Bank Hapoalim has decided to try to buy Maritime Bank of Israel, and merge it into its own operation.

Hapoalim CEO Eliezer Yones said yesterday that after the Bank of Israel reversed its policy, and now allows big banks to buy smaller ones, Supervisor of Banks Yitzhak Tal asked Hapoalim to consider a Maritime buyout.

Hapoalim had looked at buying Maritime Bank a year ago. But the central bank rejected the idea, arguing the move was anticompetitive and would increase centralization in the banking sector.

However, the collapse of Trade Bank after a NIS 250 million embezzlement aroused fears of liquidity crunches at the smaller banks, leading the central bank to reverse its position.

The Hapoalim offer for Maritime will be based on 72% of its equity, according to pre-offer financials.

At the end of Q1 2002, Maritime Bank reported NIS 251 million in equity, meaning Hapoalim's offer will reflect a value of NIS 181 million. This is 57% above the small bank's market capitalization of NIS 115 million.

Bank Hapoalim stated that publication of the purchase offer is contingent on due diligence. If the results are satisfactory and do not indicate a deviation of greater than 8% in equity, material deterioration of financial results or Israeli economic downturn that could adversely affect the possibility of completing the transaction, then the purchase offer will be made.