Why Israeli Banks Look Better than U.S. Banks

With most of the world trying to cope with a banking sector that is teetering on the brink of disaster, it’s refreshing to see that someone thinks Israeli banks are safe. Barclays came out with a call on the Israeli banking sector, and while they give an ‘underweight’ weighting, at least they don’t forecast anything close to what has befallen U.S. banks. According to Globes:

“[Barclays analyst Joseph] Wolf says that Israeli banks are well capitalized compared with U.S. banks. He notes that “in Israel, the overwhelming majority of the Tier 1 capital is common equity. Hybrid Tier 1 is a relative latecomer to Israel.” He adds, “Given the dearth of opportunities, the Israeli banks have not grown via acquisition and as such have limited to no goodwill being counted as Tier 1 capital.

”Barclays Capital notes that since Israel is not a classic emerging market, growth rates and opportunity in Israel are far more similar to those in the U.S. and Western Europe than they are to emerging markets. The major risk in Israel is geopolitical, but we believe this risk is more a perception than a reality. Despite a “history of violence with its Palestinian and Arab neighbors” the economic policies have remained strongly in place, the currency has been relatively stable and interest rate moves and inflation have mirrored the moves in the US.”

Once again it seems that the Israeli economy is, fundamentally, in a stronger position than most countries.

Comments

[jrtaylorinflag:]

Don't suppose the fact that Israel is the number one recipiant of U.S. foriegn aid to the tune of billions of dollars/year and totaling over 100 billion would have anything to do with that.

Mar 04 09:11 PM

[mplaut:]

More than 90% of the aid now is military aid. Economic aid has been reduced over the past several years and is now very low. Maybe it already disappeared.

Mar 05 05:13 AM

[marksgirl:]

I hope you don't mind my asking but as a possible future emigre to Israel from the US I have been looking at the Israeli banking system to see how similar or otherwise it is to the banking system here. I wanted to know whether they have a debit card system like here, you know where it comes directly out of your account. I also am concerned about the admin fees on a simple checking account. Any comments would be gratefully accepted.

Jul 30 02:01 PM