Israels banks are gearing up to sell of much of their stakes in the Automated Bank Services Limited (Shva), a divestment that could fetch them a combined ILS 400 million. Four of Israels big five banks have stakes in the company and three of them will have to sell substantial portions of them to meet the new law on banking competition that bars them from holding more than 10% of Shva after a four-year deadline expires. The sell-off, which a valuation of Shva puts at ILS 400 million, could be done via an initial public offering of shares for trading on the Tel Aviv Stock Exchange, or in a sale to a single investor.

Alternatively, the banks might offer their excess shares to the credit card issuing companies that the same law mandates they spin off, although they would be limited to 10% stakes themselves. In the case of Shva, its bank shareholders are now in the process of merging Shva's The Bank Clearance Center (Masab). They say there's no reason Masab has to remain a separate operation.

Shva is now waiting for the Antitrust Authority to clear the merger. When that is done, the banks holding will be diluted but three of them will have to sell off a big chunk of their holdings. Bank Leumi le- Israel B.M (Leumi) will have to sell a 28% stake to bring its holding down to 10% while Bank Hapoalim B.M. (TASE:POLI) (Hapoalim) will have to sell 22% and Israel Discount Bank Limited (TASE:DSCT) 11% at a combined value of ILS 400 million.

First International Bank of Israel Ltd (TASE:FTIN) will have just 5.4% of the merger company and Mizrahi Tefahot Bank Ltd. (TASE:MZTF) just 3%.