The financial landscape of Israel is changing, as banks are moving major branches from prime real estate in the country’s center to less expensive locations.
On Wednesday, Bank Leumi became the latest to do so, announcing the sale of its main branch in Tel Aviv. Only the day before, Mizrahi-Tefahot Bank announced the opening of negotiations to sell its headquarters in Ramat Gan’s Aviv Tower.
Acro Group and Israel Canada, who are buying the Leumi property at the intersection of Herzl and Yehuda Halevy Streets, intend to tear down the existing structure and raise in its place an office and residential tower, according to sources quoted by Globes.
Bank Leumi will post a 260 million shekel pre-tax profit on the sale. The changeover won’t be overnight, however. Leumi will continue to rent the premises for three years, during which it will operate the branch and prepare to move it elsewhere.
Some 27 bank branches have been closed in Tel Aviv in the past two years, reducing the total number by 12 percent (a much faster pace than elsewhere in the country). Tel Aviv currently has 156 bank branches, 13 percent of all bank branches in Israel.
The shifting and shrinkage of bank branches is largely a product of digitization, which makes bank services possible without a physical branch. Online banking offers convenience to the customer and a way to cut costs for the banks.
In addition, Supervisor of Bank Hedva Ber has offered an incentive to the banks, granting accounting benefits to banks who agree to reduce their real estate costs by moving their branches away from the high-priced sites in central Israel, mainly in Tel Aviv.