Regulation in Israel, including at the Bank of Israel, is still an insurmountable obstacle for some foreign investors, at least according to accountant Avi Berger, a managing partner at Kesselman & Kesselman PWC. Kesselman represents Cerberus-Gabriel, the company that won the Bank Leumi privatization tender.

"There are bureaucratic hassles in Israel," Berger said on Monday during a discussion at the College of Management. "And Cerberus executives said that the regulation here is stiffer than the accepted norm in the rest of the world."

Berger added that another issue that deters foreign investors and diverts their investments to other countries is the tax policy in Israel.

"Investors take this into consideration when examining investments here," Berger explained. "The first question asked by Berkshire Hathaway in the Iscar deal concerned their tax status before and after the deal. If an investor can buy the same technology in an environment in which taxation rates are significantly lower than here, he will do so."