Bank Leumi, Israel's
second-largest lender, has completed the sale of a 5.1% stake in Migdal Insurance and Financial Holdings as it faces new capital requirements next year.
Leumi said it sold the 4.6% stake to institutional investors at NIS 5.72 ($1.51) per share, representing a 2.2% discount to the opening price of Migdal last Thursday, and completed the sale with a further 0.5% at the same price on Tuesday.
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Israeli business daily Calcalist said the funds from the sale of Migdal would help Leumi meet its core capital requirements set by the Bank of Israel.
Leumi needs to reach a core Tier I capital ratio of 9% by the end of 2014. It was at 8.6% at the end of the third quarter of 2012.
Leumi expects to post a net gain of NIS 110 million ($29 million) from the 4.6% stake sale, and a further gain of NIS 12 million ($3.17 million) from the sale of the additional 0.5%, after which it would still hold 4.7% of Migdal.
Leumi's subsidiary Leumi Partners carried out the sale.
Migdal, Israel's largest insurer, has a market value of NIS 6.15 billion ($1.63 billion).
Late last year, businessman Shlomo Eliahu bought a 69.1% stake in Migdal from Generali
for €705 million (about $920 million).
As part of the changes taking place in Leumi under the management of CEO Rakefet Russak-Aminoach, the bank has begun mulling the option of splitting its real estate holdings and merging them under one subsidiary, in a move expected to yield the bank a profit of hundreds of millions of shekels along with the reevaluation of its assets.
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