Discount bank buys Dexia bank for for NIS 670 million


by Ifi Reporter Category:Banking Sep 12, 2018

Dexia Israel Bank, which operated in recent months without a core controlling interest, becomes part of Israel Discount Bank. The two banks signed a deal according to which Discount will purchase 100% of the shares of Dexia for NIS 670 million in cash, almost identical to the shareholders' equity of the bank.
Dexia's sale was carried out because the bank has no advantage as an independent bank. Discount's offer was chosen, which was significantly higher than that of Bank of Jerusalem. Some of the bank's shareholders, headed by the Noked fund, headed by Roi Vermos, which holds 4.8% of the bank's shares, pressed the board of directors to promote the merger of the bank with another bank, in full transparency with the shareholders.
The finalization of the transaction is subject to receipt of approvals from the Supervisor of Banks at the Bank of Israel and the Antitrust Authority, which last May decided to disqualify the merger between Mizrahi Tefahot Bank and Union Bank after the two banks announced that the latter would buy the latter in a share allocation transaction of NIS 1.4 billion. Discount itself had previously expressed interest in the acquisition of Union, but it was not willing to pay the sum agreed to by Mizrahi Tefahot
 Market assessments were that Discount would seek to acquire Dexia by allocating shares as well, but ultimately it was decided to make the deal in cash.
Dexia employs 45 employees and specializes in providing credit to local authorities and serves about 300 clients. The merger between the two banks will enable Mercantile to access Dexia's customers, expand into new areas of activity and create synergy with Mercantile's retail operations.
Dexia ended the year with a net profit of NIS 47 million, a 7.4% drop compared to the previous year, a return on equity of 5.2% and a credit portfolio of NIS 4.5 billion. This is a drop compared to 2016, when the Bank's credit portfolio totaled NIS 6.3 billion. The trend of weakening also continued in 2018. In the second quarter of the year, the bank signed a net loss of 18.2% compared to the corresponding period last year, when it totaled NIS 23.4 million



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