Israel-based Bank Leumi, together with Azrieli Group, has signed an agreement to divest its credit card company Leumi Card to US private equity firm Warburg Pincus for NIS2.5bn ($685m).

Bank Leumi owns 80% stake in the Bank Leumi credit card unit, Leumi Card, and the remaining 20% stake is held by Azrieli Group.

Under the terms of the acquisition, the transaction amount will be paid in three instalments.

Bank Leumi credit card payments

The first instalment is scheduled for the transaction’s completion date, while the second will be paid one year following the completion date and the third after two years from the completion date.

Bank Leumi is also eligible for an additional payment of NIS273m ($74.67m), subject to meeting various terms and conditions that will be included in the operating agreement set to be signed between the bank and Leumi Card.

The additional payment is also subject to Leumi Card’s results outlined in a business model presented to the buyer.

Bank Leumi’s wholly-owned subsidiary Leumi Partners has been granted an option to buy up to 20% in the corporation via which Warburg Pincus shall purchase Leumi Card. The option will come into force after completion of the Leumi Card acquisition.

Bank Leumi president & CEO Rakefet Russak-Aminoach said: “Due to the importance of Leumi Card and its services to customers, we endeavoured to find a reputable buyer with extensive experience in finance and payments, who will be committed to the development and success of Leumi Card in its new independent path.

“Warburg Pincus’s experience will assist Leumi Card in realizing its business strategy and ensure innovative, high-quality and professional service to its customers.”