December 24, 2021 

Luigi L. De Ghenghi 

Davis Polk & Wardwell LLP 

450 Lexington Avenue 

New York, New York 10017 

Dear Mr. De Ghenghi: 

This letter responds to your request for an opinion that Bank Leumi LeIsrael B.M. (“BLITA”), Tel Aviv, Israel, would not be deemed to control Valley National 

Bancorp (“Valley”), New York, New York, for purposes of the Bank Holding Company 

Act of 1956 (“BHC Act”), following its acquisition of 14.6 percent of the voting common 

stock of Valley. 

For purposes of the BHC Act, a company has control over another 

company if the first company (i) directly or indirectly or acting through one or more other 

persons owns, controls, or has power to vote 25 percent or more of any class of voting 

securities of the other company; (ii) controls in any manner the election of a majority of 

the directors of the other company; or (iii) directly or indirectly exercises a controlling 

influence over the management or policies of the other company.1

 In addition, the 

Board’s Regulation Y sets forth a set of rebuttable presumptions of control.2

 

BLITA is a foreign bank as defined under section 1(7) of the International 

Banking Act of 19783

 and a bank holding company under the BHC Act. BLITA controls 

Bank Leumi Le-Israel Corporation (“BLLC”), which controls Bank Leumi USA 

(“BLUSA”), New York, New York, a state non-member bank. 

1

 12 U.S.C. § 1841(a)(2); 12 CFR 225.2(e). 

2

 See 12 CFR 225.31(d). 

3

 12 U.S.C. § 3101(7). 
2 

 Valley has agreed to acquire BLITA’s interest in BLLC. As part of the 

proposed transaction, BLITA would acquire 14.6 percent of the voting common stock of 

Valley. 

 Pursuant to an Investor Rights Agreement, BLITA would have certain 

director representation rights. BLITA would have the right to appoint two directors to 

the 13-member boards of directors of each of Valley and Valley National Bank, as well 

as the right to one nonvoting observer on each of the Valley and Valley National Bank 

boards of directors.4

 The boards would be required to consist of a minimum of 

10 members for so long as BLITA has a right to appoint two members to each board and 

a minimum of 5 members for so long as BLITA has a right to appoint one member to 

each board.5

 Additionally, for so long as BLITA has a director representative on the 

Valley and Valley National Bank boards, a BLITA representative would be permitted to 

serve on the Executive Committee, the Nominating and Governance Committee, and the 

Risk Committee of the Valley board, and on the Investment Committee of the Valley 

National Bank board. For so long as a BLITA representative serves on the Valley and 

Valley National Bank boards, each of these committees would consist of at least four 

members. BLITA represents that there would be no employee interlocks between 

BLITA, on the one hand, and Valley or its subsidiaries, on the other. Finally, the 

4

 The non-voting observer would not be considered a “director representative” for 

purposes of the Board’s control rules. See 85 Fed. Reg. 12398, 12418 (Mar. 2, 2020). 

5

 Under the Investor Rights Agreement, BLITA would have the right to two director 

representatives on each board for as long as it owns at least 12.5 percent of the common 

shares of Valley, and one director representative on each board for as long as it owns 5 

percent of the common shares of Valley. 
3 

Investor Rights Agreement would subject BLITA to customary standstill,6 lock-up,7 and 

transfer restrictions8

 and provide BLITA with customary registration rights.9 

 BLITA represents that any business relationships between BLITA and 

Valley following closing of the transaction would be on market terms and de minimis. 

BLITA represents that these business relationships are expected to account for less than 

 percent of each of Valley’s pro forma projected gross annual revenues and expenses 

for 2022. Pursuant to a Business Cooperation Agreement, BLITA and Valley would 

monitor their business relationships to ensure that they would account for (i) less than 

5 percent of Valley’s total annual revenues and expenses for so long as BLITA owns 

10 percent or more of Valley’s voting common stock, and (ii) less than 10 percent of 

Valley’s revenues and expenses for so long as BLITA owns between 5 percent and 

9.9 percent of Valley’s voting common stock. 

BLITA would be restricted for at least two years following consummation 

of the transaction from competing with Valley with respect to the activities of the 

acquired BLLC business. Non-compete and non-solicitation provisions in the Investor 

Rights Agreement would limit BLITA’s ability to compete in certain U.S. markets in 

which Valley operates until at least two years after closing of the transaction. However, 

these provisions would not restrict Valley from expanding geographically and thereby 

competing with BLITA in additional markets. Under these circumstances, it does not 

appear that BLITA would be able to exert a controlling influence over Valley through 

these contractual provisions. Rather, these provisions appear to inure to the benefit of 

Valley. 

Based on BLITA’s representations, upon consummation of the proposed 

transactions, it appears that BLITA would not trigger any of the presumptions of control 

6

 Under the standstill provision, as long as BLITA owns 5 percent or more of Valley’s 

outstanding shares, BLITA generally may not acquire additional voting common stock of 

Valley, solicit proxies, initiate shareholder proposals, or propose any merger, tender 

offer, or other takeover transaction. 

7

 The lock-up restriction generally would prohibit BLITA from transferring more than 

25 percent of its shares of Valley in any of the four years after closing. 

8

 Following the lock-up period and subject to certain exceptions, BLITA would be 

restricted from transferring shares of Valley common stock it acquired in the proposed 

transactions to any holder of 5 percent or more of Valley’s voting power, in a transaction 

in which a single person acquires more than 2 percent of Valley’s voting power, or in an 

amount greater than 20 percent of Valley’s average daily trading volume. 

9

 The registration rights would require Valley to file a shelf registration statement and, at 

the demand of BLITA, register shares that BLITA proposes to sell. 
4 

under the Board’s regulations.10 Based on all the facts of record in this case, and 

specifically conditioned on compliance with all the representations made in connection 

with your request, staff of the Legal Division would not recommend that the Board find 

BLITA to control Valley for purposes of the BHC Act. 

 This opinion is based on all the facts of record, including all the 

representations made by or on behalf of BLITA, whether noted in this letter or otherwise 

contained in correspondence or discussions with the Board or the Federal Reserve Bank 

of New York. Any change in the terms or circumstances of the transaction may result in 

a different opinion and should be reported immediately to Board and Reserve Bank staff. 

If you have any questions about this matter, please contact Brian Phillips, 

Counsel (202-452-3321), or Tara Hofbauer, Legal Assistant/Attorney (202-680-2503), of 

the Board’s Legal Division. 

Sincerely, 

 

10 See 12 CFR 225.32. In addition, although the divestiture presumption does not apply 

in this case, if it were applicable, BLITA still would not trigger the divestiture 

presumption because it would own or control less than 15 percent of the voting common 

stock of Valley. See 12 CFR 225.32(i)(1); see also 85 Fed. Reg. 12398, 12410 (Mar. 2, 

2020) (noting that the divestiture presumption generally would not apply in cases where a 

company sold a subsidiary to a third company and received stock of the third company as 

consideration for the sale).