According to Barclays, the possible forced divestment of Leumi's credit card business is already priced into its share.
Barclays has issued a very bullish recommendation for Bank Leumi (TASE: LUMI) today. Barclays sets a price target of NIS 18 for the Israeli bank, representing a 29% premium on its opening price on the Tel Aviv Stock exchange this morning. Barclays gives Bank Leumi an "Outperform" rating.
Barclays issued the recommendation after a meeting with Bank Leumi CEO Rakefet Russak-Aminoach and CFO Ron Fainaro in New York. According to Barclays, Bank Leumi's share has suffered from under-performance since August because of fears of the recommendations of the committee on competition in Israel's banking industry headed by Dror Strum, which is expected to require the large banks to sell their holdings in credit card companies.
As far as Barclays is concerned, the risk is priced into the share price, and in any case the credit card business accounts for only 10% of Bank Leumi's profit.
Barclays also mentions as a positive the understanding of Bank Leumi's management that traditional banking is more and more giving way to digital banking, an area in which Bank Leumi has been active for years.
Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2015
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Rakefet Russak-Aminoach