CAL Between a One-Off Hole and a Capital Event: What Could Really Reach International Bank and FIBI
CAL cut the bank's 2025 profit contribution through the VAT ruling and a phantom-liability revaluation, but if the sale closes International Bank could record up to NIS 132 million of net gain plus up to NIS 52 million later. The real issue is how much of that value is clean, how much is contingent, and how much can actually travel up to FIBI.
The main article argued that value at FIBI is mostly trapped in the holding-company layer. This follow-up isolates the CAL thread, because this is where 2025 created what looks like a one-off hole, while the same transaction could turn into a capital event in 2026. The real question is not whether the headline is positive or negative. The question is how much of these numbers is actually clean, how much is contingent, and how much can move from CAL to International Bank, then to FIBI, and only then to shareholders.
A quick read can go wrong in both directions. It can look at the drop in CAL's contribution and conclude that a recurring earnings engine has been impaired. Or it can look at the up to NIS 132 million and up to NIS 52 million figures and treat them as cash already on the way up. Neither read is complete. 2025 was hit mainly by two unusual items, but at least one of them, the VAT ruling, is still not fully closed. On the positive side, part of the upside is pushed out to 2027 and 2028, and another part has already passed through 2025 earnings via a liability remeasurement.
What actually fell in 2025
International Bank's share of CAL profits, before tax, fell to NIS 33.4 million in 2025 from NIS 87.9 million in 2024. That is a 62% drop, and at first glance it can look like a sharp weakening in the associate. But the breakdown tells a different story. The bank itself says CAL's 2025 results were mainly affected by two one-off items: a NIS 137 million expense, net of tax, related to the VAT assessments ruling, and another NIS 75 million expense, net of tax, from a revaluation of a phantom option granted to El Al.
That means the 2025 hole is not a simple reading of operating weakness. It was built by a combination of litigation, accounting, and deal mechanics. Anyone who looks only at the NIS 33.4 million line may conclude that CAL permanently lost a profit engine. That is too early. But anyone who assumes everything is already behind us misses something important as well.
The VAT ruling still does not look like a clean, closed item. CAL says it cannot yet estimate with certainty all of the accounting, economic, and other implications of the judgment, and it estimates the exposure for which no provision was recorded at about NIS 210 million. So the VAT item is not only a hole that has already been booked. It is also an open tail of uncertainty.
The phantom item also deserves a more careful read. This is not a normal operating expense. It is a liability revaluation that is based, among other things, on the agreement to sell Discount's CAL stake. In other words, the same transaction that could later produce a capital gain for International Bank has already pushed 2025 earnings lower. That matters because it blocks a simplistic reading in which there is a clean one-off negative on one side and a clean upside event on the other.
The sale can create a capital event, but not all at once
On September 19, 2025 Discount signed an agreement with Union Investments and Development and Harel to sell all of its CAL holdings. Under that agreement, total consideration could reach about NIS 2.873 billion, including about NIS 2.694 billion as immediate consideration at closing, plus a contingent component of up to about NIS 180 million to be paid over two years, for 2027 and 2028, subject to CAL's business performance.
International Bank received tag-along rights on September 21, 2025 and exercised them on November 19, 2025. That means its share of the transaction reflects its equity stake in CAL, 28.17% under the allocation set in the agreement. On March 9, 2026 Discount extended the long-stop date to April 19, 2026. Beyond that, the parties can extend the agreement by another three and a half months, and Discount can then add another 90 days. If all extensions are used, the deadline would move to November 1, 2026.
The numbers that matter for FIBI and International Bank sit at the bank layer. If the transaction closes, the bank expects to record a net gain, after tax, of up to about NIS 132 million based on CAL's carrying value as of December 31, 2025. Beyond that, it expects an additional future net gain, after tax, of up to about NIS 52 million, depending on the contingent consideration. But even here, it is worth stopping before turning the headline into cash.
First, the NIS 132 million is not a fixed amount in a safe. The immediate consideration is adjusted for dividends and certain transaction expenses, and the bank itself says the gain will be updated for its ongoing share of CAL profits until the quarter near completion. This is a reference point based on the December 31, 2025 picture, not a final cheque.
Second, the NIS 52 million is not immediate upside to capital. It is built on contingent consideration that depends on CAL's business performance in 2027 and 2028. So this upside is exposed not only to closing risk, but also to future execution risk.
Third, the contingent consideration is already affecting both sides of the equation. The revaluation of CAL's phantom liability is based on the immediate and contingent consideration in full. CAL also says that if Discount does not become entitled to all or part of the contingent consideration, that liability would fall by up to NIS 16 million, net of tax. So the contingent consideration is not just a positive option floating above the deal. It has already entered the accounts through the liability side.
How much can really reach International Bank and FIBI
To understand what is actually accessible, the analysis has to move layer by layer. International Bank owns CAL. FIBI owns 48.34% of International Bank. So even if the deal closes in full, there is still a difference between gain recorded at the bank and value that truly rises to the holding company.
The last two bars are already an analytical calculation rather than a reported number: applying FIBI's 48.34% stake in the bank to the bank's two potential gain components gives a look-through exposure of about NIS 63.8 million on the immediate component and about NIS 25.1 million on the contingent component. Together that is about NIS 88.9 million. It is a respectable amount, but it is still far from making CAL alone a thesis-changing engine for FIBI.
| Layer | What is visible | How much | What blocks it from becoming clean cash |
|---|---|---|---|
| CAL in 2025 | Main one-off charges | NIS 137 million from VAT and NIS 75 million from phantom, net of tax | The VAT ruling is still open, and the phantom already reflects sale assumptions |
| International Bank if the deal closes | Possible capital gain | Up to NIS 132 million net plus up to NIS 52 million later | Closing risk, price adjustments, and dependence on CAL's 2027-2028 performance |
| FIBI on a look-through basis | Economic share of the bank event | About NIS 63.8 million immediate plus about NIS 25.1 million contingent | This is economic exposure through the bank, not cash contractually committed to move immediately to the parent |
| FIBI shareholders | No automatic amount | None | In March 2026 FIBI chose not to distribute its roughly NIS 247.5 million share of the dividend approved by the bank |
That is the real test. FIBI itself says it has no external restrictions on its ability to distribute dividends, and its distributable profits stood at NIS 6.443 billion at year-end 2025. And yet, after the bank approved total dividends of about NIS 522 million on March 9, 2026, with FIBI's share amounting to about NIS 247.5 million, FIBI's board decided not to distribute that amount to its own shareholders at this stage. That is the number that should stay in view when reading the CAL deal. Even when value already reaches International Bank, and even when it can already rise to FIBI, it still does not automatically pass through to public shareholders.
It is also worth remembering that the bank itself does not distribute capital on autopilot. Its payout policy is up to 50% of annual net profit, subject to capital ratios, law, and board discretion, and the bank stressed that any additional distribution remains subject to banking-supervision limits. So even if the CAL deal closes and improves the capital picture, the path from an accounting gain at the bank to accessible cash at FIBI still runs through regulatory and board filters.
Bottom line
CAL created a real one-off hole in 2025, but it was not a clean operating hole. It was built from a VAT judgment that still leaves an open tail and a liability revaluation that already leaned on the sale agreement. By the same logic, 2026 does not automatically guarantee a clean capital event either. There is real potential for up to NIS 132 million of gain at International Bank and another up to NIS 52 million later, but it remains subject to closing, future performance, and the movement of capital up the chain.
So the right reading is not that CAL will simply "repair" 2025 if the sale closes. The better reading is that CAL can replace a one-off hit with a partial, staged, and filtered capital event. For International Bank that is a secondary but positive capital event. For FIBI it is one more test of value accessibility: even if the event happens, the decisive question remains who actually receives the cash, when, and on what terms.
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