Bank Leumi: Family battles for control of Israel’s biggest bank
Bank Leumi might soon have a new owner. But as the government sells its controlling stake in Israel’s biggest bank, Leumi might instead be left without any controlling shareholder. Dominic O’Neill questions the finance minister and central bank over the role of Israel’s banking tycoons.
ISRAEL ELIAHU IS hoping to enhance his company’s position in Israel’s banking market. "The sale of the government’s share will pave the way [for us] to put together a controlling-interest group [in Leumi]," the chief executive of Shlomo Eliahu Holdings says, during a lunch with Euromoney. Shlomo Eliahu Holdings, whose chairman, Shlomo Eliahu, is Israel Eliahu’s father, is already the largest private shareholder in Leumi, Israel’s biggest and oldest bank, with a 9.59% stake.
The government retains a controlling stake of 11.5% in Leumi – the legacy of a banking crisis in the 1980s – but in November finance minister Yuval Steinitz told Euromoney that the remaining shares "will be sold in the next few months".
"My goal is to sell as soon as possible with a good price," says Steinitz. "There is no preference for this or that group." However, he says the shares will probably be sold to an investment bank for widespread distribution – rather than in a block to a group aiming to gain the 20% needed for a privately held controlling stake. Steinitz says this method of market distribution worked well in the staggered sales between January and October this year of the government’s remaining 25% holding in Discount Bank, Israel’s third-biggest lender.