Israel corporate banking options in 2024

Since 2003, Healy Consultants Group helps multi-national Clients open multi-currency corporate bank accounts in Israel for both local and overseas companies.

Without bank signatory travel, our team will project manage multi-currency corporate bank account opening process, including preparing a quality business plan for our Client’s business.

We recommend our multi-national Clients read this web page to avoid bank surprises later!

• Israel banking problems and solutions

  No	Potential Israel banking problem	Our solution
  1.	There is no formal bank deposit insurance scheme in Israel. If a bank fails, depositors could lose their money. Israeli multi-currency corporate bank account opening is difficult. Local banks request an excessive amount of Know Your Customer due diligence documents, some of which need to be translated into Hebrew.	Healy Consultants Group opens a multi-currency corporate bank account in the USA, EU or Singapore for the Israeli LLC.
  2.	Bank insists that the bank signatory travel to Israel for a one-hour bank interview. The Israel bank requires our Client to appoint a local co-bank signatory.	Healy Consultants Group’s Client travel policy will apply. Our staff will organise the bank meeting in our Israel affiliates’ office and assist our Client during the bank interview(s). Healy Consultants appoints our local attorneys or accountants as temporary co-bank signatories
  3.	Global banks continue to tighten corporate bank account opening procedures, and their internal compliance departments are completing more thorough due diligence of Clients. Consequently, our Clients should expect Israel bank account approval to take up to four weeks. Like most international banks, it is common for Israeli banks to close corporate bank accounts without giving an open, transparent reason to their customers. To close a bank account without giving the bank signatory an opportunity to explain ‘unusual transactions in the corporate bank account’ is an unfair, unreasonable action which places our multi-national Clients’ businesses under stress. As we advance deeper into a global depression, it will become more common for banks to experience financial difficulties. Consequently, multi-national Clients should expect i) small banks to go bankrupt and ii) small to medium-sized banks to be bought over by top-tier banks. The number of banks operating in Israel will shrink, exposing our Clients to financial risk.	If our Client requires a bank account at short notice, we recommend an immediate Israel solution plus already-approved international corporate bank account. We recommend our multi-national Clients open multiple multi-currency corporate bank accounts for their entity. It is unwise to open one corporate bank account and depend on one bank. For each entity, we recommend our multi-national Clients open multiple multi-currency corporate bank accounts across multiple countries. Spread your funds across multiple corporate bank accounts in multiple top-tier banks in multiple different countries. Avoid small banks including PSPs, FSPs and digital banks. Ensure each bank offers customer deposit insurance.

• The Israel banking sector

  Healy Consultants Group summary view:

  Banks in Israel are well run and stable, and are good options for multinational Clients because:

  • The country’s banking and financial system is well regulated. The Central Bank is a prudent and conservative regulator.
  • Banks in Israel are similarly conservative, well capitalised, profitable and resilient. Israeli banks have recorded a positive return on equity every year since 2006, successfully weathering the 2008 financial crisis and 2020 Covid-19 pandemic. Total capital adequacy ratios for banks in Israel are 14.5%, nearly double the legal minimum requirement.
  • Just 5% of total bank assets in Israel are held by banks outside the ‘big 5’. Because the central bank imposes high entry criteria, very few new banks have entered the market in recent years. As a result, the big banks face little competition.
  • Israel is an advanced, high income economy. Banks benefit from a large, stable core customer base. Although Israel has no formal bank scheme to protect bank deposits, in practice depositors face little risk. The government would intervene to prevent a bank collapse.
  • Israel has a good international reputation (for example in terms of corruption). As a result, an Israeli bank account has a good reputation. Your customers and suppliers will feel comfortable receiving funds from, and making transfers to, an Israeli bank account.

  • That said, Israel does suffer bank scandals. In May 2020, Israel’s largest bank was fined US$900 million for helping US customers avoid tax, as well as money laundering. Israeli banks are historically vulnerable to money laundering from i) terrorist organisations, ii) organised crime and iii) public sector corruption.

  • After suffering recession in 2020, Israel’s economy is expected to grow by 6.3% in 2021. The country has one of the world’s most successful vaccination programmes, restrictions are being lifted and the economy is opening up again. Healthy economic growth means healthy demand for loans, mortgages and other wealth management products. This will boost bank revenues.

  • However, if a global recession deepens in 2021, Israel will be vulnerable to i) high unemployment ii) rising public sector debt iii) bankruptcies and iv) a real estate crash. Bad debts will accumulate as borrowers struggle to repay loans. Israeli bank margins are also negatively impacted by low interest rates.
  • Israel is constantly at risk of violence and war. In 2021, the Israel/Palestine conflict flared up again. While Israel’s banking system has been resilient to geopolitical shocks for more than four decades, escalating conflict may make some multinational investors and depositors nervous.
  • Israeli banks are aggressively cutting costs to counter i) low interest rates and ii) competition from non-traditional banks (e g digital banks). Approximately, one in 10 bank branches have been closed since 2015. The move online has been accelerated by Covid-19, and many more bank branches will close and bank jobs will be lost. Cutting costs will help improve bank balance sheets.

  • Standard & Poor’s (S&P) sovereign credit rating for Israel is AA- with a stable outlook. Moody’s is A1 with a stable outlook. Fitch’s rating is A+ with a stable outlook. See more data on Israel here.

• Key information on the Israel banking sector

  • The Bank of Israel licences, regulates and supervises i) 16 local banks ii) four foreign banks and iii) six card companies.
  • Israel’s largest commercial banks include i) First International Bank of Israel (FIBI) ii) Bank Leumi iii) Bank Hapoalim and iv) Mizrahi-Tefahot Bank. Bank Leumi and Bank Hapoalim control 60% of the Israeli market between them.
  • As well as these large, stable and listed domestic banks i) Barclays Bank, ii) Citibank, iii) HSBC and iv) State Bank of India (SBI) are licenced to operate in Israel. We recommend our Clients open multicurrency bank accounts at an international bank with a presence in Israel. Doing so makes international transactions to and from overseas accounts easier, faster and with lower charges.
  • Opening a corporate bank account in Israel is slow. Expect onboarding to take 12 to 14 weeks. Internet banking activation takes a further two weeks. Onboarding is slow because banks in Israel are reluctant to open corporate accounts for companies with complex structures involving multiple foreign beneficial owners. To increase the chances of account opening success, we recommend our Client keep the corporate structure simple. It is not normally necessary for our Client to visit Israel to open the bank account.
  • Both local and foreign banks in Israel offer multi-currency accounts. Most reputable banks have an initial minimum deposit of 100 ILS (US$31). Once the account is open, we advise our Clients maintain at least US$5,000 in the account to avoid bank charges.
  • Israeli banks offer an excellent range of corporate and personal banking products including i) checking and saving accounts, ii) debit and credit cards, iii) fixed-term deposit and iv) wealth management services. Getting credit in Israel is easier than in many countries.
  • There are ATMs across Israel, and most accept foreign debit and credit cards. While the number of physical bank branches across Israel is dwindling, customer service is usually good. Most bank staff can speak Hebrew and English. Bank communications, including online and phone banking, are available in both languages.
  • Contactless payments are becoming more widely accepted in Israel, a trend accelerated by Covid-19. Taxi fares and small payments in grocery stores can often be completed by simply tapping your debit or credit card.
  • Since 2019, Israel is a signatory to the Common Reporting Standard (CRS), a global initiative to clamp down on tax evasion. As a result, banks in Israel share information on accounts and account holders with tax authorities where the company/individual is tax-resident.
  • Similarly, under the Foreign Account Tax Compliance Act (FATCA), banks in Israel report information on US account holders to the US Inland Revenue Service (IRS).

• Foreign exchange obligations in Israel

  There are no foreign exchange controls in Israel. Residents and non-residents can freely repatriate funds to and from the country.

• Healy Consultants Group fees to help open a corporate bank account in Israel

  Healy Consultants Group guarantees Israeli company bank account approval. Our fees for different banking services include:

  Israeli banking task	Our Client travels	US$
  Israel bank account for a foreign company	No	5,950
  Israel bank account for an Israeli company	No	4,950
  Israel personal bank account	No	4,950

Conclusion

Israeli multi-currency corporate bank account opening is easy if you know how. Contact Healy Consultants Group if your firm needs assistance navigating through the different banking solutions.