Banking in Israel

Banking in Israel

Banking in Israel has its roots in the Zionist movement in the beginning of the 20th century prior to the establishment of the State of Israel in 1948. The World Zionist Organization established the Anglo-Palestine Bank in 1903 (which later was renamed to Bank Leumi).The two largest banks control over 60% of the banking activity and the top five over 90%.

Most of the banks were nationalized when their stocks collapsed in the 1983 bank stock crisis. Since then the government has sold much of its bank stock holdings, but still remains a large stock holder in many of the now privately held banks. The government sold Bank Hapoalim in 1996 and HaMizrachi in 1998. The government also sold a major part of its stock in Discount bank in 2006, and of Leumi in 2005.

Israel's five largest banks [http://www.bankisrael.gov.il/deptdata/pikuah/skira05/ch-aa_e.pdf Israel's Banking System - Annual Survey 2005]

Bank mergers

There has been limited merger activity within the Israeli banking system. Mergers have mostly been limited to the merger of mortgage banks with the leading banks in their banking groups and some small banks have been bought by larger banks to take advantage of economies of scale.

upervision and regulation

The Bank of Israel supervises Israeli banks via the Supervisor of Banks.The tasks and authority of the Supervisor of Banks are based on several laws: [http://www.bankisrael.gov.il/abeng/1-9eng.htm Bank of Israel - Banking Supervision]
* The Banking Ordinance, 1941, a Mandatory ordinance which has been amended and updated over the years;
* The Banking (Licensing) Law, 1981;
* The Banking (Service to Customers) Law, 1981;
* The Checks Without Cover Law, 1981.

Notes


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