Israel Discount Bank to acquire 10% equity in Kardan Financial Services through capital increase of EUR 50 million

Total capital of EUR 275 million raised, EUR 50 million in equity and EUR 225 million in debt

Amsterdam, 25 September 2007 – Following the press release dated 10 September 2007, international investment company Kardan N.V. (Kardan) announces that it's Supervisory Board and the Board of Directors of Israel Discount Bank Ltd. (Discount Bank) have approved signing a term sheet for an equity investment by Discount Bank of 10% in Kardan Financial Services B.V. (KFS) through a capital increase of EUR 50 million. In addition, Discount Bank will provide KFS with a credit facility of EUR 225 million. The EUR 50 million consideration for the shares reflects a post-transaction valuation of KFS of EUR 500 million (approximately USD 700 Million). Discount Bank will have the option to increase its holding to 11% until the closing.

Discount Bank will provide KFS with various credit facilities totalling EUR 175 million with maturities ranging from 6 to 11 years for which KFS will provide certain pledges and will maintain certain commitments. KFS will also receive an additional facility of EUR 50 million maturing in 11 years against a guarantee to be provided by Kardan.

This transaction marks a significant increase in value of the financial services activities of the group. A third party transaction last year valued KFS at EUR 210 million while this transaction values KFS at EUR 500 million (post transaction and after a capital increase by Kardan of EUR 20 million). This value increase demonstrates that Kardan has created a better balance between its real estate and financial operations.

Kardan is currently evaluating the impact of signing the term sheet and the completion of the transaction on its financial statements.

The completion of the transaction is subject to certain conditions precedent, including the completion of due diligence and the signing of final agreements. Discount Bank will have customary minority rights and the right to nominate up to 20% of the Supervisory Board members of KFS.

KFS intends to primarily use the funds to further develop its activities, capitalizing on the strong growth opportunities in the financial services sector in the CEE region. Part of the funds will also be used to refinance certain loans. 

Israel Discount Bank is the third largest bank and a leading financial group in Israel. In Israel, the Discount Bank Group is comprised of commercial banks and financial services companies active in credit cards, investment banking, portfolio management, trustee services and leasing. Discount Bank operates internationally through a network of subsidiaries, branches and representative offices in North America, Europe and Latin America, with a focus primarily on private banking and commercial finance. As of 31 December 2006, total assets aggregated to $38.5 billion. 

Kardan Financial Services (KFS) is the holding company of TBIF and TBIH. Kardan holds a direct stake of 90% in KFS, which in turn holds 89.5% and 40% in TBIF and TBIH respectively. TBIF is a leading retail financial services provider (banking, leasing, consumer finance, mortgages and asset management) active in Bulgaria, Romania, Russia and Ukraine. TBIH is a leading provider of insurance and pension services in several CEE and CIS countries. TBIH is jointly controlled by Kardan and Wiener Städtische Versicherung AG Vienna Insurance Group.

Kardan is an international investment company with a focus on three sectors: Real Estate, Financial Services and Infrastructure. Kardan is primarily active in Central and Eastern Europe, where it conducts most of its activities. Kardan holds controlling interests in its main businesses and is actively involved in the definition and implementation of their strategy. Total assets per December 31, 2006 amounted to EUR 2.2 billion, with revenues of EUR 588 million. The number of employees engaged by the group is approximately 7,980 as of December 31, 2006. Kardan is listed on Euronext Amsterdam and the Tel-Aviv Stock Exchange.

For further information please contact:

Citigate First Financial                            phone +31 (0)20 575 40 10

Floor van Maaren                                   mobile +31(0)6 29 59 77 46

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