Closures of Israeli bank branches below int’l average

Over the past three years, 5 percent of the country’s bank branches have closed, leaving 1,152 branches, the Bank of Israel reported Monday as part of the annual Supervisor of Banks Report.

“Over the past three years, some decline in the overall number of branches in Israel has been seen, although it is less of a decline than observed worldwide,” the report said. “The decline in Israel comes after seven years in which banking corporations opted to expand their branch network and increase their access to customers, primarily from the retail segments, and households in particular.

“The decline derives from the changes... in banking-service consumption habits, resulting from new financial technology that allows the provision of banking products and services online. In addition, the decline also stems from processes aiming to increase efficiency being carried out by some banks.”

The survey found that the number of branches in Israel has returned to the level of six years ago and is 15% higher than the number of branches 10 years ago. The decline in the number of bank branches over the past few years is part of the streamlining process by Israel’s major banks. The process is expected to continue over the next two years with dozens more branches shutting down.

The Bank of Israel also found that in the Arab sector there has been a sharp rise in the number of branches.

“While the total number of branches declined over the past three years, the number of branches in Arab towns increased during that time,” the report said. “This increase is part of a longterm trend in the number of bank branches in Arab towns and the number of banks operating in them.

“Between 2004 and 2015, the total number of branches in Arab municipalities increased by about 83%, compared with about 11% in Jewish municipalities and about 9% in mixed municipalities. As of December 2015, the number of branches in Arab towns was 108, compared with 58 in 2004. This change derives from business considerations and specific policy that led many banks to expand their retail activity in the Arab sector.”

Bank Hapoalim and Mercantile Discount Bank have both doubled the number of their branches in the Arab sector since 2004, the report said. Bank Leumi operates in the Arab sector through the Arab-Israel Bank, which merged last year with Leumi. It remains the largest bank in the Arab sector, although its market share has been eroded due to the increased activity of its rivals. Mizrahi Tefahot Bank and Bank Massad, which had no branches in the Arab sector in 2004, are now operating there.

The number of bank branches in Israel’s outlying regions has increased over the past three years by 30%, the report said.