Discount selling Jerusalem, Tel Aviv, Haifa branches

Lilach Asher-Topilsky
Lilach Asher-Topilsky

Discount Bank has already posted a NIS 60 million first half capital gain on its real estate sales so far this year.

Israel Discount Bank (TASE: DSCT) is selling five properties for NIS 100 million. Sources inform "Globes" that after selling properties separately over the past two years, the bank has now initiated the simultaneous sale of several of its properties in Tel Aviv, Jerusalem, Haifa, and Herzliya, which it plans to complete within six weeks. The most valuable property being sold is 70% of an office building on Lilienblum Street in Tel Aviv, in which part of the bank's headquarters are located, but which is slated for removal by the end of the year. The value of the property is estimated in the tens of millions of shekels, due to its size and location.

Another property marked for sale is the bank's recently closed branch on Yehuda Hamaccabi Street. While it is relatively small, the location is very expensive. Another branch that has been closed and put up for sale is the Bayit VeGan branch in Jerusalem. The bank is also selling a property on Sokolov Street in Herzliya, whose area has been reduced. Also slated for sale is a large property in Haifa, Discount Bank's main branch in the city, consisting of two buildings that were united into one. The bank's northern district administration was formerly located in this branch, before being moved to Nesher.

Nice capital gains

Discount Bank managed by CEO Lilach Asher-Topilsky, has an especially low efficiency ratio; its expenses account for 70% of its revenue. Since become CEO 30 months ago, Asher-Topilsky has instituted a series of measures aimed at improving this situation. The most important of these was a personnel cut; since she entered the bank, its personnel has been reduced by 1,000, and she recently announced another streamlining plan to reduce staff by a further 1,000 workers in the next five years. By the end of the year, the bank plans to put into effect an early retirement plan for 300 workers.

An equally important part of the bank's streamlining, however, is reducing its real estate. Deputy CEO and Human Resources and Assets Division head Yafit Gheriani is leading the streamlining plan and head of properties and construction division Assaf Eldar is leading the sale of the properties. Discount Bank is in the process of selling real estate space and cutting back. In the first half of the year alone, the bank posted a NIS 60 million after-tax capital gain on the sale of properties. The bank has posted many capital gains on the sale of its properties, since the value of the properties is often listed in its books at their historic value. Beyond the one-time profit, however, reduction of space facilitates cuts in other expenses, especially municipal property tax.

The bank's main real estate venture is the construction of its headquarters in Rishon Lezion, to which its management and computer facilities are set to be moved in five years. In June, the bank signed a contract with the Rishon Lezion municipality for the purchase of 21 dunam (5.25 acres) on the Elef site for NIS 105 million. The bank will transfer various units to Rishon Lezion, including its Mercantile Discount Bank and ICC-Cal subsidiaries. This measure is also projected to reduce the bank's expenses, since the space occupied by the various units will be smaller than the space they currently occupy, and the bank will also reduce its municipal property tax expenses, because these taxes are lower in Rishon Lezion than in Tel Aviv, where the bank's headquarters are currently located.

Published by Globes [online], Israel business news - www.globes-online.com - on September 25, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Lilach Asher-Topilsky
Lilach Asher-Topilsky
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