Minister of Finance Yuval Steinitz today asked the Knesset Finance Committee to allow the government to sell its remaining 11.46% holding in Bank Leumi (TASE: LUMI).
The request was made after Shlomo Eliahu, Bank Leumi's largest private shareholder, urged the government to sell its shares in the bank. Since the beginning of the year, Eliahu has been locked in battle with the government over Bank Leumi's next chairman.
MI Holdings (State of Israel Properties) will sell its Bank Leumi shares in the same way it sold a bloc of its shares in Israel Discount Bank (TASE: DSCT) several months ago: a block trade to financial institutions, which will sell them to Israeli and foreign investors.
The Ministry of Finance said that it the sale would not be of a controlling core in the bank. This would make Bank Leumi the country's only bank without a controlling core, and without anyone clearly controlling the bank a power struggle is expected to ensue. This is the reason that the Ministry of Finance is waiting until a new board of directors has been appointed before embarking on this option. This will allow a period of one year in which no changes can be made in the composition of the board, and in the following years most board members will remain in place. This will at least assure a degree of management certainty at the bank until a new control structure is formulated and approved by the Bank of Israel.
Bank Leumi's share price rose 0.8% by midday to NIS 14.99.
Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2010
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