Bronfman-Schron group takes over Discount [pg. 17]

Matthew Bronfman and Rubin Schron handed Acting Prime Minister and Finance Minister Ehud Olmert a check for NIS 1,425,267,532 Wednesday in exchange for a 26 percent controlling stake in Israel Discount Bank, which the state had held for 23 years. Bronfman said Discount's privatization would be "good for the economy, and hopefully good for investors." "We look forward to the stewardship of a financial institution that is a distant third, but still integral to the fabric of Israel's economy," he said at a ceremony marking the transfer, adding that the drawn-out process of buying the bank was "not easy politically or economically." The group also has the option to buy another 25% of the bank's stock for about NIS 1.25b. within three years. The remaining 49% stake will be offered on the Tel Aviv Stock Exchange. "The privatization of Israel Discount Bank completes a long process ... that began with the [state's] acquisition of the bank's stock during the financial crisis of 1983, and which has come to an end with the privatization of Discount, together with that of Bank Leumi," said Bank of Israel Governor Stanley Fischer, who presented the consortium with the license to operate the bank. Fisher said the privatization would strengthen the financial system, listing numerous challenges to be faced by the bank's new direction given the shifts and changes affecting the system as a whole. Olmert noted that the consortium's entry into the bid in 2004 constituted "a most important turning point" in the state of foreign investments in Israel, catalyzing the process that led non-residents to invest a total of $9.7 billion in 2005. Israel has successfully endured "not a few crises that in other circumstances would potentially shake up an economy, indicating internal resilience and stability, strength and a very serious chance for a continuation of the growth process that has characterized recent years," Olmert said. He also spoke of the need to provide "a fair and serious response to social distresses," as part of the government's efforts to ensure Israel's economic resilience.