Supervisor of Banks Rony Hizkiyahu said that Israel's banking system has provided a successful response to the credit crunch in 2008 and will continue to do so in 2009. Explaining that the crisis was caused by the drying up of non-banking credit finance, he is uncertain about the bank's capabilities in 2010.
Speaking at the "Globes" conference on the credit crunch in the Israel market Hizkiyahu said, "NIS 35-40 billion in credit is needed in 2009, part of which will contribute to growth in 2010. The banking system will provide solutions despite the need for meeting capital adequacy of 12% and preparing for the Basel II rules. The banks can supply credit to everybody who wants, as well as providing solutions bodies who in the past received credit from foreign banks. The problem will be in 2010."
He added, "The banking system has created a window of time in which the State of Israel can get ready for the problems that there will be in 2010, but the banking system cannot carry on providing the goods over a longer period of time. Therefore, we have to worry that by 2010 the capital market would have started functioning again, so as to carry its part of the burden in providing credit. We have to find creative solutions so that we can reach 2010 with good opening figures."
Hizkiyahu expressed few optimistic sentiments. He said, 'The financial crisis in Israel is under control and that enables us to cope with the crisis in the real economy, but that is not the case in the rest of the world. Every day, financial institutions are collapsing and people stopped counting them long ago. Our role is to see that the global financial crisis, which is not yet over, will not reach us in 2009. It almost reached us in 2008, and I stress again and again that the challenge is not yet over."
Published by Globes [online], Israel business news - www.globes-online.com - on February 18, 2009
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