"Globes" learns that Mizrahi Bank wishes to acquire Mercantile Discount from Discount Bank and merge with it.
Under a government resolution, Discount Bank is obliged to sell its holdings in Mercantile Bank. This decision was take as part of the comprehensive reform of the banking system, designed to reduce concentration and boost competition in the sector.
The management of Mizrahi bank, controlled by Yuli Ofer and Mozi Wertheim, regards the acquisition of Mercantile as a means of attaining the strategic goal of increasing clientele and expanding market share. For a small bank, Mercantile has a relatively large system of branches, and maintains a presence in places where Mizrahi has no branches. Mercantile has a significant presence in the Arab sector, whereas Mizrahi had focused, until being sold to Ofer and Wertheim four years ago, on the national religious sector.
Mizrahi bank commented "Mizrahi bank has a policy of growing at a faster rate than the banking system average, in order to increase its market share directly by expanding activity. Further to this policy, the bank may consider purchasing banks that are offered for sale".
Mizrahi Bank is also studying a possible merger with Union Bank, estimating that the Eliyahu consortium, which is bidding to acquire the bank's controlling core, will have to sell it if it wins the Discount tender. The State will require the consortium winning the Discount Bank tender, in the framework of the acquisition agreement the parties sign, to undertake to sell Mercantile.
The management of Mizrahi Bank has reportedly not yet applied to Supervisor of Banks Yitzhak Tal for permission in principle for a merger with another bank. It is assessed that Tal is unlikely to oppose such a merger.
Discount Bank management firmly opposes the government's decision to require it to sell Mercantile. The management of Mercantile, on the other hand, supports the government's decision and wishes to separate from Discount Bank.
Published by Israel's Business Arena December 20, 1999