Follow-up to FIBI: Cal is no longer only a capital event
The Cal sale can still generate an after-tax net gain of up to about NIS 113 million for First International Bank, plus up to NIS 52 million in future contingent gain, but the first quarter added three frictions: regulatory delay, the El Al club exit, and new VAT assessments. For FIBI, the test is no longer only whether the deal closes, but how much of the value remains clean and accessible after 2026.
The previous Deep TASE analysis of Cal framed the sale as a possible capital event, but the first quarter of 2026 makes it harder to read it that way alone. First International Bank may still record an after-tax net gain of up to about NIS 113 million, plus up to NIS 52 million of future gain, but both numbers sit on top of a deal that still needs approvals and an asset whose business and legal picture has become heavier. The El Al frequent-flyer club exercised its early exit right at the end of 2026, and club customers hold about 381,000 active cards, about 9.3% of Cal active cards, with a very material share of Diners activity. At the same time, new VAT assessments for 2023-2025 reached NIS 220 million, or NIS 251 million including interest and linkage, and Cal estimates another NIS 221 million of unprovided exposure. The current read is therefore sharper: Cal can still release capital, but it is no longer a clean asset-sale story. For FIBI, a gain inside the bank is no longer enough. The value must still pass through approvals, closing, Cal's 2027-2028 earnings quality, tax, and the willingness to move capital up the chain.
The Bank Gain Is Only The Starting Point
Cal remains a material asset for First International Bank, but the quarter reduces the room to focus on the headline gain alone. The bank owns 28.2% of Cal's equity and 21.0% of voting rights, and carries the investment at NIS 896 million. Its pre-tax share of Cal profit fell in the first quarter to NIS 20.8 million, compared with NIS 24.6 million in the parallel quarter. That is not a dramatic event by itself, but it matters because the contingent consideration is not only a closing question. It also depends on Cal's business performance in 2027 and 2028.
If the sale closes, the bank expects to record an after-tax net gain of up to about NIS 113 million, plus up to NIS 52 million of future after-tax gain linked to contingent consideration. Through FIBI's roughly 48.35% stake in the bank, that is about NIS 54.6 million from the immediate component and about NIS 25.1 million from the contingent component before any distribution decision. Those are not trivial sums, but they do not change FIBI's value-access story by themselves. They need to move from an accounting gain inside the bank to capital that can be pushed upward, and that path still depends on closing the deal and on capital policy at both the bank and the holding company.
The regulatory delay matters because it turns the sale from a relatively near event into a more open process. The buyers have applied for permits from the Supervisor of Banks and for Competition Authority approval, and the Competition Authority has already extended its merger review several times: first to 31 March 2026, then to 30 April 2026, then to 14 May 2026, with willingness to extend again to 28 May 2026 if needed. If all contractual extensions are used, the final completion deadline can reach 1 November 2026. The NIS 113 million figure is therefore not yet cash and not yet accessible excess capital. It is a possible outcome of a deal that still has to pass approvals, price adjustments, indemnity arrangements, and Cal's results until near closing.
| Cal Layer | Current Number | Meaning For FIBI |
|---|---|---|
| Expected after-tax gain at the bank if the deal closes | Up to about NIS 113 million | About NIS 54.6 million look-through before distribution |
| Future contingent gain at the bank | Up to about NIS 52 million | About NIS 25.1 million look-through, dependent on 2027-2028 results |
| Active El Al club cards | About 381,000, about 9.3% of Cal cards | Business risk in the same years that drive contingent consideration |
| Cal unprovided VAT exposure | About NIS 221 million | A tax tail that can reduce value quality even if the deal closes |
The El Al Exit Hits A Pocket That Is Hard To Price
The 9.3% card count is not the whole story. The agreement with El Al was signed in 2018, became effective in September 2019 and was due to run for ten years, with a mutual exit right at the end of 2026. On 26 March 2026, the frequent-flyer club notified Cal that it would exercise the early exit right on 31 December 2026, and on the same date El Al reported that it had signed a term sheet with another company to issue and operate credit cards for club customers.
The more hidden issue is Diners. Cal exclusively markets and operates Diners cards in Israel, and the El Al club cards' share of Diners activity is described as very material. The exit is therefore not just a loss of part of the card base. It may affect a pocket of activity where Cal had a more differentiated relationship, and one that is harder to replace quickly without a strong alternative customer proposition.
Cal is already trying to defend that ground. It says it is working on an alternative value proposition for club customers, including through partnerships, while a legal dispute with El Al and the club is ongoing. Cal sought an injunction and interim relief, some requested remedies were granted and some were rejected, and the parties are conducting mediation and arbitration. At this stage, Cal itself has difficulty estimating the direct and indirect effects of the early termination on future profitability. That is not a reason to write off the sale value, but it is a reason to treat the contingent consideration carefully: 2027 and 2028 are exactly the years in which the club exit should begin to show in Cal's results.
VAT Makes The Deal Less Clean
Cal's legal risk is not just a routine claims list. Reasonably possible exposure from claims against Cal is about NIS 228 million. Alongside that sits the VAT story, which has already hit Cal and is still not closed. After the August 2025 judgment, Cal recorded an additional NIS 178 million provision in the third quarter of 2025, but it still cannot estimate with certainty all the accounting, economic and other implications of the judgment.
The new March 2026 assessments sharpen the problem. The VAT manager issued assessments to Cal for 2023-2025 totaling NIS 220 million, or NIS 251 million including interest and linkage. Cal intends to object, and notes that the assessments include components for which the court ruled no charge should apply. There was no material change in the existing provision or in total exposure following receipt of the assessments, but that is exactly the point: the exposure did not disappear, it remains outside the current provision. Cal estimates unprovided exposure of about NIS 221 million.
On the bank's 28.2% equity share in Cal, a NIS 221 million exposure equals about NIS 62 million before tax and accounting layers, or about NIS 30 million through FIBI's look-through stake in the bank. This is not a claim that the amount will crystallize, and Cal disputes part of the assessments. The size still matters. Against an expected immediate gain of up to NIS 113 million at the bank, that kind of tax tail can affect indemnity arrangements, how buyers view the asset, and the market's willingness to treat the full capital gain as clean value.
FIBI Needs A Clean Closing And An Upstream Path
Cal can still be positive for First International Bank and FIBI, but it no longer stands alone as an easy answer to the value-access problem. The closing needs to clear competition and banking-supervision approvals, the El Al club exit needs a business or legal answer, and the VAT assessments need to become clearer without creating another material economic hit. Only then will it be possible to judge whether the bank gain can become distributable capital or value accessible through a broader structural move.
The current read is that Cal has shifted from a relatively clean capital option to a test of accessible-value quality. If the deal closes without a material price erosion, and if Cal retains enough activity after the El Al club exit while containing the VAT exposure, the gain of up to NIS 113 million and the contingent component of up to NIS 52 million can still strengthen bank capital. If one of the three frictions drags or worsens, Cal could become another example of the same gap that follows FIBI: value exists in a lower layer, but the route to shareholders is neither short nor certain.
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