Banks Lose Out Provident Fund Share; Leumi Suffers Most

Bank Leumi has lost a significant share of the provident fund market this year, according to Finance Ministry data. The data, presented at a conference on provident funds last week, showed that all the banks lost market share to the private brokerages this year.

But Leumi's loss was by far the highest: Thus far, customers have withdrawn a net NIS 637 million from the bank's provident funds this year. This represents 60 percent of the total net withdrawals suffered by the banking system and more than 2 percent of Leumi's provident fund assets.

Hapoalim, by contrast, suffered net withdrawals of only NIS 65 million from its funds, or 0.1 percent of its funds' total assets. Israel Discount Bank lost NIS 193 million (1 percent); First International Bank lost NIS 113 million (1.6 percent); and United Mizrahi Bank lost NIS 81 million (0.9 percent).

Shmuel Zelutnick, general manager of Leumi's provident funds, attributed the bulk of this year's hemorrhage - some NIS 400 million - to employees of the bank who withdrew their money from the funds upon retiring, having saved for retirement in a provident fund rather than a pension fund.

This is consistent with the treasury data, which showed that only a minority of the more than NIS 1 billion withdrawn from the banks' provident funds found its way to provident funds managed by private brokerages. The brokerage funds grew by only NIS 340 million this year.

Leumi has also suffered massive withdrawals from its mutual funds this year. Those withdrawals were apparently affected by a Securities Authority investigation into the huge deposits made into these funds in previous years. It is not known whether this probe also played a role in Leumi's provident fund losses.