UPDATE 1-Deutsche Bank places 4.6 pct of Israel's Leumi

(Recasts with Deutsche statement)

JERUSALEM, June 23 (Reuters) - Deutsche Bank (DBKGn.DE) said on Tuesday it had placed 67.81 million shares of Bank Leumi (LUMI.TA), equal to 4.6 percent of Israel's largest bank, with institutional investors.

Deutsche declined to say where it bought the shares.

Israeli media said Deutsche had bought the remaining shares held by Cerberus Capital Management [CBS.UL] and Gabriel Capital Corp, neither of which was immediately available for comment.

The Globes business daily said Deutsche paid 9.5 shekels a share for the Leumi shares for 648 million shekels ($163 million), a 4.5 percent discount to Monday's closing price of 9.99 shekels.

Leumi's share were down 1.1 percent at 9.88 shekels in late trading after a fall of more than 3 percent earlier in the day.

Cerberus and Gabriel last month sold a 4.83 percent stake in Leumi to the Azrieli Group for 740 million shekels, or 10.5 shekels per share.

Cerberus and Gabriel together bought nearly 10 percent in the bank from the state in 2005 at 16.5 shekels a share. They later split up, taking half each.

Newspapers have said Cerberus and Gabriel decided to sell their stake jointly to boost liquidity in the wake of the global financial crisis and the Bernard Madoff scandal.

Money management firm Gabriel is run by Ezra Merkin, who has been charged by New York's attorney general with secretly placing $2.4 billion of client funds with swindler Madoff.

Madoff pleaded guilty in March to running Wall Street's biggest investment fraud involving as much as $65 billion over 20 years, including billions from feeder funds like Merkin's. ($1 = 3.97 shekels) (Reporting by Steven Scheer and Joseph Nasr, editing by Will Waterman)