Citibank Files SEC Registration for Mizrahi-Tefahot Bank ADRs
Citibank has filed with the SEC to register up to 50 million unsponsored ADRs for Mizrahi-Tefahot Bank. The move enables U.S. investors to trade the Israeli bank's shares in dollars on OTC markets, expanding its investor base.
Citibank has filed registration documents with the U.S. Securities and Exchange Commission (SEC) to issue American Depositary Receipts (ADRs) for shares of Mizrahi-Tefahot Bank. This move allows U.S. investors to trade the Israeli bank's shares in dollars during U.S. trading hours without needing to open a direct account on the Tel Aviv Stock Exchange.
According to the Form F-6 filing submitted last Thursday, Citi is registering up to 50 million ADR units, with each certificate representing one-fifth of an ordinary Mizrahi-Tefahot share. The registration went into effect immediately.
Citi initiated the step independently as the depositary bank without requiring prior approval from the Israeli institution. Mizrahi-Tefahot did not initiate the process, but raised no objections and confirmed the details of the arrangement.
Structure of Un-sponsored ADRs
In the U.S. market, this structure is known as an unsponsored ADR. SEC rules permit a depositary bank to establish such a program for a foreign company's stock provided the firm publishes required home-market disclosures in English on its corporate website. Citi noted that Mizrahi-Tefahot complies with this requirement by directing investors to its English-language portal.
In practice, Citi acquires Mizrahi-Tefahot shares on the Tel Aviv Stock Exchange, deposits them with a custodian, and issues corresponding certificates traded in the United States. These instruments typically trade over-the-counter (OTC) rather than on major exchanges like the NYSE or Nasdaq, and the bank itself is not obligated to report directly to the SEC.
Expanding Investor Access
For Mizrahi-Tefahot, the advantage lies in broadening its investor base. Many U.S. private and institutional investors face restrictions preventing them from trading directly in Tel Aviv. The ADR mechanism removes this barrier, clearing through U.S. settlement systems like any domestic equity.
However, in an unsponsored ADR, fees are borne by the certificate holders rather than the issuing company, and dividends are converted to dollars by the depositary bank. Furthermore, trading volumes for such instruments tend to be modest during their initial stages.
With this registration, Mizrahi-Tefahot joins Bank Hapoalim, whose shares have traded in the U.S. for years via a sponsored ADR program, also on the OTC market. The key distinction is that Citi's initiative for Mizrahi-Tefahot came directly from the depositary bank rather than the issuer.
Opening the Door to Wall Street
Citi's move arrives roughly three months after local media reports revealed that the Supervisor of Banks distributed a draft circular enabling banks to publish financial statements under U.S. GAAP standards. Until now, Israeli banks reported under specific local regulatory guidelines.
This potential transition could pave the way for full Wall Street listings on major exchanges, requiring SEC reporting in formats familiar to U.S. investors. Market analysts believe such measures could increase liquidity, attract foreign capital, and support valuations for banks choosing this path.
Mizrahi-Tefahot, valued at approximately 62 billion shekels, becomes the second Israeli bank whose shares are accessible to U.S. investors through depositary certificates.
