Investec bank analyst Kobby Finkelstein believes Citibank may acquire a medium-size Israeli bank, instead of buying Bank Leumi, which is undergoing a privatization process.
The assessment follows reports last week that the Ofer family, co-shareholder of the controlling interest in the United Mizrahi Bank, is negotiating the sale of its shares to Citibank.
Finkelstein believes that among the medium-size banks, The First International Bank is the most suitable acquisition target for Citibank. He says that its customers' profiles are more in line with Citibank's target audience.
Finkelstein said, "A significant portion of United Mizrahi Bank's earnings, 43% in the year 2000, comes from mortgage banking. We believe Citibank isn't interested in entering this field."
Finkelstein believes that if United Mizrahi Bank or The First International Bank is acquired by Citibank, the deal will be concluded at a company value 1.2 times its book value. That is to say, the premium will be 30%, based on the current market value.
Published by Israel's Business Arena on 21 June, 2001