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Normally, ‘private banking’ refers to financial services provided to high-income individuals. All major Israeli banks have private banking departments. Some of them require their clients to have a minimum amount (from five hundred to one million dollars) in their accounts to be eligible to provide private banking services in Israel.

It’s possible to register an asset management & consulting company in Israel or establish an Israeli insurance company that provides reserve funds. To provide private equity services, one is required to obtain a portfolio manager license in Israel.

Licensing Requirements

Obtaining a license requires potential candidates to:

  • develop an action plan & prove its implementability;
  • prove that their BoD members are competent enough to fulfil their duties;
  • ensure compliance with the economic policy pursued by the government;
  • make sure that the general public is interested in their services ;
  • ensure reciprocity in licensing banking corporations in Israel & a country in which applicants’ main business is done.

Organizational Forms

To establish a banking institution in the state of Israel, one has to obtain a license authorizing management of financial establishments in the state of Israel. Because the majority of non-Israeili banks don’t get such a license, they aren’t allowed to carry out banking operations in the state of Israel. Hence, non-Israeli banking institutions prefer to open branches in the state of Israel. In their turn, Israeli banks have their own departments handling private banking.

Licensing

Taking at least half a year, the procedure for getting a banking license in the state of Israel comprises 5 steps. A license may be revoked if a company:

  • desires to revoke a license;
  • hasn’t commenced or stopped its operation;
  • can’t ensure compliance with the relevant requirements;
  • doesn’t meet capital requirements;
  • violates Israeli laws & damages its own reputation;
  • makes a decision to self-liquidate;

A license can also be revoked if:

  • the general public is interested in revoking a company’s license.
  • an order for liquidation of a company or appointment of a liquidator is issued;

Providers of advice on investment in Israel may be tried by special disciplinary tribunals  The latter concern themselves with penalizing licensees that violate their fiduciary obligations.

Israel: Settlement of Investment Disputes

Clients can file a complaint against licenced providers of advice with the Banking Supervision Tribunal. A power to impose fines on licensed individuals violating certain regulatory provisions has recently been granted to the ISA.

It can also revoke or suspend  licenses of licensees that don’t meet the necessary requirements. Imposing civil fines on law offenders is the prerogative of the Civil Fines Committee.

Filing claims in investment disputes in the state of Israel is possible with courts of relevant jurisdiction. Violating restrictions on ownership, trading in securities & provision of advisory services is deemed criminal offences & punished accordingly. 

Interested in advice on regulation of the Isrraeli banking sector? Looking for assistance in registering a subsidiary of a foreign bank in Israel? Please, consider contacting IQ Decision UK?