Israel Discount Bank's controlling shareholders start selling stake

Reuters

JERUSALEM, Dec 3 (Reuters) - Israel Discount Bank's two controlling shareholders have sold a 7 percentstake for 493 million shekels ($140 million), the bank said onTuesday, the beginning of a phased sell-off of their 25-percentholding.

Trying to turn around Israel's No. 3 bank has been tough forU.S.-Canadian businessman Matthew Bronfman and New York realestate investor Rubin Schron, who bought the stake from thegovernment in 2005.

They have cut its loan portfolio to reduce risk assets andimprove its capital adequacy ratio, and say they may sell partof its U.S. business to shore up the balance sheet. Recentprofits have been bolstered by sales of proprietary securities.

The bank's shares fell 3.2 percent to 6.867 shekels by 1105GMT after Bronfman and Schron sold 73.8 million shares at 6.679each to Citigroup. It closed at 7.098 on Monday. Dealers saidthe stock has been sold on to institutional investors.

They cannot sell the remaining stock for at least 120 days.

Bronfman and Schron are no longer allowed to appointdirectors or make any moves that controlling shareholders make,the Bank of Israel said after they announced their intent tosell control. Each of them will also be required to hold lessthan 5 percent of the bank, it said.

The Psagot brokerage owns 5.9 percent while some 69 percentof Discount is freely traded on the Tel Aviv Stock Exchange.

The bank last week reported a 25 percent rise inthird-quarter profit but a 4.2 percent fall in net interestincome.

In October, Discount named Lilach Asher-Topilsky as its newchief executive pending regulatory approval. She would replaceReuven Spiegel, who in August said he planned to step down inMarch 2014 for personal reasons.

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