I guess the celebration of Israel’s 61st birthday last week was superfluous. After all according to BOI head Stanley Fischer, Israel came into existence when he took his position a few years ago. How else do you explain his bizarre statement in the Knesset today, when speaking about the Bank Hapoalim situation.
According to Globes: “Fischer told the committee, “It’s a mistake to discuss this matter. We’re still in the middle of the measures. I can assure you that we would not have embarked on this path without considering everything, every repercussion, in the middle of the greatest financial crisis this country has every known.”
The ‘greatest financial crisis the country has every known’. Huh?
What drivel. What is he talking about? Israel was about to go bankrupt 7 years ago…remember? Remember the days of hyperinflation????
Give me a break. The fact that Fischer was talking up the economy, as it was entering a slowdown is bad enough. To now say this is a great crisis, is both admitting that you have failed, and that you know nothing of Israeli history. Either way it doesn’t look good.
Much like Prez. Obama, who is trying to recreate the country in his own image without any respect to history, Fischer as well has used the same strategy. unforuneately, those that don’t learn from history are the ones that are doomed to repeat it.
In another signal that the Israeli economy is falling further into the abyss, Moody’s has cut the ratings of 4 Israeli banks. Interesting to note that Bank Mizrahi Tefahot did not get cut, as they continue to implement their conservative business model, which has kept them both profitable and out of much of the financial crisis.
According to Globes: “International ratings company Moody’s has cut its ratings for four Israeli banks: Bank Leumi (TASE: LUMI), Bank Hapoalim (LSE: BKHD; TASE: POLI), First International Bank of Israel (TASE: FTIN1;FTIN5), and Israel Discount Bank (TASE: DSCT). Moody’s has downgraded the long-term local currency deposit rating of Bank Leumi to A1 from Aa3. The Baseline Credit Assessment (BCA) was lowered to Baa1 from A3 and the bank financial strength rating (BFSR) was downgraded to C- from C. The bank’s A1 long-term foreign currency deposit rating and Prime-1 short-term deposit ratings were affirmed. The outlook on both the long-term local and foreign currency deposit ratings and on the BCA is negative, while the outlook on BFSR is stable.”
The resons cited for the downgrades were familiar. A slowing economy, bank exposure to construction and tourism which are both in trouble and lower profitability.
Let’s see if PM elect Benjamin Netanyahu, can turn things around quickly so that Israel can get a credit upgrade.
I guess when you bang people over and over on the head, you shouldn’t expect them to be optimistic, and the latest figures show that is exactly what has happened in Israel. Israeli consumer confidence dropped to its lowest level since 2004, and chances are good that the trend will continue.
According to the Jpost.com: “The monthly
Consumer Confidence Index compiled by Bank Hapoalim and TNS, the global marketing information group, dropped in February by 10 points to a level of 111.3 after rising by 7.9 points in January. “Following a surprising increase in January, the index, impacted by the worsening economic climate, last month fell back down below the December level,” Bank Hapoalim economists said in a report Monday. “The decline in the index is consistent with recent data showing that the economy is falling into a recession. “The index showed that the greatest fear of consumers is the situation of the job market; the rate of surveyed who think that there are few available positions reached a high.”
With more and more companies announcing layoffs, and no political leadership, look for consumer confidence to continue to crumble.
As if the Israeli banking system needed more bad news, UBS came out yesterday with a negative report on the nation’s big banks. According to Globes: “The main event of the day was a report by UBS on Israel’s banks. UBS predicts that the banks will stay in the red through 2009 and 2010, and that they will need an aggregate additional capital injection of NIS 22.5 billion by the end of next year. The report sent the bank shares down. Israel Discount Bank (TASE: DSCT) had the sharpest fall of 4.1%. Bank Leumi (TASE: LUMI) fell 1.8% after also garnering a “Sell” recommendation. Two banks received a “Neutral” recommendation: Bank Hapoalim (TASE: POLI; LSE:80OA), which fell 1%, and Mizrahi Tefahot Bank (TASE:MZTF), which also fell 1%.”
We have spoken here about the potential for a large Israeli bank to fail. If you listen to the UBS report, that potential may turn into a reality.
