Memoranda of understanding announced by Bank Hapoalim, Bank Leumi necessary for broader financial relations, observers tell The Media Line
Israel’s two biggest banks by total asset size have signed memoranda of understanding with the two largest financial institutions by total asset size in the United Arab Emirates (UAE).
On Monday, Bank Hapoalim said it had inked an MOU with Emirates NBD. On Tuesday, Bank Leumi announced an MOU was signed with Emirates NBD and First Abu Dhabi Bank.
The moves came just before Tuesday’s signing ceremony at the White House of normalization agreements between Israel and the UAE and Bahrain.
“It is a great honor to be the first bank to sign such an agreement that will contribute to the establishment of the relationship between the two countries.” Dov Kotler, CEO of Bank Hapoalim, said in a statement.
According to Moody’s Investor Service, as of September 2019 Bank Hapoalim had a market share of 28% in terms of total system assets with 453.3 billion shekels ($130.4 billion) in total assets, while Bank Leumi’s 454.5 billion shekels ($130.8 billion) in total assets took up a market share by assets of around 29%.
This MOU really represents a concrete, practical, and constructive step toward greater economic engagement that follows the recent historic deal between Israel and the UAE
“This MOU really represents a concrete, practical, and constructive step toward greater economic engagement that follows the recent historic deal between Israel and the UAE,” Anthony Kim of The Heritage Foundation in Washington, who is research manager and the editor of the Index of Economic Freedom, told The Media Line.
Prof. Elise S. Brezis, head of the Aharon Meir Center for Banking and Economic Policy at Bar-Ilan University in Ramat Gan, agrees that the banking deals are a necessary step in the path to economic relations, telling The Media Line that soon the governors of the country’s central banks should meet, followed by the intellectual elites.
“It means a lot,” Brezis said. “There is no possibility of developing strong economic ties without agreements between the banking system.”
Prof. Eli Gimmon, associate professor in the Economics and Management Department at Tel-Hai College in Israel’s Upper Galilee region, told The Media Line that fintech (financial technology) can provide great potential for collaboration as part of these agreements.
According to a 2019 report from Start-Up Nation Central, foreign investors have increased their interest in Israeli fintech, with a 69% participation rate in equity rounds in 2019, compared to 57% in 2018.
“New financial technologies are well developed in Israel and the banks in Israel are investing a lot of money in different tools of fintech, like digital banking, digital money, digital transactions,” Gimmon said.
Robert Mogielnicki, resident scholar at the Arab Gulf States Institute in Washington, told The Media Line that the banking deals are part of a broader process of normalization between Israel and the UAE with details to be hashed out via negotiations.
“It is less a financial watershed with instant commercial gains and more of an expected signal of things to come,” Mogielnicki said.
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