"Deutsche Bank did not make a loss on the deal. It wasn’t philanthropy. The interesting thing was the speed at which the goods were snapped up. The whole world understands that we're heading in the right direction," said Minister of Finance Benjamin Netanyahu today, at a reception to receive a NIS 1,162,013,925 check from Deutsche Bank (NYSE: DB; LSE: DBK; XETRA, AEX, SWX, ATX: DBKG) for its purchase of 6.5% of Bank Leumi (TASE: LUMI).
At the reception, Netanyahu also received a dividend check for NIS 349,246,187 from Bank Leumi chairman Eitan Raff and CEO Galia Maor.
At the reception, Deutsche Bank representative in Israel Dr. Boaz Schwartz said, "We're satisfied. We made a profit. We didn’t make a loss on the deal." He declined to state a precise figure for the profit.
A question that remains open is who to whom will the capital gains tax be paid: the Israeli or German government? Israel and Germany have a treaty to prevent double taxation, under which the lower tax rate is paid.
Schwartz said this was a good day for Deutsche Bank. He said the block of Bank Leumi shares were sold to 52 investment institutions in Europe and the US. 90% of the shares were sold to foreign investors. "Investors gave a vote of confidence with their money - in the deal, in the privatization of Bank Leumi, and in the minister of finance's policy."
Netanyahu announced that alongside the plan to distribute Bank Leumi shares to the public, other methods would be considered, including the sale of the controlling interest in the bank, if investors could be found. "We will operate in parallel, and see which comes first," he said, adding that potential benefit in the share distribution plan would reach NIS 2,000 per family, "which is quite nice."
Netanyahu promised that the money received today would only be used to cover the state's debt. "The money will go to citizens' pockets; not directly, but through lower interest rates. The overdraft must be reduced. We're burdened with a very large overdraft."
Netanyahu said the value of Bank Leumi had doubled in two years. "I thank Deutsche Bank for buying the block of shares, and for selling them."
Published by Globes [online], Israel business news - www.globes.co.il - on March 3, 2005