Banking in Israel
Banking in Israel has its roots in the Zionist movement at 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 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 stockholder in many of the now privately held banks. The government sold Bank Hapoalim in 1996 and Bank Mizrahi (now merged into Bank Mizrahi-Tfahot) in 1998. The government also sold a major part of its stock in Discount Bank in 2006, and of Leumi Bank in 2005.
Israel's five largest banks
|Banking group||Established||Number of
|Bank Leumi group||1902||232||272.8||29.9||29.9||30.2|
|Discount Bank group||1935||195||154.8||17.0||14.2||17.7|
|Mizrahi-Tefahot Bank group||1923||123||86.3||9.5||10.9||9.7|
|First International Bank group||1975||103||71.9||7.9||7.3||8.4|
|Source: Israel's Banking System Bank of Israel|
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.
Supervision 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:
- Banking Supervision Bank of Israel