Netanyahu Approves Bank Privatization Plan

(Communicated by Finance Ministry Spokesman)
Jerusalem, 27 January 1999

Prime Minister and Finance Minister Benjamin Netanyahu today (Wednesday), 27.1.99, approved the 1999 bank privatization plans jointly submitted by Accountant-General and M.I. Holdings Chairman Shai Talmon and M.I. Holdings Director-General Meir Jacobson.

According to Talmon, M.I. Holdings intends to sell the State of Israel’s controlling interests in various banks as a key component of the privatization program, while also offering block shares for sale to private and institutional investors in Israel and abroad — which will expand the shareholder base, and increase the exposure of the international financial community to the State of Israel.

Bank Discount

Of the State of Israel’s 59% controlling interest in Bank Discount, M.I. Holdings is negotiating the sale of between 30-53% of the Government’s stake with two interested parties; the remainder will be offered to Bank Discount employees.

Bank Hapoalim

The State of Israel continues to hold a 24% stake of Bank Hapoalim, with outstanding options covering 15% thereof — 7.5% by April 1999, and another 7.5% by October 1999. Pending the approval of the Knesset Finance Committee, and subject to market conditions, M.I. Holdings also intends to sell 7.16% of Bank Hapoalim in the form of expired options from October 1998.

Bank Leumi

State holdings in Bank Leumi, on a fully diluted basis, constitute about 45% of the bank’s value — from which 5% is to be offered to Bank Leumi employees. At the same time, M.I. Holdings intends to sell 2-4% block shares, via investment banks, to domestic and foreign investors; this deal has already received the approval of the Knesset Finance Committee.

Union Bank

The State of Israel owns a 19% stake in Union Bank, which is controlled by the Eliyahu Group. Negotiations on the sale of the State of Israel’s interest to the Eliyahu Group were recently concluded, and a contract is now being formulated for the approval of the Knesset Finance Committee.

Bank Mizrachi

The sale of Bank Mizrachi has been completed. The State of Israel’s fully diluted interest in the Bank stands at 1.1%.

1998 State revenues from bank privatization:

Bank Hapoalim NIS 669.0 million
Bank Leumi NIS 800.2 million
Bank Mizrachi NIS 718.6 million
Bank Hapoalim options NIS 200.3 million
Bank Leumi options NIS 358.5 million
Bank Mizrachi options NIS 143.5 million
Total NIS 2.891 billion