A prominent economist from Tel Aviv University’s Joseph Safra Capital Markets and Financial Institutions, said he believes it is unlikely that Israeli banks would face collapse as two banks in the United States have done in recent days.
“It’s hard to imagine an Israeli bank collapsing. Based on the latest figures, Israeli banks are performing well in terms of capital and liquidity,” said Prof. Dan Amiram in an interview with Israel's Ynet radio.
Amiram says capital assets are a crucial parameter that influences bank stability. Banks that have more assets than liabilities are more likely to survive in the long term.
“When a bank faces credit losses – for example, when a client takes out a mortgage but is unable to repay it – the bank’s existing assets may be insufficient to cover its liabilities. While this is possible, it was not the case with SVB and Signature Bank,” Amiram stated.
The Tel Aviv University professor stressed that, unlike American banks, Israeli banks tend to be more conservative, which reduces the risk for economic collapse.
“Although there is no deposit insurance in Israel, Israeli banks maintain a conservative approach and always maintain a high liquidity ratio,” he said.
He also indicated the disadvantage of the relative conservatism of Israeli banks.
“This approach may not always be advantageous, as it can make Israeli banks less attractive to the high-tech and cryptocurrency sectors,” Amiram said.
Despite a recent decline in the value of the Israeli shekel, reportedly due the nation's political uncertainty, some financial experts believe the Israeli currency could emerge as one of the best investments of 2023.
“We have had some increased noise in recent days on the developing political situation in Israel. Our ultimate takeaway is that this is largely noise,” J.P. Morgan financial services firm concluded in recent weeks.
The All Israel News Staff is a team of journalists in Israel.