Discount Bank Seeks to Cancel Sale of Cal Credit Card Company

Discount Bank is reportedly on the verge of canceling its NIS 4 billion deal to sell its controlling stake in the credit card company Cal to the Horesh-Harel group, citing conditions imposed by the Competition Authority that make the transaction unfeasible. The bank has appealed to the Bank of Israel governor and the Ministries of Finance and Justice to revoke the regulatory requirement for the sale.

The Competition Authority's conditions include appointing its own supervisor to Cal's board and prohibiting the buyer, Union (Horesh's holding company), from appointing directors. These restrictions stem from Union's stake in Super-Pharm, whose pharmacy chain competes with Shufersal. The authority's stipulations would prevent Horesh from effectively controlling Cal, even after acquiring it.

Discount Bank, managed by Avi Levi, is obligated to sell its 72% stake in Cal by May 2027 due to banking reforms. The bank argues in its letter that if the deal isn't approved under reasonable terms, and given the Competition Authority's hurdles, finding an alternative buyer within the remaining timeframe is highly unlikely. The bank also noted that International Bank, which holds the remaining 28% of Cal, opposes a potential IPO, which would prevent Cal from operating as a "slim bank."

Discount Bank contends that the state is forcing it to sell while the Competition Authority creates impossible conditions for buyers, potentially harming both the banking reforms and the bank itself. The bank believes that canceling the sale order is the only way to prevent significant damage, arguing that the failure of this deal would undermine the goals of the Strum law and the small banks reform, which aim to increase competition.