Sources inform “Globes” that the Bachar committee recommends requiring Bank Hapoalim (LSE:BKHD; TASE:POLI) to sell Bank Otsar Hahayl by the end of 2005. The recommendation is designed to reduce the centralization in Israel's banking system - the guiding principle for most of the committee's recommendations. The Bachar committee recently completed its deliberations.
The government decided to sever Bank Otsar Hahayal from Bank Hapoalim in May 1993 by the end of that year. The deadline was recently extended to the end of 2005.
The deadline may be postponed again at the request of Bank Otsar Hahayal employees. With the assistance of Adv. Ram Caspi, they are fighting to keep the bank as a subsidiary of Bank Hapoalim, concerned that the sale of the bank to a third party will adversely affect them.
Banking sources believe that the Bachar committee recommendation regarding Bank Otsar Hahayl will touch off a battle between possible buyers. United Mizrahi Bank (TASE:MZRH), First International Bank of Israel (TASE:FTIN1;FTIN5) and Union Bank of Israel (TASE:UNON) are all candidates to buy the bank.
The Bachar committee recommends not allowing Bank Leumi (TASE:LUMI) to acquire Bank Otsar Hahayal. Israel Discount Bank (TASE:DSCT) is being privatized, making it unlikely to bid for another bank at this time.
Bank Otsar Hahayal is considered an attractive acquisition target, mainly because many of its customers are fairly wealthy. The bank posted a profit of NIS 34 million for the first half of 2004, reflecting a return on capital of 13%.
Published by Globes [online] - www.globes.co.il - on October 4, 2004