Discount Bank Asks State to Cancel CAL Sale Amid Competition Hurdle
Israel Discount Bank has petitioned state regulators to cancel its mandated sale of credit card company CAL to the Horesh-Harel group, citing prohibitive conditions imposed by the Competition Authority that threaten the 4 billion shekel deal.
The 4 billion shekel deal to sell credit card company CAL to the Horesh-Harel group faces potential collapse as Israel Discount Bank has appealed to the Governor of the Bank of Israel, the Ministry of Finance, and the Ministry of Justice. Discount Bank requested the cancellation of the regulatory mandate requiring it to divest its holdings in CAL.
The letter was dispatched following strict conditions imposed by the Israel Competition Authority, which include appointing an authority-appointed supervisor to CAL's board of directors and banning Union — the holding company controlled by George Horesh — from appointing its own directors. These restrictions stem from Union's one-third stake in Super-Pharm, a direct competitor to Shufersal's pharmacy chain.
Background and Regulatory Hurdles
Managed by CEO Avi Levi, Discount Bank signed an agreement a year ago to sell CAL to George Horesh and Harel Insurance for 4 billion shekels. The transaction remains subject to several approvals, chief among them the Competition Authority. As previously reported, the authority conditioned approval on terms deemed unacceptable to Horesh, effectively forcing him to acquire control of CAL without the ability to exercise actual governance due to the ban on appointing directors.
Today, the General Director of the Competition Authority extended the deadline for approving the transaction once again. Discount Bank is legally obligated to sell its 72% stake in CAL by May 2027 under the Strum Reform and the small-bank reform framework. In its letter, the bank argues that if the deal fails to materialize under reasonable terms, finding an alternative buyer within the remaining timeframe is virtually impossible.
«Even if we receive a long extension, we will not be able to bring another buyer,» Discount Bank stated, emphasizing that no prospective purchaser could meet a compressed schedule given that approval has stalled for an entire year.
The Deadlock Over Alternatives and IPO
Discount Bank initially favored the bid by Horesh and Harel over Moti Ben-Moshe, whose bid might have cleared regulatory hurdles more smoothly, though the bank contends Ben-Moshe also holds conflicting assets. Addressing the fallback option of a public offering (IPO), the bank noted that First International Bank of Israel (FIBI), which holds the remaining 28% stake in CAL, has expressed informal opposition to an IPO.
FIBI holds veto power over any public offering, and as long as it retains its shares, CAL cannot secure a regulatory permit to operate as a lean bank. Discount Bank argues it is practically blocked from executing any alternative transaction or restructuring strategy.
Consequently, the bank urges government ministries to rescind the divestment order, asserting that state authorities are simultaneously demanding a sale while regulatory bodies impose conditions that render the transaction unviable. Discount Bank warns that failing to complete the current deal damages the banking reforms and harms the bank itself, threatening the foundational goals of the Strum Reform and small-bank legislation designed to foster market competition.
