Banks in Israel rely on strictly mandated and enforced banking rules. They operate under the guidelines of domestic banking laws put in place by the government. When investing or placing funds in a bank of Israel, it is important for the small business owner to understand both their rights and the regulations that cover their transactions.

With over 25 major Israeli banks, clear banking guidelines are a must. Whether investing in the Israel banking system or even establishing an account at a bank in Israel, understanding the banking system is always the move of the smart small business owner. When considering banks in Israel laws and regulations:

1. Remember that regulating banks in Israel is the job of the government

2. Understand that reputable banks in Israel illustrate open compliance with the banking regulations

3. Know that established rules and penalties govern international banking in Israel

Action Steps
The best contacts and resources to help you get it done

Know the regulatory structure of an Israel bank

Banking in Israel comes under the regulation of the Central Bank of Israel. Since the country began in 1948, the Central Bank has assumed responsibility, issuing legal tender. The Ministry of Finance governs the economic policy of the country and institutes banking reform and monetary policies.

I recommend: The website of the Israeli Central Bank provides information about its operations, compliance methods and organizational structure. The Ministry of Finance offers detailed files on the banking laws regarding pensions, insurance, investments and trusts.

Recognize that Israeli banks rely on the legal advice of finance lawyers

Swimming the banking waters of another country can be overwhelming. To avoid drowning in Israeli financial regulations, the smart business leader seeks professional guidance. Israel has a number of law firms specializing in corporate and baking law that can assist any investor with banking law questions.

I recommend: Mayer Brown LLP works with many of the major Israeli banks and can assist the individual with banking services in Israel, as well as advise on legal matters and investment compliance. Gornitzky & Co. also assists a number of Israeli banks and specializes in regulatory compliance and corporate finance law.

Research the international banking laws that Israel banks operate under

Global banks in Israel adhere to numerous banking laws and regulations. Familiarity with those laws is a must for the wise investor. Those business leaders considering establishing a foreign bank in Israel, placing their savings in a global bank in Israel, investigating Israeli bank rates or considering commercial banking in Israel should carefully review compliance regulations.

I recommend: The World Bank Group offers a database (begun 2003 and updated in 2007) of all member country banking laws and regulations, including Israel. Bank Hapoalim is the leading international bank in dealing with both local and international investors and corporations. Their website provides the latest corporate banking news as well as economic and banking industry reports.

Israeli banks offer sophisticated services within an established, robust economy. Banking services in Israel include traditional commercial and retail services, mortgages and commercial loans.

Israel also offers foreign bank branches as an option. Israeli agencies will assist you in conducting business in Israel, and services are available in English to assist you with business information and commercial needs.

Commercial banks in Israel must have a commercial banking license granted from the state-owned Bank of Israel in order to conduct commercial business. Israeli banks with a commercial banking license offer real estate, capital market and savings, and international banking services. Think about what type of bank will meet your needs:

1. A bank in Israel offering commercial services.

2. Israeli banks that offer mortgages and other home loans.

3. Setting up a merchant (investment) account.

4. International commerce or foreign trade.

Action Steps
The best contacts and resources to help you get it done

Contact the Israeli banks that fit your needs

Invest with one of the merchant banks of Israel to maximize your business investments. Consider an investment bank branch within Israel when conducting business in Israel and the larger European theater. Mortgage banks will provide real estate mortgages for real estate ventures.

I recommend: Visit the Israel banks Bank of Jerusalem or First International Bank of Israel to choose from commercial banking services. The Bank of Israel, owned by the Israeli government, will provide banking services as well as up-to-date exchange rates. The Bank of Israel also offers a comprehensive list of Banks in Israel, with contact information. Fill out a short form to have the Bank of Jerusalem contact you about mortgage banking.

Consider using a credit card issued by a bank in Israel

Use a credit card issued by a bank in Israel when conducting business within the country. You will save the 1-3% foreign currency tariff, incur lower ATM fees, and expedite certain services. As an example, you may only rent or buy a cellular phone with a credit card issued by an Israeli bank. However, understand the billing of Israeli bank credit cards when going this route. Billing is automatically deducted from your bank account at the end of each month.

I recommend: The First International Bank of Israel is a good place to start to open a credit card. The Israel Discount Bank provides credit cards to customers who are located in Israel.

Research relevant laws when commercial banking in Israel

If your banking in Israel includes imports and exports, several government agencies will help you with the details of your venture. These agencies will provide you to find business partners, set agendas for meetings, and understand the ins and outs of the regulatory requirements when dealing with Israel banks.

I recommend: Contact the Israeli Export and International Cooperation Institute to conduct business or engage in banking services in Israel. The Institute offers a wide range of useful information for business in Israel. Review the laws and regulations related to banking in Israel to better understand the obligations of conducting business in Israel.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  The spread in base interest rates in Israel and the U.S. is almost non-existent, making shekel-based investments with Israeli banks more attractive in the past few months.

The banking system in Israel is similar to the one in the United States. Like the United States, there's a central bank and banking regulatory system that derives its authority from the Central bank and legislation. The banking system in Israel differs in the names and the functions of the various entities and banks in the system. Knowing these terms will help make asset allocation decisions easier and give you a basis on which to build further industry expertise.

Action Steps
The best contacts and resources to help you get it done

Bank of Israel and The Supervisor of Banks

The primary regulators of the Israel banking system are the Bank of Israel and The Supervisor of Banks. The Bank of Israel issues currency, makes monetary policy, maintains economic stability and regulates the banking system. The Supervisor of Banks is the body that is responsible for actually regulating the industry and reports to the Bank of Israel.

I recommend: Review the descriptions of the responsibilities of the Bank of Israel and the Supervisor of Banks for further details on the topic.

Bank Hapoalim

The Bank Hapoalim is one of the largest private banks in Israel. Bank Hapoalim has offices in New York and London as well as Israel.

I recommend: Examine the corporate banking services available from Bank Hapoalim for more information.

First International Bank of Israel

The First International Bank of Israel is the fifth largest banking group in Israel. It offers a full range of financial services and plans for international growth in the future.

I recommend: Evaluate the scope and purpose of the First International Bank of Israel.

General Agreement on Trade in Services

The General Agreement on Trade in Services is the governmental agreement between the United States and Israel. The purpose is to promote economic transactions between the two countries.

I recommend: Assess the goals and details of the General Agreement on Trade in Services for an in-depth explanation of the agreement.

HSBC Private Bank

The HSBC Private Bank is one of the largest foreign banks in Israel. If you're new to the Israel banking industry, starting with a foreign bank that specializes in outside investment in Israel may be your best option.

I recommend: Study the services offered by the HSBC Private Bank.

Israeli New Shekel

The Israeli New Shekel is the primary currency in the state of Israel. It's also important to monitor the exchange rate of the Israeli New Shekel compared to the US dollar prior to making any deposits.

I recommend: Use the currency conversion application and definition of the Israeli New Shekel at Coin Mill for more information.