Text size

In a meeting with Israel Bank Governor Stanley Fischer and Banks Supervisor Rony Hizkiyahu yesterday, the managing directors of the seven largest banks in Israel reported that exposure of commercial banks to the collapse of U.S. investment bank giant Lehman Brothers is limited. The banking system has taken steps to protect itself from the effects of the financial crisis in the U.S., they reassured.

The meeting initiated by the central bank governor was convened after the U.S. investment bank Lehman Brothers filed for bankruptcy protection. Fischer described recent developments in U.S. and world markets, and their implications in Israel. The Bank of Israel, he said, would continue to closely follow developments and the ramifications on the banking system, financial markets and the entire economy.

He also emphasized there could be no assurance that the collapse of Lehman Brothers would be the last collapse of a financial institution in the U.S. Hizkiyahu, who had returned only hours before from a visit to the United States, reported on meetings he held over the past week with U.S. bank regulators, and the lessons relevant to the local banking system.

The directors reported on their bank's limited exposure to Lehman Brothers and on recent steps taken, a cautiously optimistic atmosphere.

Both the governor and the finance minister expressed confidence in the banking system and in its risk management, and Fischer said that the central bank would not hesitate to take necessary action, if developments necessitated.

Following the meeting, Bank Leumi CEO Galia Maor said she was not worried about the stability of the financial system, and Bank Hapoalim CEO Zvi Ziv echoed her words. CEO of First International Bank of Israel Smadar Barber-Tsadik also agreed that her customers have nothing to worry about. Union Bank director Haim Freilichman noted that the crisis is an American one, but that the Israeli banking system and public should be cautious, and avoid irresponsible actions.