Sources inform ''Globes'' that the government's sale of 5% of Israel Discount Bank (TASE: DSCT) today infuriated the bank's management, which was taken by utter surprise. The bank is in the midst of a road show for a rights and shares issue, intended to raise capital to boost its Tier-1 capital, and the bank was in talks with large institutional investors for this purpose.
The Ministry of Finance is aware of this, but nevertheless decided to go ahead with the sale of part of the government's stake in the bank. The sale takes Discount Bank's rights issue off the table for now, or will at least damage it.
Discount Bank's management is furious at the ministry's action. A source close to the bank told "Globes", "The sale by the government will sate investors' appetite for Discount Bank shares, and will stick it to the issue that we're trying to undertake."
Discount Bank planned to raise NIS 400 million, half in a rights issue and half in an issue of new shares. The offering has been delayed until now because the bank needs permission from the US Federal Reserve Bank because of Israel Discount Bank of New York.
Discount Bank's spokesman declined to comment on the report.
Discount Bank's share fell 2.2% in early trading today to NIS 8.90, after falling 2.2% yesterday.
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2010
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