Bank Leumi (TASE: LUMI) today reported that it had agreed to sell its main branch in Tel Aviv at the intersection of Herzl and Yehuda Halevy Streets to Acro Group and Israel Canada Ltd. (TASE:ISCN) for NIS 277 million. The bank will post a NIS 260 million pre-tax profit on the sale. Bank Leumi will continue to rent the premises for three years, during which it will operate the branch and prepare to move it elsewhere.
Bank Leumi has been transferring activity to digital means for some time, thereby rendering its branches unnecessary. In addition, like all the banks in Israel, Bank Leumi is planning to move branches from the central region to less expensive locations.
The Tel Aviv municipality recently expressed concern about the banks' cost-cutting measures. Tel Aviv Deputy Mayor Arnon Giladi sent Supervisor of Bank Hedva Ber a letter, following the announcement of the accounting benefits she was intending to grant banks cutting their real estate costs and moving their branches away from prime real estate in central Israel, mainly in Tel Aviv.
Yesterday Mizrahi-Tefahot Bank announced that it was in talks to sell its head office in the eight floors of Ramat Gan's Aviv Tower.
27 bank branches have been closed down in Tel Aviv in just the past two years. The total number of these branches has been reduced by 12% in two years (compared with a much smaller percentage decrease nationwide). Tel Aviv currently has 156 bank branches, constituting 13% of all bank branches in Israel.
Controlled by Assaf Tuchmeir and Barak Rosen, each of whom own 33% of the company, Israel Canada finished the first quarter of 2017 with a NIS 5.4 million operating profit on NIS 30.6 million in revenue. The company's equity is NIS 454 million, and it had a negative cash flow of NIS 338 million in the first quarter.
Bank Leumi's main branch, with 7,500 square meters, is located on a 1.6-dunam (0.4-acre) lot. Sources inform "Globes" that the buyers intend to promote a new plan for the site, including the demolition of the current building and the construction of an office and residential tower in its place. An urban building plan for the site with 30,000 square meters of business and residential space has been approved.
Published by Globes [online], Israel Business News - www.globes-online.com - on June 7, 2017
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