After failing to sell Leumi Romania to the ARGO fund because of regulatory permits, Bank Leumi (TASE: LUMI) is now likely to sell it to a Romanian bank.
Bank Leumi today reported that it had signed an agreement to sell Leumi Romania to First Bank, controlled by US investment fund JC Flowers, which specializes in financial investments.
Since this sale is directly to a bank that already has a banking license, not to a fund, the deal will probably obtain regulatory approval in Romania and go through. Bank Leumi's announcement did not state the price for Leumi Romania. The price is believed to be small, and Bank Leumi will in any case post no substantial profit or loss on the deal.
Bank Leumi's investment in Leumi Romania has not been successful. Bank Leumi benefited from Romanian economic prosperity and a growth in activity by Israeli investors when it first acquired Leumi Romania, but the global financial took place shortly afterwards. Eastern European countries were hard hit by the crisis, including Romania, and Leumi Romania lost money for quite a few years. Furthermore, Bank Leumi injected more than half of its original investment into Leumi Romania over the year in money and special credit. As a result of its losses, Bank Leumi wrote off over half of its investment in the Romanian bank. Bank Leumi, led by CEO Rakefet Russak-Aminoach, has been trying to unload its activity in Romania for some time. A year ago, it signed an agreement that did not go through, and it now appears that it is close to disposing of the Romanian bank.
Published by Globes, Israel business news - en.globes.co.il - on April 16, 2019
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