After a six-year absence from the Israeli financial scene, the Safra family is planning a return, this time as investment advisers to the country’s wealthiest people.
Sources said the Safra Group, which once controlled First International Bank of Israel and the mobile operator Cellcom Israel, is now holding talks with Israeli regulators, including the Bank of Israel. Their target market is Israeli residents who have at least several million shekels in funds to manage.
The return to Israel of the Safras – one of the world’s wealthiest families, with estimated assets of more than $200 million – brings them into a highly competitive field where the growing wealth of individual Israelis has attracted a host of European private banking groups to the country.
The market is crowded by the local operations of Credit Suisse, UBS, Pictet and Julius Bear, which bought the $6 billion Swiss private banking business of Bank Leumi in 2014. In addition, Lombard Odier recently launched operations in Israel and is seeking clients with portfolios of $3 million or more.
In spite of the competition, industry sources said plenty of opportunities remain for private bankers in Israel. With global bond yields at historic lows and stock markets at record highs that make further gains less likely, investors are seeking alternative investments that promise better returns – and private bankers are the ones to advise them.
While foreign banks are entering the Israeli market, Israeli banks are pulling out of private banking overseas after Leumi, Bank Hapoalim and Mizrahi Tefahot Bank all came under investigation by U.S. and New York State authorities for allegedly helping clients evade U.S. taxes. Leumi reached a $400 million settlement in 2014 and the other two banks are in talks with investigators.
In the latest deal, a Safra group bank – J. Safra Sarasin, based in Basel, Switzerland – agreed to buy Hapoalim’s international private banking business in Switzerland and Luxembourg. It’s paying as much as 33 million Swiss francs ($33.2 million) for the business, which manages some 4 billion Swiss francs in assets for Israeli and European clients. The deal is expected to close in the first half of 2018.
Hapoalim Switzerland has offices in Israel, which Safra will be acquiring in the deal and will serve as the basis for its new Israel private banking business.
Another Safra bank, Safra National Bank of New York, agreed last December to buy the private banking assets of Hapoalim in the United States and Latin America. Several months earlier, J. Safra Sarasin acquired Leumi Luxembourg’s private banking business, which managed $1.5 billion in assets.
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