Bank Leumi (TASE: LUMI) has distributed to institutional organizations a 5% stake in Israel Corporation (TASE: ILCO) worth NIS 380-475 million. The move is part of its effort to adhere to a government decision barring financial firms from holding more than 10% of non-financial institutions. Leumi held close to 11% of Israel Corp shares before today. After the announcement, the latter's shares tumbled while the former noted a modest gain.
The second-largest Israeli bank began selling off its stake in the company earlier this year. In February, the bank sold some 5% of its Israel Corp holdings to institutional investors at 5% under the market price - for a total of NIS 450-500 million.
In March, Leumi announced that it would relinquish its place on the board of Israel Corp, as well as its right to appoint board members, in accordance with a directive from the Bank of Israel. Leumi will also not include Israel Corp's performance on its income statement starting from the fourth quarter - to be published this month. However, it will record the profits from its sale of Israel Corp shares.
Israel Corp had announced in December 2014 that its shareholders approved a split, by a 99% majority, in which a spin-off firm called Kenon Holdings received its stakes in Tower Semiconductors, IC Power, IC Green Energy, Qoros, and Zim, among others.