Banking in Israel has its roots in the Zionist movement in the beginning of the 20th century prior to the establishment of the State of Israel in 1948. The World Zionist Organization

World Zionist Organization

The World Zionist Organization , or WZO, was founded as the Zionist Organization , or ZO, in 1897 at the First Zionist Congress, held from August 29 to August 31 in Basel, Switzerland...

 established the Anglo-Palestine Bank in 1903 (which later was renamed Bank Leumi). The two largest banks control over 60% of the banking activity, and the top five over 90%.

Most of the banks were nationalized when their stocks collapsed in the 1983 bank stock crisis

Bank stock crisis (Israel 1983)

The Bank stock crisis was a financial crisis that occurred in Israel in 1983, during which the stocks of the four largest banks in Israel collapsed, and were nationalized by the state.-Background:...

. Since then the government has sold much of its bank stock holdings, but still remains a large stock holder in many of the now privately held banks. The government sold Bank Hapoalim in 1996 and Bank Mizrahi (now merged into Bank Mizrahi-Tfahot

Bank Mizrahi-Tfahot

Bank Mizrahi-Tfahot is a bank in Israel. The fourth largest in the country, it has around 90 branches. It was formed by a merger of Bank Mizrahi HaMeuhad and Bank Tfahot in 2004....

) in 1998. The government also sold a major part of its stock in Discount bank in 2006, and of Leumi in 2005.

Israel's five largest banks

Banking group	Established	Number of Branches	Total Assets (NIS Israeli new sheqel The Israeli New Shekel is the currency of the State of Israel. The shekel is divided into 100 agorot...  billion)	Share of total banking system assets	Share of total banking system credit	Share of total banking system deposits
Hapoalim group Bank Hapoalim Bank Hapoalim is Israel’s largest bank. As of 31 December 2008 it had total consolidated assets of NIS 306.85 billion. The Bank has a significant presence in global financial markets. In Israel, the Group has over 260 full-service branches, eight regional business centers, and industry desks...	1921	320	273.3	30.0	31.3	29.1
Bank Leumi group Bank Leumi Bank Leumi is an Israeli bank. It was founded in London as the Anglo Palestine Company on February 27, 1902, by members of the Zionist movement to promote the industry, construction, agriculture, and infrastructure of Palestine.-History:...	1902	232	272.8	29.9	29.9	30.2
Discount Bank group Israel Discount Bank Israel Discount Bank Ltd. , I.D.B., is one of Israel's three largest banks, with 260 branches, and assets of 171 billion NIS .-History:...	1935	195	154.8	17.0	14.2	17.7
Mizrahi-Tfahot Bank group Bank Mizrahi-Tfahot Bank Mizrahi-Tfahot is a bank in Israel. The fourth largest in the country, it has around 90 branches. It was formed by a merger of Bank Mizrahi HaMeuhad and Bank Tfahot in 2004....	1923	123	86.3	9.5	10.9	9.7
First International Bank group First International Bank of Israel The First International Bank of Israel is an Israeli bank founded in 1972 through the merger of several smaller banks. It is the fifth largest bank in Israel...	1975	103	71.9	7.9	7.3	8.4
Source: Israel's Banking System - Annual Survey 2005 Bank of Israel

Bank mergers

There has been limited merger activity within the Israeli banking system. Mergers have mostly been limited to the merger of mortgage banks with the leading banks in their banking groups and some small banks have been bought by larger banks to take advantage of economies of scale.

Supervision and regulation

The Bank of Israel

Bank of Israel

The Bank of Israel is the central bank of Israel. It is located in Kiryat HaMemshala in Israel's capital city of Jerusalem, with a branch office in Tel Aviv. The current governor is Stanley Fischer.-History:...

 supervises Israeli banks via the Supervisor of Banks.
The tasks and authority of the Supervisor of Banks are based on several laws:

• The Banking Ordinance, 1941, a Mandatory ordinance which has been amended and updated over the years;
• The Banking (Licensing) Law, 1981;
• The Banking (Service to Customers) Law, 1981;
• The Checks Without Cover Law, 1981.