Tighter US tax laws have taken a toll on Israeli banks. The banks estimate that US citizens have withdrawn $4-5 billion from Israeli banks in less than two years. Although this amount is not enough to undermine the banks’ stability, as it amounts to only a few percent of deposits, it is nonetheless a substantial sum and some banks say that it is more than their initial projections for withdrawals.
“The blow is not just in the drop in assets, but also in the drop in investments. Some of these customers, especially the wealthy ones, use the money to make investments and acquisitions in Israel. There is now little chance that they will make these investments, after they moved the money back to the US,” said a banking source.
In most cases, the money withdrawn from the Israeli banks was sent to banks overseas, mostly in the US. In many cases, the money was intended to buy property in Israel, especially luxury apartments, which had helped inflate prices in this market segment where prices were already high.
Read more at GLOBES ISRAEL.