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.
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.