Shari Arison wants out of israel: will sell her holdings in Hapoalim bank

by Ifi Reporter Category:Banking Sep 5, 2018

Shari Arison is on her way out fron Israel. The announcement of the separation from Bank Hapoalim comes after Arison sold the controlling interest (47%) in the real estate and infrastructure company, Shikun U'Binui, to American businessman Nati Sayidoff for NIS 1.1 billion. Arison put on its shelf the additional holdings in Israel - Salt Industries, which it acquired from the Dankner family. She strives to stay with her maintenance in the American shipping company Carnival Cruise, controlled by her brother Mickey Arison.
Arison is expected to post a handsome profit for the 19 years it controlled Bank Hapoalim. Arison acquired control of the bank in 1999 after her father, Ted Arison, acquired control of the bank (43%) together with a group of American investors and the Dankner family in 1997 for $ 1.36 billion, reflecting a value of $ 3.2 billion. Today the bank is traded at a value of $ 10 billion (NIS 36 billion). In addition, over the years, the Bank distributed dividends totaling $ 3.5 billion, and according to estimates, Arison's share was 15%. In addition, Arison invested $ 500 million in acquiring the share of the American partners and the Dankner family when it became the sole controlling shareholder in 2007, and over the years exercised $ 300 million worth of shares (net of debt) that left it with its current holding in the bank - 20%. In other words, Arison's total profit is $ 1.7 billion, or NIS 6.1 billion
Arison explained that the reason Arison is liquidating her holdings in Israel is that the old investments inherited from her father have exhausted themselves, and that she now aspires to seek different directions and create new businesses. This explanation sounded stuttering and unconvincing. The chances that Arison will make use of the large amount of cash that will flow into her pockets in order to acquire a very low Israeli company
The many negative headlines surrounding Arison recently because of the international investigations in which Bank Hapoalim and Shikun U'Binui are involved did not help Arison and may have led it to decide to end its holdings in Israel. The affair of the tax evasion in which Bank Hapoalim is complicated is far from over, and the Housing and Construction bribe affair is in a similar situation, and even brought Arison herself to the interrogation room.

Another reason is the failure of Arison's contacts with a group of three American entities to sell 50% of Arison Investments - that is, to sell them 10% of Bank Hapoalim.

Bank Hapoalim published good reports in the second quarter. The bank earned NIS 920 million the highest profit among the banks in the second quarter, profit rose by 13% compared to the corresponding quarter. The profit reflects a yield of 10.5%, lower than the yield presented by the banks that published results in the past two days.

Revenues from core operations also grew: financial income increased against the background of the high index, grew 6% to NIS 2.21 billion, while commission income increased by 4.5% to NIS 878 million. The bank's credit portfolio grew by 2.5% since the beginning of the year to NIS 272.5 billion, with the main increase being in mortgages and business credit.
Like Bank Leumi, Bank Hapoalim also reduces exposure to consumer credit and credit to small businesses, against the background of increased risk in these sectors. Consumer credit has fallen 1% since the beginning of the year, and credit to small businesses has fallen 1.7% this year.
Although Bank Hapoalim did not make a provision for the US authorities' investigation of the second quarter's reports, it reached an agreement with the Bank of Israel on the freezing of the dividend in the second quarter.
The bank, headed by Arik Pinto, announced in an unusual manner that it would not distribute a dividend for the quarter's profits against the background of the investigation being conducted against it. Bank Hapoalim, controlled by Shari Arison, has a dividend policy that includes a distribution of 40% of the profit, while the Bank aspired to increase it to 50%.

Bank Leumi, under the management of Rakefet Russak-Aminach, opened yesterday the banks' financial statements season when it published a strong report for the first half of the year. The bank earned NIS 903 million in the second quarter, an increase of 3% compared to the corresponding quarter. The profit reflects a return on double-digit capital of 11.1%, which is likely to be the highest among the banks in the current quarter, in light of the fact that Mizrahi Tefahot, which usually holds this title, is expected to record a significant provision for the US investigation in the second quarter. NIS 1.63 billion, an increase of 9% compared to the same period in 2006. The Bank's share was conspicuous today, with a 2.5% rise in afternoon trade.
After being the first bank to detect the increased risk of consumer credit, it appears that Bank Leumi is marking the next sector in which it identifies an increase in risk: small businesses. The Bank's reports show that while in other sectors Leumi is growing on credit, in the small business sector, growth is curbed. The volume of credit to small businesses stood at NIS 26.8 billion at the end of June, a decrease of NIS 600 million since the beginning of the year, reflecting a 2% drop in the portfolio.
In the National Bank have returned to grow in the mortgage sector. The bank's portfolio grew by 1.5 percent in the past year and crossed the NIS 80 billion mark in June. Leumi also finds interesting opportunities for growth in credit to the real estate sector - and this credit has soared by 14 percent since June last year to NIS 22.3 billion.
In the meantime, it appears that the Bank's decision to reduce risks and focus on the business sector and mortgages is paying off. The provisions of Leumi Credit Losses stood at a negligible 0.1% in the first half, with income of NIS 14 million in the second quarter. The Leumi Group believes that as long as the interest rate in the economy does not rise, it will remain more or less the level of the provisions even later on.
Leumi's financial income in the second quarter jumped by 11% to NIS 2.41 billion, with the rise in the CPI, which led to an increase in revenues of NIS 282 million, as well as growth in the credit portfolio, which rose by 3% in the last 12 months.
On the other hand, the depreciation in the shekel in recent months mainly affected the non-interest financing income line. This devaluation, in addition to the fact that Leumi did not realize significant investments in the first half, led to NIS 140 million in non-interest financing income compared to NIS 452 million in the same period last year.
Salary expenses at Leumi rose in the second quarter by 9.7% to NIS 1.22 billion. The increase stems from a grant of an estimated NIS 60-80 million paid to employees during the quarter, due to their commitment to the Bank's deep streamlining measures, which were expressed in the establishment of a new operating division. It is estimated that this division will set in motion a further streamlining process at the bank next year.
Against the background of the results, Leumi will distribute a dividend of NIS 361 million for the second quarter. In addition to the dividend, we will note that the Bank began this year with a plan to buy shares in a total amount of NIS 700 million. Leumi said that until now, the bank has made a purchase of NIS 303 million out of the sum. According to estimates, after completing the current quota, Leumi will approach the Bank of Israel for approval of another share buyback plan, against the background of the Bank's surplus capital.

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