The government will reportedly delay the sale of its shares in Bank Leumi (TASE: LUMI) into June, after the bank's general shareholders meeting on May 24, in order to influence the composition of the bank's board of directors. Four new directors will be elected at the general meeting, and if the government sells its shares beforehand, it will not have a vote.
The Ministry of Finance has not yet made an official decision on the matter.
The upcoming vote for directors is especially important, because after the government sells its shares in Bank Leumi, the bank will no longer have a controlling core. The creation of a controlling core and its approval by the Bank of Israel will reportedly take at least 18 months in the best case. This means that the board of directors will effectively run the bank.
In January, the government sold 5% of Bank Leumi, and promised not to sell more shares for 60 days. This commitment expires on Saturday, March 19. The government, through MI Holdings (State of Israel Holdings) currently owns 6.46% of the bank, including 1.1% which will be allotted to employees when the sale is completed.
The government's stake is currently worth NIS 1.3 billion. Accountant General Shuki Oren, who is leaving his post on June 1, is responsible for the sale.
Despite the sale of the shares, the government will continue to be the informal controlling shareholder in Bank Leumi, even though it is no longer the bank's largest shareholder. That title passed to Shlomo Eliahu, who owns 9.59%. By law, the share committee continues to exist so long as the government owns more than 5% of the bank. Since the shares committee appoints more than half of the bank's directors, the Bank of Israel still considers the government as Bank Leumi's controlling shareholder.
Bank Leumi's share price rose 1.4% today to NIS 17.25, giving a market cap of NIS 25.1 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on March 17, 2011
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