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August 6, 2018

Mizrahi Bank to appeal Union Bank merger ruling

Israel’s Mizrahi Bank will appeal against the anti-trust authority’s attempt to block its merger with another Israeli lender Union Bank (locally known as Bank Igud).

In November last year, Mizrahi-Tefahot signed an agreement to acquire 75% stake in its rival Bank Igud from Yeshayahu Landau and Shlomo Eliyahu Holdings, in an all-share transaction worth NIS1.4bn ($400m).

However, the Israel Antitrust Authority objected to the deal in May 2018 citing competition concerns.

The anti-trust authority said that the domestic banking sector is highly concentrated with multiple problems with ‘extremely high barriers to entry’ being one of them.

Currently, there are six banking groups in the country offering checking account services along with other ancillary banking services.

Following an evaluation, the authority concluded that “the incentives and the competitive actions of Bank Igud differ from those of the other five banking groups”.

The proposed Mizrahi, Union Bank merger is expected to precipitate a price rise in the sector as well as discourage the operating lenders to offer competitive services to the customers.

Bank Igud employees also expressed reservations over the acquisition. However, the deal was supported by the country’s banking regulator Bank of Israel.

With more than 30 branches across Israel, Bank Igud employs more than 1,200 staff.

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