JERUSALEM, Sept 30 (Reuters) - Israeli Accountant General Shuki Oren is formulating a plan to sell the state's controlling stake in Bank Leumi, most likely through a public offering on the Tel Aviv Stock Exchange.
A Finance Ministry spokesman said Oren is still looking at two options -- selling the 10.4 percent stake through the bourse or finding an investor.
Finance Minister Yuval Steinitz has already instructed Oren to submit a plan to sell the government's stake in Leumi, Israel's largest bank. A proposal is expected by the end of 2009.
"I don't know if he will decide to sell it to someone and then get one owner and he will form control of the bank or do it through the stock exchange and let the market come up with control," the spokesman said.
"But during the year, several attempts to find a buyer all failed so it's likely that it (the privatisation) will be through the stock exchange," he added.
The Finance Ministry has tried to sell the state's controlling stake in Leumi -- which has a market value of 22.2 billion shekels ($5.9 billion) -- since Prime Minister Benjamin Netanyahu was finance minister from 2003-2005.
Private equity firm Cerberus and Gabriel Capital Corp jointly bought a 9.8 percent stake in Leumi in 2005 and received an option to raise the holding to 20 percent, which would have given the group control of the bank.
But the Bank of Israel rejected Cerberus-Gabriel increasing its stake and, earlier in 2009, they sold their holdings in two stages.
The state still holds 11.5 percent of Leumi but 1.1 percent will be allocated to Leumi employees.
The central bank has given its approval for the government to sell its stake through a share offering. It had previously resisted on grounds that it wanted a clear owner of the bank.
That could still happen. Shlomo Eliahu owns 9.59 percent of the bank and he could buy enough shares in an offering to take control of Leumi.
Another 73.7 percent of Leumi is traded on the TASE.
Oren is also planning to sell the state's minority 25 percent holding in Israel Discount Bank, Israel's third-largest lender.
The Bronfman Group owns 26 percent of Discount after buying the stake in 2006. It declined to exercise an option to raise it to 51 percent.
The ministry spokesman said the state's holdings in Discount could also be sold on the bourse, most likely in stages. ($1 = 3.76 shekels) (Reporting by Steven Scheer; Editing by Rupert Winchester)