Discount Bank Drops Most in Three Months on Sale: Tel Aviv MoverSharon Wrobel
Israel Discount Bank Ltd. slumped the most in more than three months after shareholders sold stock in the country’s third-largest lender below its market value.
The shares of the Tel Aviv-based bank fell 3.4 percent, the biggest decline since Aug. 27, to 6.86 shekels at the close in Tel Aviv. The benchmark TA-25 Index of stocks retreated 0.6 percent, while the Tel Aviv Banking Index of the country’s five largest commercial lenders dropped 0.7 percent.
Two units of the Bronfman-Schron group agreed to sell 73.7 million shares in Discount Bank at 6.679 shekels each, the bank said in a statement to the Tel Aviv bourse. That values the stake at 492 million shekels ($140 million). The units will hold 191 million shares, or about 18 percent of stock outstanding, after the sale, according to the statement and data compiled by Bloomberg.
“This is not a very big vote of confidence in the bank,” Micha Goldberg, the head of equity research at Excellence Nessuah in Ramat Gan, said by phone. “Seems that after many years of ownership the owners have not succeeded in improving cost efficiencies and capital constraints in the bank and they are giving up on the controlling stake.”
Lenders need to cut costs to cope with lower interest rates, tougher competition and higher capital requirements, Supervisor of Banks David Zaken said in a July interview with Bloomberg.