Leumi Drops as IBI Says Eliahu Sold Shares: Tel Aviv Mover

Bank Leumi Le-Israel Ltd. dropped the most in five months after IBI-Israel Brokerage & Investments said Shlomo Eliahu sold the stock and as Israel’s biggest lender reported its first quarterly loss since 2008.

Shares of the bank fell 3.2 percent, the largest retreat since Oct. 21, to 12.70 shekels at the close in Tel Aviv, with trading volume surging to 5 times the stock’s three-month daily average, data compiled by Bloomberg show. Bank Leumi was the fourth-biggest decliner on the benchmark TA-25 Index, which fell 0.8 percent.

Businessman Shlomo Eliahu sold about 37 million shares at 12.75 shekels a share, IBI said in an e-mailed note today. The move comes after Eliahu was asked by the Bank of Israel in October to sell his entire holding in the lender within three years in exchange for being allowed to acquire a majority stake in Migdal Insurance & Financial Holding Ltd., which owns a stake in Bank Leumi.

“Leumi’s share is down due to a combination of factors including Eliahu selling part of a stake in the company, according to press reports,” Zach Herzog, head of international sales at Psagot Investment House Ltd., said today by phone. “The net loss for the fourth quarter was higher than the guidance given and provisions were higher than what the market had forecast.”

A spokesman for Eliahu didn’t immediately answer a text message from Bloomberg News today seeking comment. Eliahu already sold 200 million shares in Bank Leumi at 12.25 shekels a share in October, IBI said at the time.

Last Loss

The Tel Aviv-based bank, which has the fifth-biggest weighting on the TA-25, also reported a fourth-quarter loss of 259 million shekels ($70 million), the first time it hasn’t turned a profit since the final three months of 2008, data compiled by Bloomberg show. Bank Leumi warned earlier this month that it would report a provision to cover costs related to an investigation by U.S. authorities of clients’ tax evasion.

The fourth-quarter loan loss provision was 386 million shekels compared with 385 million shekels in the comparable period. Excellence Investments Ltd analyst Micha Goldberg estimated a provision of 364 million shekels, according to data compiled by Bloomberg.

Total assets of Leumi on Dec. 31 totaled 376.2 billion shekels, up 2.8 percent from 365.9 billion shekels from the previous year, according to bank data. Net return on equity for 2012 was 3.8 percent. The bank’s capital adequacy ratio reached 14.87 percent of which the core capital ratio was 8.55 percent.

Hapoalim Results

Bank Hapoalim Ltd., Israel’s second-largest bank by assets, said today fourth-quarter profit fell to 652 million shekels, from 672 million shekels a year earlier, according to a company statement. Net financing income for the period was 2.1 billion shekels, compared with 1.96 billion shekels. The loan loss provision for the three months dropped to 54 million shekels, from 363 million shekels a year ago.

Total assets as of Dec. 31 were 376.4 billion shekels, the company said in the statement. Return on equity for the bank reached 10.3 percent in 2012, compared with 11.9 percent in 2011. The core Tier 1 capital ratio rose to 8.9 percent, from 7.9 percent at the end of 2011. Hapoalim’s shares slipped 0.9 percent to 16.42 shekels.

Both banks have to reach a minimum core Tier 1 capital ratio of 10 percent by January 2017, according to Bank of Israel regulations.