The International decided to merge the PAGI branches into the International

June 17, 2015   

The International Bank's Board of Directors decided today to instruct the International Bank's management to act to approve and implement the merger of PAGI, a wholly owned subsidiary of the International Bank, into the International Bank.

The effective date of the merger for tax purposes is set for December 31. The merger will be completed upon the satisfaction of all conditions precedent and is subject to regulatory approvals.

 PAGI is a banking subsidiary that is fully owned by the International Bank.

Pagi Bank is a long-standing bank that focuses on the religious-ultra-Orthodox population and leads the Haredi banking market in Israel in all its sectors: in the retail sector, the business sector, and the institutional sector.

Since its establishment in the 1970s, the bank has grown and developed, while showing handsome profits, and today it has 24 branches, extensions, a mortgage counter and counseling centers located in the heart of the Haredi population in Israel. In 2010, the International Bank acquired the minority stake in Pagi, reaching full ownership of 100%, and the merger process is a continuation of this acquisition.

The reasons and benefits of the move are both based on regulatory directives, some of which were received very recently, which limited Pagi's growth options, and on business and economic considerations, primarily streamlining and deepening synergies.

The regulatory changes and the tightening and expansion of various provisions also result in a proliferation of headquarters functions required for each bank, which does not allow for the existence of efficient and lean headquarters as befits a small bank like PAGI. As a result, the potential for growth and profitability of the bank's traditional areas of activity has been harmed in relation to its small size, and its ability to compete in the competitive arena has been harmed.

 The merger will enable strengthening and deepening synergies, savings in administrative resources, savings in operating costs, and savings in duplication of roles, and hence efficiency that will improve the ability of PAGI and the International Group to compete in the competitive arena of the banking system.

 After the merger, led by the bank's CEO,  Yinon Shuika  The full values ​​of the Pagi brand, a leading brand in the sector, will be maintained, and the branches and branch employees will continue to operate in the manner in which they operated prior to the merger, as unique branches rooted in the heart of the religious Haredi population, employing employees who belong to the community with the same work format and in the same manner and nature of activity.

The fact that already today, and in fact always, PAGI operates through the international group computer system will also ensure continuity of service, and that the merger process is expected to proceed without any changes or disruptions for customers.

 CEO of PAGI Yinon Shuika He said: "The merger will make it possible to strengthen and optimally utilize the synergy in the activities of the banks in the group and will allow PAGI branches to continue to deepen their hold and activities in the ultra-Orthodox-religious population.".

""The merger will also allow us to offer customers a wider range of banking services, and will also allow us to deepen and diversify business activities with the customers of the merged banks, and hence to grow the areas of activity.".

""In addition, the move will create an advantage for PAGI customers who will continue to enjoy a unique and differentiated banking value proposition tailored to their needs, and will also benefit from the advantage of a large universal bank, one of the five largest banks in Israel, which will allow for the expansion and diversification of banking services according to their financial needs.".

""PAGI management will allocate significant management resources in order to carry out the move in the optimal manner, and I have no doubt that it will work for the benefit of the group and its customers, thanks to the fact that the PAGI brand will be preserved, and the branches will remain in their current format and differentiated from the International branches, and will continue to provide customers with the unique and tailored service to which they have become accustomed over the years. In addition, they will benefit from the opportunity to diversify and deepen business activity that is made possible by the merger with the International.".