Bank of Israel Governor Prof. Amir Yaron: “At this time, the Bank of Israel’s job is to help achieve the proper balance in the financial system.  It is essential that the banks know how to find the balance between credit policy and the financing needs of the economy—particularly the business sector with an emphasis on small and midsized businesses, which are very significant to the economy’s ability to continue growing, and are based mainly on bank credit.  This will help the economy weather the crisis.  If each bank hardens its credit policy significantly, the economy will grow more slowly, which will retroactively justify the more rigid credit policy taken by the bank, and become a self-fulfilling prophecy.  In contrast, if each bank in the system eases its credit policy even slightly, it will help gety through any cash flow difficulties that may weigh down on businesses with healthy economic activity, and the economy will get through the interim period and grow more rapidly, which will retroactively justify the policies adopted by the banks.”


Supervisor of Banks Dr. Hedva Ber: “In view of the development of the coronavirus and its implications for the economy in Israel and abroad, including on every household and businesses, I would like to emphasize at the outset that the banking system in Israel is strong, and thanks to that, it is prepared to support and assist its customers at this time. The banks are facing this event with surplus capital, high liquidity ratios, and a credit portfolio that is of high quality and diversified among many borrowers.  The Banking Supervision Department is acting on behalf of bank customers in order to ensure the proper supply of banking services as much as possible, under the limitations set out by the government.  I emphasize that there is no concern over a negative impact to essential banking services, and the banking system is prepared to continue providing banking services even if the situation worsens significantly, and there are greater restrictions on movement.  We are now publishing a list of regulatory leniencies that will enable the banks and credit card companies to assist households and businesses in getting through this period with as little negative impact as possible.”


In view of the request by the Bank of Israel Governor and the Supervisor of Banks to the banking system last week, the banks have started offering various services to the public due to the situation:


1.      Leniencies in the repayment of mortgages, with a delay in current payment for a period of a few months;

2.      Loans to small and midsized businesses, that have encountered liquidity problems due to the situation, as part of a fund for small businesses that is being operated by the government, and through independent programs that banks have created for businesses;

3.      Offers of deposits adjusted to the volatility in the markets;

4.      Offers of remote digital services in order to make it easier for customers who do not want or cannot come to branches at this time, particularly the establishment of a designated call center for senior citizens;

5.      Provision of courier services for customers in quarantine.


We emphasize that these services are being offered based on the business and operational considerations of each bank individually.


Additional services to be provided in the coming days due to regulatory leniencies published today by the Banking Supervision Department:


a.       Leniency in the restriction on all-purpose household loans backed by a residence: 


In order to provide a response for households’ credit needs, the banks will be permitted to provide an all-purpose loan backed by a residence (meaning an increase to the customer’s existing mortgage that is not for the purpose of purchasing a home), at an LTV rate of up to 70 percent.  (Prior to the leniency the limitation was an LTV rate of 50 percent.)  The provision of a loan in accordance with this leniency shall be subject to the borrower’s declaration that the deviation from the 50 percent LTV rate is not for the purpose of purchasing an additional residence (an investment home).


b.      Increasing the credit facility for households and businesses:


Banks will be permitted to unilaterally increase a customer’s credit facility (overdraft), under the same conditions as the existing facility, thereby making it easier for customers encountering cash flow difficulties or who may have checks returned due to insufficient funds.  A bank taking such action will present the customer with a document outlining the increase in the credit facility, the new level of the facility, and the interest rate applying to it.


c.       A leniency that will enable the general public to make banking transactions without coming to the branch:


Pursuant to existing directives, a customer can join remote banking services, services without coming to a branch, and services provided through “online banking” only at the customer’s initiative.  In order to enable all customers to conduct banking transactions remotely without needing to come to the branch at this time, banks will be able to offer all customers to join “online banking” remotely, in order to obtain information and to conduct transactions by phone, the bank’s website, and the bank’s mobile application.


d.      The proper supply of cash in automatic teller machines:


In order to continue maintaining the proper supply of cash services to customers through ATMs, the Bank of Israel is temporarily making it possible to change the mix of banknotes in the machines (for instance, to reduce the amount of NIS 20 and NIS 50 banknotes and to increase the quantity of NIS 100 and NIS 200 banknotes), so that each machine will contain the maximal monetary amount and customers will be able to reduce the frequency with which they withdraw cash from ATMs.


e.       Leniencies (in the future) for customers whose checks are returned:


If a civilian emergency is declared (pursuant to Section 90b of the Police Ordinance), the Banking Supervision Department will use its authority to instruct the banks not to restrict accounts or account holders due to checks that have been refused. (The suspension period is limited by law to 90 days.)


f.        Loans to contractors:


With the aim of supporting the continued operation of the real estate industry and assisting contractors in meeting their increasing financing needs, in view of the expectation of a shortage of workers and delays in construction, banks will be able to increase credit to the construction and real estate industry so that total credit (excluding national infrastructure) will increase from a rate of 20 percent to 22 percent of the bank’s total credit portfolio. (The total restriction, including infrastructure, will be 24 percent.)  This leniency will enable the banking system to increase credit to the industry by about NIS 15 billion.


We emphasize that the leniencies are intended to provide the banks with the business flexibility necessary at this time in order to provide services to the public, but credit will be provided by each bank only after a risk assessment is conducted individually on a case-by-case basis.