ISRAELI BANK AIMS TO BECOME STRATEGIC PARTNER IN HAREL GROUP

Israel Discount Bank has reached an agreement in principle to acquire 20% of Harel Insurance Investments for $73.5m, a price that values the firm at $367.5m. Discount said that it planned to become a strategic partner in Harel, which controls several of Israel’s largest insurance companies. It will purchase the shares from the Hamburger and Manor families. Harel chairman and chief executive Yair Hamburger said that the deal with Discount, which is Israel’s third-largest bank, reflected the need for co-operation between banks and insurance companies in the areas of insurance, capital markets and pension, provident and mutual funds. It follows a trend in the Israeli market of banks teaming up with insurers — previous deals have included Bank Hapoalim’s investment in Clal Insurance Enterprise Holdings and Bank Leumi’s investment in Migdal Insurance Holdings. Israeli banks are not allowed by law to invest more than 20% in any insurance company and banks are not currently permitted to sell insurance services over the counter. Mr Hamburger forecast that “the ban limiting bank services will change in the next three to four years, as there is large support for [such change] locally, including from Bank of Israel governor David Klein. There are also precedents throughout Europe and the US”.