European financial institution Dexia SA today completed the sale of its shares in Dexia Israel (Public Finance) Ltd. (TASE:DXIL). 58.9% of the bank's shares were sold to investment institutions at NIS 674 per share, a 13% discount on the share price on the Tel Aviv Stock Exchange (TASE). The shares in Dexia Israel, which specializes in credit for the municipal sector, were sold for a total of NIS 350 million.
The global corporation previously announced its intention of selling the Israeli bank. It is believed that a number of banks were interested in acquiring Dexia Israel, including Bank of Jerusalem (TASE: JBNK), Israel Discount Bank (TASE: DSCT), and Mizrahi Tefahot Bank (TASE:MZTF), but the Bank of Israel wanted Dexia Israel to remain independent, with the controlling shareholders selling their shares on the TASE and leaving the bank without a controlling core. At the same time, the Bank of Israel supports merging Union Bank of Israel (TASE: UNON) into Mizrahi Tefahot Bank, and it cannot be ruled out that it will prefer the second option in this case in order to avoid losing another player in the banking market, even if it is a small one.
Dexia SA has wanted to unload its business in Israel for a long time, following the 2008 financial crisis, which left the company in dire straits and forced the French and Belgian governments to assist Dexia SA. As part of this aid, Dexia SA undertook a recovery plan that included the sale of some of its business, and activity in Israel was one of the sections put up for sale.
Dexia Israel, however, had problems with its minority shareholders, due to the fact that the bank had five different types of shares. In the end, following a lengthy legal dispute, the parties reached a compromise that included the consolidation of its share capital. In the second stage, a strategic plan substantially improved the bank's profit margins through more efficient utilization of its equity. The next stage was the sale of the controlling interest in the bank, which was completed today.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 18, 2018
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