Barenboim buys Industrial Development Bank from government for NIS 572m.

Barenboim buys Industria

zvika barenboim 248 88 (photo credit: Nitzan Harmoni)
zvika barenboim 248 88
(photo credit: Nitzan Harmoni)
Barenboim Group Investments Ltd., controlled by businessman Zvika Barenboim, has won a government tender for the sale of Industrial Development Bank of Israel in a deal worth NIS 572 million. "We welcome the sale of Industrial Development Bank, which comes ahead of the sale of the government stakes in Bank Leumi and Israel Discount Bank, injecting billions of shekels into state coffers to help reduce government debt," Finance Minister Yuval Steinitz said Monday. The privatization of Industrial Development Bank is the first in a string of privatizations of state-controlled companies. The government, which still owns a controlling stake in Leumi and a minority take in Discount Bank, plans to sell those holdings in 2010. The Finance Ministry has been trying to sell the government's controlling stake in Industrial Development Bank for the past year in a tender open to domestic and foreign investors. The privatization process was conducted by the Government Companies Authority in form of an auction. Twelve potential bidders had expressed initial interest in the bank. In the final stage of the tender there were three bidders: Mizrahi Tefahot Bank, Bank of Jerusalem and Barenboim. Barenboim won the tender after outbidding Bank of Jerusalem's offer of NIS 555m. and Mizrahi Tefahot Bank's offer of NIS 505m. The deal for the Industrial Development Bank, which is 45% owned by the state and 40% by the country's three largest banks - Bank Hapoalim, Leumi and Discount Bank - is subject to regulatory approvals. The Finance Ministry said the sale had marked the completion of the full amount pouring into the government's coffers after the bank presented the Treasury with a check for NIS 313.5m. at the beginning of the month. The payment represented redemption of deposits and settling of accounts and was made against the background of the pending sale of the bank. Industrial Development Bank workers were among the country's most expensive government employees in 2008, with an average monthly salary of NIS 27,676. Industrial Development Bank was incorporated in 1957 and operated as a commercial bank. In 2002 it ran into difficulties and was saved from collapse by a government bailout. It has since reduced its operations in coordination with the government. The Bank of Israel revoked its banking license in August 2008. It operated as a financial institution that deals with problem credit, credit collection and the handling of debts.