Israel: Detailed Assessment of Observance of Basel Core Principles for Effective Banking Supervision

IMF Staff Country Reports, April 12, 2012

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A detailed assessment of Israel’s compliance with the Basel Core Principles for effective banking supervision is presented.
The Bachar reform, started in mid-2005, forced banks to divest most noncommercial banking activities, such as mutual funds, insurance, pension, and provident funds; the banks today focus on traditional banking business.
As a result of the reform, the nonbank financial sector has grown rapidly, playing a larger role in credit markets.
Financial supervision responsibilities in Israel are shared among several agencies.
The Bank of Israel and specifically its Banking Supervision Department supervises banks.

The assessment documents the structural shift in the financial system following the Bachar reform (mid-2005), with commercial banks concentrating on traditional banking.
Rapid growth of the nonbank financial sector has increased its role in credit markets, implying heightened importance of nonbank oversight and inter-agency coordination.
Supervisory responsibilities are fragmented across several agencies, highlighting potential coordination and jurisdictional issues for effective oversight.

Banking supervision is conducted by the Bank of Israel, specifically its Banking Supervision Department.
Multiple agencies share financial supervision responsibilities, reflecting a multi-agency supervisory landscape.