JERUSALEM: Israel’s government sold a 5 percent stake in Israel Discount Bank to UBS on Tuesday, lowering its holding in the country’s third-largest bank to 15 percent, the Finance Ministry said.
The ministry did not provide details of the deal other than UBS was one of four foreign investment banks to submit bids.
A source close to the deal told Reuters that the Swiss bank bought the Discount shares at 6.803 shekels each — a discount of nearly 2 percent from Monday’s closing price of 6.93 shekels — for a total of 340 million shekels ($89 million).
The source noted that UBS then sold the Discount shares to its clients, mostly foreign ones.
UBS has an option to buy as much as another 3.33 percent of Discount by 1500 GMT. The source said exercising the option depended on whether UBS clients wanted more shares.
"The 5 percent was sold in less than an hour," the source said. "UBS will probably buy the 3.33 percent more. Demand is very high for Discount."
Shares of Discount were down 1.23 percent at 6.85 shekels at midday.
Late on Tuesday, the Finance Ministry approached nine foreign investment banks and asked them to submit bids to buy a 5 percent stake in Discount.
It said the decision to sell the shares came after recent interest by foreign investors.
In similar fashion, Israel sold 5 percent of Discount through Deutsche Bank in January for 435 million shekels — or 8.871 shekels a share. At the time, Deutsche declined to exercise an option for 3.33 percent more.
The Bronfman-Schron group, led by US businessman Matthew Bronfman controls Discount with a 26 percent stake.
Israel’s government has long said it seeks to rid its stakes in Discount and in Bank Leumi, Israel’s largest bank in which the state is the controlling shareholder.
A Finance Ministry spokesman said the ministry had no concrete plans to sell the remaining stake in Discount.
"After we close the deal (with UBS) we will consider the next step," he said, noting that as part of the agreement with UBS, the state cannot sell any more of the bank for three months.
He added that a sale can be made via the stock exchange, to foreign banks or directly to a strategic investor depending on demand and market conditions.
"Everything is possible and nothing has been decided yet," he said.
