Looking to ease the local Israeli credit crunch, a new program freeing up 6 billion Shekel has gone into effect. According to a JPost report:” A program to guarantee as much as NIS 6 billion in borrowing by commercial banks to help shore up their capital base and increase lending went into effect Monday, the Finance Ministry announced. The guarantees are being offered to lenders issuing subordinated notes, the ministry said. “These guarantees will enable the banks to raise capital and make loans in the tens of billions of shekels, thereby easing the crunch in the credit market and helping business to succeed in this difficult period,” Finance Minister Ronnie Bar-On said.”

While in the US the transfer of hundreds of billions of dollars into the banking system, has for the most part, failed to jump start lending, the hope in Israel is that it will help ease the situation.

After speaking to some banks I am not so sure how much this program is going to work. Banks still aren’t in the mood to lend and will only do so in cases where the client has collateral to put up for the loan.

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