Cooperation between Israeli banks and financial institutions in the field of mortgages continues. This morning, Bank Leumi (TASE: LUMI) announced that it had sold Menorah Mivtachim Holdings Ltd. (TASE: MORA) a mortgage portfolio for NIS 1.6 billion. Leumi’s overall mortgage portfolio currently totals NIS 70 billion.
Mizrahi Tefahot sells NIS 900m mortgage portfolio
Mizrahi Tefahot sells mortgage risk to Phoenix
The bank announced that the agreement is contingent on several conditions, including regulatory approval, and reported that the completion of the deal is not expected to have a significant effect on financial results.
The sold loans constitute about 80% of one of Leumi’s mortgage portfolios, valued at NIS 2 billion, of which, as mentioned, it has sold a NIS 1.6 billion share. The bank will continue controlling 20% of the portfolio and therefore the accompanying rights and commitments sold to Menorah will be of an equal level (pari passu) to those the bank maintains. Leumi will manage Menorah’s share of the portfolio, for a fee paid to the bank.
Earlier this month, Leumi reported signing an agreement with Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) for the joint provision of mortgages of up to NIS 8 billion during the next two years. Leumi will control at least 50% of the portfolio and continue managing it.
The Leumi-Menorah deal joins several other mortgage-related deals between banks and financial institutions: Bank Hapoalim (TASE: POLI) has recently reported talks with Harel for the sale of an 80% share of a NIS 870 million mortgage portfolio, with the portfolio divided 80%-20% between the financial institution and the bank in this case as well.
Mizrahi Tefahot Bank (TASE:MZTF), the biggest player in the field of mortgages, has also recently made two deals with financial institutions – one with Menorah and one with Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) for overall NIS 1.67 billion.
For financial institutions, the field of mortgages offers a new investment with a fair interest, specifically considering the zero return in the relatively solid markets. As far as the banks are concerned, these deals free up substantial capital. The banks are subject to ever tightening regulatory requirements, while financial institutions, which make investments using planholders’ funds, face no such restrictions and are eager to diversify their investments in a low-interest environment.
Published by Globes [online], Israel business news – www.globes-online.com – on September 28, 2016
Copyright of Globes Publisher Itonut (1983) Ltd. 2016