Beginning in March 2012, the Bank of Israel will require foreign banks operating in Israel to publish reports on their local operations. The information will be published on the Bank of Israel's website as an attachment. The first reports will cover figures for 2011.
Five foreign banks have operating licenses in Israel and have offices in the country: Citigroup Inc. (NYSE: C), HSBC Holding plc (LSE: HSBA; HKSE: 005; NYSE, Paris: HBC), Barclays Bank plc (LSE: BARC), BNP Paribas SA (Euronext: BNP), and the State Bank of India. The State Bank of India only operates in the diamond industry.
According to Bank of Israel figures, the balance sheet of the foreign banks' Israeli branches totaled NIS 19 billion at the end of 2010, 1.8% of the Israeli banking system. However, since none of the foreign banks have retail operations in Israel, their aggregate share of business is higher, at 5%.
The information that will be disclosed will include the balance sheet of the banks' Israeli branches, credit to the public by industry, and provisions for bad debt. The information will be given in the aggregate, unless this figure exceeds NIS 50 billion, or if the balance sheet total of one bank's Israeli branch exceeds NIS 15 billion. In that case the information about each of the five banks will be published separately.
The Bank of Israel says that if the foreign banks' operations in Israel increase substantially, it would consider expanding the public disclosure to apply to each branch in Israel.
In addition to the five foreign banks with branches in Israel, 20 foreign banks have representative offices in the country, including Deutsche Bank AG (NYSE: DBK; DAX: DB), UBS AG (NYSE; SWX: UBS), and Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ). These representative offices are not supervised by the Bank of Israel and are not required to disclose information, because they may not conduct transaction, but only provide information and direct clients to another branch of the bank. The representative offices may not extend credit, accept deposits, or manage customers' money. The branches of the five foreign banks can carry out all of these activities, and therefore come under Bank of Israel supervision.
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