Watchdog: Shlomo Eliahu must quit Bank Union seats to bid for Bank Leumi - TheStreet

By Amit Sharvit

Banker Shlomo Eliahu and his son Ofer Eliahu will have to quit all their positions at the Union Bank of Israel by the end of May, in order to participate in the imminent public issue of Bank Leumi stock on the Tel Aviv Stock Exchange.

Shlomo Eliahu holds 26.7% of Union Bank¿s shares.

The State of Israel, which owns 42% of Bank Leumi¿s stock, plans to privatize the bank via the TASE in stages. At first the state will be selling an interest of 5% to 8% by the end of May.

Eliahu has long been preparing to contend for the controlling interest in Bank Leumi. To do so he has to first resign his positions at Union Bank, as Israel's banking watchdogs would not permit him to possess control over two banks at the same time.

Eliahu has already acquired a 10% interest in Bank Leumi.

He is the only substantial shareholder in Bank Leumi who was not disqualified by the Bank of Israel from contending for Leumi.

The central bank nixed a bid by the insurance company Migdal, but agreed to allow Migdal to contend over a smaller bank, such as Bank Mizrahi. Bank Leumi is Israel's second-biggest bank after Bank Hapoalim.

Market sources believe Eliahu will join forces with institutional investors to achieve a 20% controlling interest in Bank Leumi.

Meanwhile, the entire exercise awaits the conclusions of a committee headed by treasury director-general Ohad Marani as to the effects of privatizing Bank Leumi via the TASE. The committee includes representatives of the Bank of Israel and of the treasury. One possible result could be that no single body obtains a controlling interest in Leumi, an unprecedented situation in the Israeli banking sector.