MK Bitan Calls for Steps to Prevent Harm to Israeli High-Tech in Event of Foreign Bank’s Collapse

MK David Bitan, chairman of the Economic Committee, leads a committee meeting at the Knesset, Thursday. (Yonatan Sindel/Flash90)

​The Economic Affairs Committee, chaired by MK David Bitan (Likud)​, held a special meeting on Thursday to discuss the possible implications of the collapse of Silicon Valley Bank for​ the Israeli high-tech industry.

Committee Chairman MK Bitan opened the meeting by noting President Joe Biden’s announcement in which he sought to assure the customers of Silicon Valley Bank (SVB), as well as the customers of Signature Bank, which also collapsed, that their money was safe. “All customers who had deposits in these banks can rest assured they will be protected and they’ll have access to the money as of today,” Biden said. According to Bitan, this means that the banks’ collapse will not harm Israeli companies. The meeting, he said, would focus on measures that can be taken to prevent harm to Israeli companies going forward.

“We should send the President of the United States a bouquet of flowers and thank him for making this debate merely theoretical,” said Bitan.

Marian Cohen, Chair of the Israeli High-Tech Association, said “The SVB affair is more or less behind us, but it should serve as a wake-up call, and the question is how should we ​prepare for the next event in which the U.S. Government will not decide [to] funnel NIS 200 billion within 48 hours.”

Ministry of Innovation, Science and Technology Director General Gadi Arieli said that on the previous Thursday, when the initial reports of SVD’s collapse came in, Prime Minister Binyamin Netanyahu and Minister of Innovation, Science and Technology Ofir Akunis assessed the situation and “discussed the possibility of an aid package, similar to the one that was provided during the corona [pandemic], if needed.”

MK Shalom Danino (Likud) said he would like to see an automatic aid mechanism in place for extreme events such as wars and pandemics.

Assaf Patir, chief economist at the Start-Up Nation Policy Institute, said “We have gotten used to thinking about checking account deposits as being 100% safe, but this is an illusion. The fact that in Israel there is no deposit insurance is a scandal that serves the large banks, and it is time that we deal with this. The opposition to this comes from the large banks, because it is obvious to every citizen that if Bank Leumi, for instance, collapses, then [the citizen] will be saved by the state, but if a new digital bank will collapse, then the state might not save him. This fear causes the customer to prefer a big bank.”

Chagai Or-Chen, Executive Assistant to the Supervisor of Banks at the Bank of Israel, said “In Israel there is no deposit insurance because this entails complicated legislation that, regretfully, is not advancing. But [SVB] fell despite the fact that there is deposit insurance in the United States, and this insurance would not have helped 95% of the customers and did not stop the rush to the bank. The rush stopped only after the US Government announced that it would insure everyone.” He said the Bank of Israel was not working on behalf of the large banks, and that Patir was overstating these banks’ ability to prevent legislation.

Gali Caspari, Director of the Research Department of the Association of Banks in Israel, said “What is currently happening at Credit Suisse is just as alarming, and the lesson is that the stability of banks is not just a slogan, it is crucial for the market.”

A Finance Ministry official said Finance Minister Betzalel Smotrich set up a taskforce headed by Director General Shlomi Heizler to examine the implications of the event on Israeli high-tech companies.

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