Bank of Jerusalem

Bank of Jerusalem, Ltd. is an Israeli commercial bank headquartered in Jerusalem. It began in 1963 as a mortgage institution created to support housing development and economic activity in Jerusalem, later expanding into a broader banking corporation serving retail and commercial customers. The bank’s historical identity is closely associated with residential construction finance, mortgages, and Jerusalem’s urban development, while its later business has included consumer credit, deposits, current accounts, savings, capital-market services, investment management, payment cards, and other banking products. The idea of a Jerusalem-focused bank emerged in the late 1950s among local businesspeople and financial organizations. Although the Bank of Israel was initially reluctant to authorize new banks, approval was granted in 1963 for a mortgage bank. The institution received its first license in December of that year under the name Bank Yerushalayim for Development and Mortgages Ltd. Its original shareholders included Wolfson-Klor Corporation, a government housing and development company, Export Investment Company, Jerusalem Loan and Savings Bank, the Municipality of Jerusalem, and the Workers’ Union. The bank financed residential construction in Jerusalem and contributed to projects including Kiryat Wolfson and the Ramat Sharet neighborhood. Ownership gradually consolidated around the Meir family. In 1989, Moshe Meir assumed control of the bank following a separation of the Meir brothers’ business interests and appointed Zalman Shoval, his son-in-law, as chairman. After Moshe Meir’s death in 1993, control passed to Zalman and Kna Shoval. Export Investment Corp. remains identified as the controlling shareholder, with the company controlled by the Shoval family. The bank became publicly traded on the Tel Aviv Stock Exchange through an initial public offering in 1992. It obtained a financial-institution license in 1997 and a commercial banking license from the Bank of Israel in 1998. The latter marked its transition from a specialized mortgage and financial institution into a commercial bank permitted to serve a wider range of private-sector credit, lending, savings, real-estate, capital-market, and international-banking needs. During the 2000s and 2010s, Bank of Jerusalem broadened its retail proposition. It began issuing credit cards in 2002 in cooperation with Israel’s Credit Cards company and, from 2010, emphasized current accounts, savings accounts, consumer credit, and a controlled-growth strategy. The bank invested in information technology, cyber protection, customer relationship management, call-center capabilities, digital document storage, online services, and branch-based cash and check deposit machines. Its operating model continued to emphasize a relatively cautious risk profile and a mix of specialized lending and diversified customer and revenue sources. The bank also pursued capital-market expansion. In 2013 it acquired General Finance-Assuta Investment Management Company, increasing its presence in investment management and local capital-market activity. That business was subsequently sold to Meitav Dash after approximately four years. In 2017 the bank introduced a prepaid debit-card service aimed particularly at workers who lacked conventional bank accounts and received wages in cash. In 2018 it sought to acquire Municipal Bank, then owned by the Dexia banking group, but the proposal was not selected. Bank of Jerusalem has maintained a primarily domestic footprint, with a network of branches across Israel and a business profile centered on mortgages, real-estate finance, deposits, consumer and commercial credit, and selected investment and payment services. It has also attracted public criticism and international scrutiny because the United Nations included it in a 2020 database of companies associated with business activities connected with Israeli settlements in the West Bank, including East Jerusalem, and…

The modern Bank of Jerusalem originated in a late-1950s effort by Jerusalem businesspeople to create a financial institution dedicated to the city’s economic development. A separate Jerusalem Workers’ Loan and Savings Fund also sought banking status. At the time, the Bank of Israel generally opposed the creation of additional banks, but in 1963 it approved the establishment of a mortgage institution in Jerusalem. The bank was founded in 1963 by Mordechai Meir, Charles Clore, Isaac Wolfson, and the Municipality of Jerusalem. In December 1963 it received a license as Bank Yerushalayim for Development and Mortgages Ltd. Mordechai Ish-Shalom, then mayor of Jerusalem, became its first president. The founding shareholder group included Wolfson-Klor Corporation, a government housing and development company, Export Investment Company, Jerusalem Loan and Savings Bank, the municipality, and the Workers’ Union. Isaac Wolfson served as chairman, with Charles Clore and Moshe Meir as deputy chairmen. Initially, the institution concentrated on financing residential construction in Jerusalem. Its lending supported the development of projects and neighborhoods such as Kiryat Wolfson and Ramat Sharet. Over time, ownership became concentrated in the Meir family. The Meir brothers acquired a majority interest through their corporate holdings and associated export businesses. In 1989 they divided their business interests, leaving Moshe Meir in control of the bank. Meir appointed his son-in-law, Zalman Shoval, as chairman. Shoval’s simultaneous political role as a member of the Knesset prompted criticism over a possible conflict of interest. Following Moshe Meir’s death in 1993, control passed to Zalman and Kna Shoval. The bank completed an initial public offering on the Tel Aviv Stock Exchange in 1992. It obtained a financial-institution license in 1997, allowing it to conduct most activities available to a banking corporation while excluding on-demand check payments. In August 1998 it obtained a commercial banking license from the Bank of Israel. This regulatory change broadened its role from a mortgage-oriented institution into a commercial bank active in real estate, capital markets, international banking, commercial credit, private-sector lending, and savings. In 2002, Bank of Jerusalem began issuing credit cards through a partnership with Israel’s Credit Cards company. From 2010 onward, it pursued controlled growth, retaining a strong focus on mortgages and specialized commercial activity while developing consumer credit and retail banking. It expanded current-account and savings products, invested in computer systems and cyber protection, established a call center and digital archive, implemented customer relationship-management tools, upgraded its website, and deployed ATMs capable of cash withdrawals and cash and check deposits. In 2011, after a period of social protest in Israel, the bank changed its deposit-pricing approach. It promoted a model that passed most of the Bank of Israel interest rate through to depositors rather than retaining most of it. Beginning in the second half of 2013, it reduced the benefit and offered depositors approximately half of the central-bank rate under the revised policy described in the reference material. The bank expanded into investment management in 2013 through its purchase of General Finance-Assuta Investment Management Company. This increased its local capital-market activity, but the investment-management business was sold to Meitav Dash after roughly four years. In 2017, Bank of Jerusalem launched a prepaid debit-card service intended to give workers without bank accounts a mechanism for receiving monthly wages electronically. In 2018, it attempted to purchase Municipal Bank from Dexia, but Israel Discount Bank’s competing offer prevailed. Bank of Jerusalem remains an Israeli commercial bank with a branch network across the country and a business mix built around mortgages, real-estate finance, deposits, consumer and commercial lending, payment products, and selected capital-market services. Its public profile has also included controversy. In February 2020, the United Nations published a database of companies associated with business activities connected to Israeli settlements in the West Bank, including East Jerusalem, and the occupied Golan Heights. Bank of Jerusalem was included in that database, leading to criticism and scrutiny regarding settlement-related financial activity.

1. 2020Inclusion in United Nations settlement-related database

   The United Nations includes the bank in a database concerning companies associated with settlement-related business activity.

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2. 2018Unsuccessful Municipal Bank acquisition bid

   The bank’s proposal to acquire Municipal Bank is rejected in favor of a bid from Discount Bank.

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3. 2017Prepaid debit-card launch

   The bank launches a prepaid card aimed in part at unbanked employees receiving wages in cash.

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4. 2013Entry into investment management

   The acquisition of General Finance-Assuta Investment Management expands the bank’s capital-market activities.

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5. 2010Controlled-growth strategy and technology investment

   The bank prioritizes specialized lending, consumer credit, retail banking, operational diversification, and upgrades to digital and cyber infrastructure.

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6. 2002Credit-card issuance begins

   Bank of Jerusalem begins issuing credit cards through a partnership with Israel’s Credit Cards company.

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7. 1998Commercial banking license

   The bank receives a commercial banking license and expands beyond its earlier specialized mortgage-institution role.

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8. 1997Financial-institution license

   The Bank of Israel grants the bank a financial-institution license under the Banking Law.

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9. 1992Initial public offering

   The bank completes an initial public offering on the Tel Aviv Stock Exchange.

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10. 1963Bank is founded as a mortgage institution

    Bank Yerushalayim for Development and Mortgages Ltd. receives a license to support housing and economic development in Jerusalem.

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A Jerusalem-rooted Israeli commercial bank combining mortgage and real-estate specialization with retail deposits, consumer credit, commercial banking, payment products, and selected capital-market services.

• Residential mortgagesMortgage banking1963

  Mortgages are the bank’s defining historical business line. The institution was created to finance housing development in Jerusalem and has retained a strong emphasis on residential lending and specialized mortgage activity as it expanded into commercial banking.

• Real-estate and construction financeCommercial lending1963

  The bank has financed residential construction and urban-development projects, particularly in Jerusalem. Its real-estate orientation continued after the institution obtained a commercial banking license and broadened its private-sector lending activities.

• Retail deposits and savingsRetail banking2010

  From 2010, the bank placed greater emphasis on retail banking, including current accounts and savings products. Its 2011 deposit-interest policy made the bank notable for temporarily passing a larger share of the central-bank interest rate to depositors.

• Consumer and commercial loansLending1998

  Following its transition to commercial banking, Bank of Jerusalem expanded into private-sector lending, consumer credit, and specialized commercial finance while maintaining a stated preference for controlled growth and a relatively low-risk mix of activities.

• Credit cardsPayments2002

  The bank began issuing credit cards to customers in 2002 through a partnership with Israel’s Credit Cards company, adding a payment product to its deposit and lending relationship with retail customers.

• Prepaid debit cardPayments and financial inclusion2017

  Introduced in 2017, the prepaid debit-card service was designed particularly for employees without conventional bank accounts who received their salaries in cash. It provided a card-based channel for receiving and using monthly pay.

• Investment managementCapital markets2013

  Bank of Jerusalem entered investment management through its 2013 acquisition of General Finance-Assuta Investment Management Company. The activity increased its local capital-market presence but was later sold to Meitav Dash.

• 2018Attempted acquisition of Municipal BankM&A

  Municipal Bank was being sold by the Dexia banking group, creating an opportunity to expand Bank of Jerusalem’s banking platform.

  What changed. Bank of Jerusalem submitted an acquisition proposal.

  Aftermath. The proposal was rejected in favor of a competing offer from Israel Discount Bank.

  • Israel Discount Bank — Discount Bank submitted the competing offer that was selected for Municipal Bank.
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• 2017Launch of prepaid debit-card serviceProduct launch

  Some employees lacked conventional bank accounts and received salaries in cash.

  What changed. The bank introduced a prepaid debit card designed to allow wages to be received and used through a card-based payment channel.

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• 2013Acquisition of General Finance-Assuta Investment ManagementM&A

  The bank sought to increase its presence in Israel’s local capital market and investment-management sector.

  What changed. Bank of Jerusalem acquired General Finance-Assuta Investment Management Company.

  Aftermath. The investment-management activity was later sold to Meitav Dash after approximately four years.

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• 2011Higher pass-through of interest to depositorsPrice change

  Following Israeli social protests and public attention to banking pricing, the bank reviewed its deposit-interest policy.

  What changed. Bank of Jerusalem shifted from retaining most of the Bank of Israel interest rate to passing approximately 80% of it to customers, retaining approximately 20%.

  Aftermath. From the second half of 2013, the bank reduced the policy and offered customers approximately half of the Bank of Israel interest rate.

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• 2010Adoption of a controlled-growth strategyStrategy

  The bank sought to develop commercial and retail activity without abandoning its mortgage specialization or low-risk orientation.

  What changed. Management emphasized mortgages, specialized commercial lending, consumer credit, diversified customers and revenue sources, and investment in technology, cyber protection, customer service, and branch infrastructure.

  Aftermath. The strategy supported broader retail banking activity, including current accounts and savings, while preserving the bank’s real-estate and mortgage identity.

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• 2020United Nations settlement-related business databaseControversy

  The United Nations included Bank of Jerusalem in a database of companies associated with business activities related to Israeli settlements in the West Bank, including East Jerusalem, and the occupied Golan Heights. The inclusion prompted criticism concerning the bank’s reported or alleged involvement in settlement-linked activity.

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• 2018Bank of Jerusalem bid for Municipal Bank is rejected

  The bank attempted to acquire Municipal Bank from Dexia, but the transaction was awarded to a competing proposal from Israel Discount Bank.

  M&A
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• 2017Bank sells investment-management activity to Meitav Dash

  After several years of ownership, the bank sold the investment-management activity acquired through General Finance-Assuta to Meitav Dash.

  M&A
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• 2017Bank launches prepaid debit-card service

  The bank introduced a prepaid card intended especially for workers without conventional bank accounts who received monthly wages in cash.

  Product launch
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• 2013Bank acquires General Finance-Assuta Investment Management

  The acquisition expanded Bank of Jerusalem’s presence in investment management and the Israeli capital market.

  M&A
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• 2011Bank changes its deposit-interest policy after Israeli social protests

  Bank of Jerusalem shifted to a policy that passed a substantially larger share of the Bank of Israel interest rate to depositors. The policy was subsequently reduced from the second half of 2013.

  Pricing
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• 2010Bank adopts a controlled-growth strategy and upgrades digital infrastructure

  The board emphasized specialized mortgage and commercial activity, consumer credit, customer diversification, and a relatively low-risk operating profile. The bank also invested in information systems, cyber protection, customer service, digital archiving, and upgraded ATMs.

  Other
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• 2002Bank begins issuing customer credit cards

  The bank entered card issuing through a partnership with Israel’s Credit Cards company.

  Product launch
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• 1998Bank of Jerusalem receives a commercial banking license

  The Bank of Israel granted the institution a commercial banking license, completing its transition from a specialized financial and mortgage institution to a broader commercial bank.

  Regulation
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1. Bank of Jerusalem