Bank Hapoalim Ltd. fell the most in more than seven months as a company owned by Shari Arison, Israel’s richest woman, sold shares in the country’s leading lender at a discount.
Hapoalim, which has not paid a dividend since July 2011, according to data compiled by Bloomberg, dropped 2.7 percent, the most since Nov. 14 to 16.93 shekels at the close in Tel Aviv. The bank said today Salt Industries Ltd., a unit of Arison Investments Ltd., sold 14.6 million shares for a total of 250 million shekels ($69 million) at 17.1 shekels a share, a 1.7 percent discount to yesterday’s closing price of 17.39 shekels. The benchmark TA-25 Index fell 1 percent.
“It makes sense for the bank’s shareholders to realize profits by selling shares because there are no dividends,” Zach Herzog, head of international sales at Psagot Investment House Ltd. said today by phone. “Their cash flow needs can be met by selling shares, and we are very likely to see shareholders of other banks doing the same.”
Israeli lenders have refrained from paying out dividends as the central bank is requiring them to meet higher core tier 1 capital requirements. Israeli institutions must keep their ratios at a minimum of 9 percent effective Jan. 1, 2015, and a minimum ratio of 10 percent for the two largest banks, according to a draft guideline published by central bank in March last year. Hapoalim’s Tier 1 capital ratio at the end of the first quarter was 9.87 percent, according to data compiled by Bloomberg.
Arison Investments said in a statement today that the sale of Hapoalim shares is intended to lower debt at the investment company. The sale did not affect the company’s controlling stake of the bank, which it sees as a “long-term strategic” investment, according to the statement. Arison Holdings Ltd. has a 20.30 percent stake in Hapoalim, according to data compiled by Bloomberg.
With the regulator and lenders “focused on increasing capital, we do not expect the Israeli banks to resume consistent dividend payment anytime soon, though there may be scope for one-offs,” Barclays Plc analyst Joseph Wolf wrote in an e-mailed note today. He downgraded the shares to equal weight, or hold, from overweight, according to the note.
First International Bank of Israel is scheduled to pay a dividend on June 24, its first since September 2010, according to data compiled by Bloomberg.