Investec Clali’s economists: The quality of the banks’ credit portfolios is not a source of concern, due to the activity of the supervisory authorities.
Investec Clali economists assess that there is little chance of a banking system crisis in Israel, similar to the one that hit Turkey, according to an analysis of the Turkish banking crisis.
Investec states that the main cause for bank collapse in the world is problematic credit portfolios. The quality of the banks’ credit portfolios is not a source of concern. Investec’s economists state that the Turkish crisis spread like wildfire, changing from a specific problem of a few banks to a systemic crisis.
Investec banking analyst Terence Klingman believes that Israel’s supervisory authorities have done good work in reducing the concentration, cross-ownerships and mutual loans within Israel’s financial system. “The banks generally complain that the regulations limit their freedom of action, but the general effect of the regulations was expressed in an improvement of the banks’ credit portfolios.
“We estimate that Israel’s banking sector has no special problems remaining,” the economists added. “The size of Israel’s economy and the structure of the holding companies increase the concentration of loans, but the overall system is free of government-encouraged loans or over-large loans between related parties.”
Published by Israel's Business Arena on ý10ý Decemberý 2000