Bronfman consortium seals Discount Bank takeover

Deal was delayed by money laundering scandal at the New York subsidiary.

The consortium led by US business man Matthew Bronfman has finally received the green light to buy the controlling stake in Israel Discount Bank for NIS 1.3 billion, which had been delayed by the money laundering affair at Discount's New York subsidiary. What started as the first in a series of privatization deals in January 2005, when the deal was announced, closed last on Wednesday. The Bronfman group purchased 26 percent of the country's third largest bank from the government, with the option of buying another 25% in one or more installments for about NIS 1.25b. within the next three years. The rest of the bank will be offered on the Tel Aviv Stock Exchange. The bank had been in state ownership for the pasy 23 years. "Transfer of control is coming at a time when the banking system is undergoing far-reaching changes, which creates new business opportunities" said Chief Executive Giora Ofer. "This marks the beginning of a new era. I have no doubt that only private ownership is appropriate to lead the bank in these critical times." In December, the US Federal Reserve approved Matthew Bronfman's taking control of Israel Discount Bank almost a year after the Bronfman-Schron consortium signed the deal to buy the bank. The authorizaton came after Israel Discount Bank agreed to pay as much as $25m. to settle US federal and New York state claims that it had allowed the laundering of $2.2 billion from Brazil through its New York office. It also agreed to set up controls and take other measures to prevent further problems. Shlomo Zohar, a 54-year-old accountant, was named chairman of Discount's board, replacing Arie Mientkavich, who had held the job since 1997, Discount said.