September 4, 2018 / 6:14 AM / 3 months ago

Arison to divest controlling stake in Israel's Bank Hapoalim

JERUSALEM (Reuters) - U.S.-Israeli billionaire Shari Arison said on Tuesday she will sell off shares in Israel’s largest bank, Hapoalim (POLI.TA), to the public after failing to find a strategic partner to share control of the business.

The logo of Bank Hapoalim, Israel's biggest bank, is seen at their main branch in Tel Aviv, Israel July 18, 2016. REUTERS/Amir Cohen/File Photo

Arison, who for years has been looking to reduce her holdings in Hapoalim, said she received permission from the Bank of Israel, the country’s bank regulator, to lower her stake to below five percent, from her current 20 percent.

Arison’s family has controlled the bank for 21 years but she was recently in talks to bring in three North American financial institutions. Those discussions ended in February without an agreement.

“Since no strategic partner was found to invest ... I approached the Bank of Israel a few months ago to examine the possibility of obtaining approval for decentralization of control,” she said in a statement.

Arison’s father, Ted, who made his fortune as founder of Carnival Cruise Line, was part of a consortium that bought control of the bank from the government. Arison, Israel’s wealthiest woman, has since bought out her partners.

A source close to the Arison Group, her investment arm, said the group has been looking to diversify its portfolio, and that it was a good time to sell the stake in Hapoalim as its shares were near an all-time high.

Last month Arison also sold control of Israel’s largest construction firm, Shikun & Binui Ltd (SKBN.TA), which she had held since 2007.

Hapoalim shares were down 2.5 percent at 26.46 shekels by 0900 GMT

Israel’s central bank said that by the end of the year, Arison’s license to control Hapoalim, which has a market cap of about 36 billion shekels ($10 billion), will be replaced by a license to hold shares. Arison will have five years to sell her stake, with an option of a two year extension.

Hapoalim said Arison’s shares would be sold on the stock market and that the bank’s operations would not be affected.

Following the divestment, Hapoalim will be held entirely by the public, as are other Israeli banks, without a controlling shareholder. Some 75 percent of Hapoalim’s shares are traded on the Tel Aviv Stock Exchange, with another 5 percent held by institutional investors.

Hapoalim, along with other Israeli banks, is being investigated by U.S. authorities for possible tax evasion by its American clients. It has already provisioned $365 million for any future settlement.

Arison’s three representatives on the bank’s board stepped down on Tuesday leaving seven directors, Hapoalim CEO Arik Pinto said, adding that otherwise the divestment would not impact business.

“I see no change, before or after,” he told reporters.

Pinto said he did not expect Arison to start selling shares before third quarter results are published in November.

Additional reporting by Tova Cohen and Steven Scheer; Editing by Kirsten Donovan

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