Bank Hapoalim

last week acquired 5% of Mishkan Hapoalim Mortgage Bank (68,700 shares), for NIS 63.5 million in off-the-floor transactions. The bulk of shares were acquired on April 3, 2001. Hapoalim's stake in Mishkan now comes to 83.87%. The shares were bought at an average of NIS 924 per share, which is 2.7% higher than Mishkan's closing price on Monday.

In the past there were unconfirmed reports that Hapoalim might issue a tender offer for Mishkan.

Dealers believe that Mishkan is being traded at a discount. Two months ago

Ofek Securities & Investments

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published a position paper on investing in mortgage banks.

Ofek said that Mishkan is an attractive investment in terms of yield and cash flow. It also said that there is no economic justification for the discount price of mortgage banks compared with commercial banks.

In terms of net profit compared with yield on capital as reported in Mishkan's financial results, Ofek noted that in the past three years Mishkan has posted a higher yield than Bank Hapoalim or

Bank Leumi

.

A fair price for Mishkan as quoted by Ofek was 30% higher than the bank's market price at the time. Since then the shares have added 14%, which means that Mishkan is still being traded at a discount of more than 10%.