Discount Bank Seeks to Cancel Cal Credit Card Sale Amid Regulatory Hurdles

Discount Bank has formally requested the Bank of Israel, the Ministry of Finance, and the Ministry of Justice to cancel its obligation to sell its holdings in the credit card company Cal. The move comes as the Competition Authority has imposed stringent conditions on the sale of Cal to the Horesh-Harel group, which Discount Bank agreed to nearly a year ago.

These conditions include appointing a supervisor from the Competition Authority to Cal's board and restricting the appointment of directors from Union, the controlling company of the Horesh group. Discount Bank, which owns 72% of Cal, fears these stipulations will make the current deal, valued at approximately 3.75 billion shekels and potentially rising to 4 billion shekels, unfeasible.

A key concern for the Competition Authority involves potential conflicts of interest due to Union's stake in Super-Pharm and Cal's operation of Shufersal's Be pharmacy chain's loyalty program. The authority is wary of sensitive customer purchasing data access. The Competition Authority has extended its decision deadline multiple times, adding to the uncertainty.

Discount Bank argues that the imposed conditions, particularly the prohibition on Union directors, create significant difficulties. They also contend that the tight timeline makes finding an alternative buyer extremely challenging if the current deal collapses. The bank is mandated by banking reforms to divest its Cal shares by May 2027, and they believe securing a new deal within the remaining timeframe will be difficult.

An alternative of publicly listing Cal also faces obstacles, reportedly due to opposition from the International Bank, which holds 28% of Cal's shares. Discount Bank is urging the government to reconsider the divestment mandate, arguing that regulatory conditions are hindering the sale process.