Table of Contents

Message from the Chairman of the Board of Directors, Mr. Eitan Raff ...... 4 Leumi and the Israeli economy...... 79 Message from the Chief Executive Officer, Ms. Galia Maor ...... 5 Leumi as a driving force in the Israeli market ...... 80 What is a Social Responsibility Report ...... 6 Financial strength of Leumi ...... 84 The Leumi Social Responsibility Report ...... 7 Leumi in the community...... 85 ...... 9 History, Vision and Ethics Putting Leumi’s social responsibility into practice ...... 86 Historical Background ...... 10 The Society of "Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation" ...... 88 Vision and Strategy ...... 12 "Young Entrepreneurs" organization ...... 98 Leumi’s Vision ...... 12 Donations allocated by the donations committee ...... 100 Leumi’s Social Vision ...... 18 Additional activities in the community ...... 102 Leumi’s Environmental Vision ...... 21 Employee involvement and volunteering ...... 105 The "Leumi Way", Leumi’s Code of Ethics ...... 22 Leumi and the Second Lebanon War ...... 107

...... 25 Organization Profile Leumi and the environment...... 109 Bank Leumi as part of the Leumi Group ...... 26 Leumi formulates a long-term environmental policy ...... 110 Ownership Structure ...... 28 Recycling and reduction of consumption ...... 112 Structure of the Board of Directors ...... 30 Energy conservation and saving ...... 114 Structure of the Bank ...... 32 Water savings ...... 116 The Size of Leumi – key financial data ...... 34 Preference for environmentally-friendly materials ...... 119 Adoption of Social and Environmental Measures ...... 36 Leumi’s indirect impacts on the environment ...... 120 Marketing and Advertising ...... 39 Preservation of historical buildings ...... 122 Compliance with laws and regulations ...... 40 A look to the future...... 123 ...... 41 Leumi’s customers Directions for the next two years ...... 124 Leumi Business Lines – the right financial solution for each customer ...... 42 Acknowledgements ...... 126 Leumi's Concept of Service ...... 52 List of contributors to the Social Responsibility Report ...... 127 Approach to Accessibility at Leumi ...... 56 GRI (Global Reporting Initiative) Index ...... 128 Letters of recognition and congratulations ...... 130 ...... 59 Leumi’s people GRI ...... 131 Leumi’s people: the bank's most important resource ...... 61 Maala ...... 132 Training and development of employees ...... 64 Employee reward and remuneration ...... 66 Internal communication ...... 68 Employee relations ...... 73 Safety and the work environment ...... 74 Caring for employees and their families ...... 77 Employee Privacy ...... 78

 | Leumi Corporate Social Responsibility Report |  Message from the Chairman of the Board of Directors Message from the Chief Executive Officer

The publication of the Social Responsibility Report of Leumi, the first of its kind, is a source of pride for the entire Board A central principle of the vision of the Leumi Group is “to be a banking group which is involved in and contributes of Directors. When we set ourselves the target of promoting Leumi’s activities with regard to our commitment, activities to the welfare of the community”. This principle has guided Leumi since its inception 105 years ago, continuing in and investment in our community and society in general, our starting point was the publication of The Leumi Way, the present times. With roots in the founding vision of Benjamin Ze’ev Herzl, Leumi has created its position as a leader in Code of Ethics. Now, I can note, with a genuine sense of achievement, the completion of a major additional step in this community matters, contributing to the development and prosperity of the Zionist vision and the State of Israel, and process in the form of the social responsibility report of Leumi. Whilst the “Leumi Way” was designed to guide us at Leumi, remains deeply involved in community activities. Today, on the eve of the sixtieth anniversary of Leumi’s founding, the State how to choose the right path, this Social Responsibility Report sets out a comprehensive social program, which relates to of Israel continues to face major national and social challenges, which require significant and varied resources, including every aspect of our lives. In this report, you will find the detail of our economic, social and environmental activities, the the major involvement of business. At Leumi, we are confident that the engagement of all sectors of society, including the result of the actions of all our people, which are undertaken out of a deep sense of social commitment. business sector, will support the ability to face these challenges effectively. Leumi, being one of the most influential players in Israeli business and society, fulfils a significant role due to its very The Leumi Corporate Social Responsibility Report for 2006 is the first of its kind from a financial body in Israel, both due existence and its activities in many countries and continents. Therefore Leumi decided to adopt an approach of “Responsible to its comprehensive nature and because it is the first Israeli report to receive the approval of the international GRI (Global Banking”, which reflects not only the spirit of Israel’s tradition in human and social matters, but also the principles of Reporting Initiative) organization. This comprehensive report expresses Leumi’s commitment to its employees, customers, sustainability. These principles form a bridge between local and global, including world-wide issues such as poverty and shareholders, business partners, suppliers, government authorities, the community and the environment. The report illiteracy, the spread of epidemics and infectious diseases, support for weaker populations and protection and care for the reflects a range of community activities in which the Leumi Group is involved and emphasizes our deep involvement in the environment, issues which are affecting the world at the start of the twenty-first century. However, these are also issues advancement of education, encouragement of youth enterprise and leadership, and the support for weaker populations. that confront the State of Israel, every day, hour by hour. It is evident to us that investment in encouraging social responsibility in the organization and amongst our employees In the light of this, Leumi has chosen to adopt an approach of social responsibility, which is intended, first and foremost, will contribute to an improvement in the quality of our lives and in the environment in which we operate, and in parallel, to enable future generations to advance and unleash their potential for excellence whist facing the challenges of the future. it will bring business value to Leumi. I am confident that businesses do better when the community and the environment In the section, “Leumi in the community”, readers will be able to note Leumi’s many areas of involvement in the community in which they operate are stronger. In my view, the best path to business success is the combination of the drive to within the framework of social ventures and non-profit activities, such as “Leumi Follow Me – the Centennial Fund for achievement in the work environment and the unequivocal adherence to the values, which are encompassed within the Tomorrow’s Generation” and the Atidim (Futures) Project. framework of social responsibility. The members of the Board of Directors and myself stand behind the Leumi Corporate Social Responsibility Report, the I have no doubt that if we invest in people, in the community, in the environment and in our country, we will result of our understanding of the imperative of assuming, and leading, social responsibility. I am fully confident that this be aptly rewarded. step will be a significant landmark in the positioning of Leumi as an enterprising and leading player in the overall efforts towards social and environmental responsibility. I wish all of us success, prosperity and well-being.

Galia Maor Chief Executive Officer Eitan Raff Chairman of the Board of Directors  | Leumi 2007 Corporate Social Responsibility Report |  The Scope of the Report

What is a Corporate Social The Leumi Responsibility Report? Social Responsibility Report

Corporate Social Responsibility relates to the conduct of business in an ethical manner, which considers the interests Leumi is a bank with a long-standing tradition of social responsibility. Now Leumi has taken the decision to align itself with of different stakeholders: customers, employees, shareholders, business partners, suppliers, government authorities, the leading organizations in the world, by launching an additional significant channel of dialogue with all stakeholders in competitors, the general public, the community and the environment. In applying such an approach, the business commits the form of this report, a summary of the bank’s activities in the areas of social and environmental responsibility. to a progressive management culture and strategy, based on the belief that a connection between business, community The report refers to the way in which we at Leumi listen to our stakeholders, improve the way we respond to their needs, and environment contributes to all and benefits all. In this way, the business organization contributes to improving the and lead the financial sector towards greater contribution and development of a sustainable world. The report covers the quality of life and the environment, whilst at the same time, improving its positive reputation in a competitive business activities of Bank Leumi in Israel during 2006. In certain cases, reference has been made to previous years, in order to world, and enhancing its position of trust amongst customers and employees. Social Responsibility leads to sustainability provide relevant background or comparisons. It is our intention to expand the scope of our activities in coming years, and – the ability of all to prosper for the long term. continue to report every two or three years. The leading approach in the world for the creation of Corporate Social Reports is that of the GRI – the Global Reporting The Social Responsibility Report of Leumi for 2006 relates, for the most part, to what has been accomplished in and by Initiative. Hundreds of companies in the world already report in accordance with GRI guidelines. the Bank within Israel. In some cases, reference is made to the Leumi Group. In the future, we will evaluate expanding our According to an examination carried by the GRI organization, at the end of 2005, approximately 69% of companies reporting beyond Israel, to include all subsidiaries in the Leumi group in Israel and the locations in which we are active ranked by the Dow Jones Sustainability Index, and 60% of companies ranked in the S&P 100 produced social reports in outside of Israel. accordance with GRI guidelines. The report summarizes intensive efforts invested in order to collect the content for the report from all the divisions and The guidelines prescribe the range of topics required for inclusion in a social and environmental report, and this is founded units of the Bank, and collate the data for clear and reliable presentation. All this has been achieved with the support on the basis of two core principles: and collaboration of members of the report steering committee and many managers and employees within the Bank. In The principle of transparency: The involvement of stakeholders in the way the organization impacts on the economy, addition, a process of dialogue with many different stakeholder groups has been conducted, including consultations with the community and the environment social and environmental organizations and experts in the field of social responsibility in Israel and abroad. In line with our purpose of aligning Leumi with leading global companies, and in order to support our ambition to be a guiding light of The principle of materiality: The reporting of all issues that would significantly affect the conduct of the organization in social responsibility in the financial sector, Leumi has adopted the reporting principles of the GRI in writing this report. In matters of social responsibility, so that stakeholders can make informed decisions. addition to adhering rigorously to these guidelines, we have presented the report to the team of experts at the GRI and Short Glossary received their approval that our report confirms with required approval levels. The GRI experts concluded that our report was prepared in accordance with the guidelines and awarded approval level B (see the GRI Index at the end of this report). Stakeholders – Any individual or organization, which directly influences Leumi or its ability to achieve its objectives, or is We are the first financial institution in Israel to receive this rating from the GRI. influenced directly by the actions of Leumi. This Social Responsibility Report is published together with the Annual Report for 2006. This is because the management of GRI – Global Reporting Initiative is an NGO (non-governmental organization) formed as a collaborative endeavor with the Bank sees our social activities as significant and as contributing, amongst other things, to successful business results. the United Nations and other international entities, for the purpose of assimilating global reporting principles. The GRI’s indicators are a global reporting framework designed to assist in preparing social and environmental reports covering subjects, such as global warming, organizational business conduct in matters of the environment and society, and human rights. Over 1,000 businesses all over the world have reported in accordance with the GRI guidelines, including Microsoft, ABN AMRO, Nike, Anglo American, Petrobas and others. For additional information, see the GRI Internet site at: www.globalreporting.org

 | Leumi Corporate Social Responsibility Report |  The Scope of the Report

We expect that this report will be of interest to Leumi’s customers and employees, senior decision-makers in the country, investors, shareholders, suppliers, journalists and the media, social organizations and to the general public. As this is a first History, Vision and Ethics report, any comments on this report are welcome. We will receive all feedback with gratitude and will review all comments in a serious way. Furthermore, we expect that this report will be an additional platform for the development of dialogue with all our stakeholder groups, so that we can further enhance our understanding of the social and environmental issues that are important to stakeholders, and extend the scope of our activities accordingly. “The combination of Zionist and Jewish values and commitment to professional banking management is that which enables Leumi to fulfill its historical vocation”

From “The Leumi Way”, Leumi’s Code of Ethics

Short Glossary

Sustainability – This is an optimistic and democratic view, which places human respect and freedom at the center and

believes that we are all part of the same life-cycle, which serves to feed and sustain life on our planet. The sustainability approach means that we must face the challenge of producing what is truly lacking in our ecosphere – not just renewal of natural reserves and restructuring of the ecological life-supporting natural infrastructures, but also the creation of a non-violent educational approach, a health care system which invests in prevention and training no less than in treatment and cure, cities which are full of human vitality and a way of life which enables all people to create and express themselves, and have free time to spend with their families, instead of sinking into an armchair opposite the television at the end of each work day for the sole purpose of earning a living. From the site of Heschel Organization, the Israeli Institute of Environmental Leadership www.heschel.org Dow Jones Sustainability Index – This is a stock index calculated by the SAM Company, which specializes in the financial analysis of companies with regard to sustainability principles. This index includes 1,200 companies from all over the world, which are ranked in accordance with their activities, amongst others, in areas relating to protection of the environment and corporate social responsibility. S&P 100 – Standard and Poor’s Index – this is an index of stocks calculated by S&P, specializing in financial research and analysis. This Index includes the stocks of the top 100 companies in the US economy.

 | Leumi Corporate Social Responsibility Report |  History, Vision and Ethics

to retain its dominant position in the Jewish land. State of Israel, led by Ben-Gurion, appointing the Bank the In 1923, the Bank opened its first branch in Tel Aviv, but financial agent of the government. The following day, the 1950 government started replacing the Palestinian pound bills, transferred its head office (known as “the Management”) to Tel Aviv only in 1932. From 1930, the Bank was known linked to the pound sterling, with the notes issued by the Historical Background Bank and carrying its name. It was only APB’s unshakable as the Anglo Palestine Bank (APB). By the outbreak of the Second World War, additional branches had been reputation that ensured the successful replacement of opened in Tel Aviv, in the Carmel, Petah Tikvah, Hadera bank notes issued in the USA, with notes lacking even the and Rehovot. country’s name. Since it made no sense for a sovereign country’s central Bank Leumi was founded in 1950 as a registered Company they way they think about us and to convince them that The development of the Bank and the reputation it earned bank to be a British firm, Bank Leumi (National Bank) in Israel, and is the exclusive and direct descendant of the because of the way we work, the Jewish settlements and in the international banking community enabled it to obtain, was founded in Tel-Aviv in 1950. In the following year, Anglo- Palestine Bank. This Bank, which was registered their populations gain benefit. from Lloyds Bank, a loan for the Jewish Agency of half a all of APB’s assets and obligations were transferred to in the United Kingdom, was founded in 1902 under the Extract from the APC Decennial Commemorative Booklet 1903-1913, Jaffa-London million pounds sterling, a massive sum in those days. This Bank Leumi. In addition to its regular banking operations, name, Anglo-Palestine Company, known as APC. 1913, p. 7 loan was dubbed the “Dry Bones Vision Loan”, because Lloyds’ managers were persuaded to approve it, not only Leumi continued to act as the country’s central bank, until APC was founded as a subsidiary of the Jewish Colonial APC’s involvement in community projects, in addition thanks to APB’s guarantee, but also after having read the the establishment of the Bank of Israel in 1954. Israel’s Trust Ltd. It was Dr Theodor Herzl – the Zionist visionary to providing loans to individuals, were well known. Bible. This loan played a critical role in the economic and banknotes issued two years earlier carried the name of who was the son of a bank manager – who conceived the APC guaranteed the credit provided to the Ahuzat social development of the State of Israel. Bank Leumi Le’Israel. idea of creating a financial institution, which would serve Bayit Association, which founded the first Hebrew city – During the 1950’s, the Bank developed an extensive the national Jewish movement. In an essay, The Jewish Tel Aviv. APC also loaned to social and community funding During the Arab Revolt of 1936-1939, the Jaffa branch network of branches, in response to the huge waves Colonial Trust, published by in 1897, Dr Herzl declared organizations, the best known of which was Hashomer was closed, to reopen only in 1949, following Israeli of Jewish immigration and profound changes in local that the Jewish state is in need of credit, not charity, and Association, out of which grew the Hagana paramilitary independence. During this time, the APB played an demography. It also deepened its involvement in the Arab laid out the objectives and operating principles of such organization, the precursor of the IDF. essential role in building the Tel-Aviv Port, replacing the sector, including Druze and Circassian populations. At the a financial institution, which was established two years When World War I broke out in 1914, the Bank ran into Jaffa Port, which was closed to Jewish shipping. Hoffein same time, it also laid the foundations for international later under the same name. APC’s first branch in Palestine difficulties since Turkey, where APC had been active, and himself headed the construction company, Otzar Mifalei banking operations. Since then, the Bank has opened opened in Jaffa in August 1903; its first CEO was Zalman the United Kingdom, where APC was registered, were in Yam (Marine Project Fund), and APB distributed the shares dozens of branches and subsidiaries in financial centers David Levontin. a state of war. Since Levontin was a Russian citizen, and and bonds, which made the project possible. and in the major Jewish communities around the world. APC advised in the prospectus published at its founding that Russia was also at war with Turkey, he was forced to move When war broke out in 1939, the citrus industry – the Its participation in international share offerings is clear its objectives were to: “develop and nurture commercial to British-controlled Egypt and entrust the management main export industry of the Jewish community in Palestine evidence of its global status. enterprise in industry, construction, agriculture, quarrying, of the Bank to Eliezer Siegfried Hoffein, a citizen of the – ran into difficulty, since Europe, the main market, was Today, 104 years after its founding by Dr. Herzl, Bank tourism and the development of infrastructures and more”. neutral Holland. at war. Accordingly, APB provided the citrus industry with Leumi is still loyal to its heritage – the bank of a nation in Indeed, APC succeeded in developing and gaining standing In theory, the Bank ceased operations, but in practice, Hoffein long-term credit, preventing its collapse. It also provided its homeland. within the State of Israel. Additional branches were managed the Bank from the offices of the Spanish consul in credit to the diamond-cutting industry, then in its infancy. opened in Jerusalem, Tiberias, Haifa, Hebron, Safed, and Jerusalem. During the war, the Bank issued bonds registered The Bank’s finest hour was when British rule was coming to an even Beirut and Gaza. On the eve of the First World War, in its own name. These bonds were entirely legal, and saved end. The collapse of the British administration threatened in 1913, in the report published to commemorate the first the community from total financial collapse. Hoffein and the to throw the financial and monetary sector into chaos, since ten years of APC’s activity, Levontin wrote the following Bank remained at the forefront of provision of assistance Palestine was excluded from the sterling bloc. However, words, testifying to the change which Leumi created in the in the Jewish settlement, where many were suffering from the Bank with Hoffein a of its head anticipated correctly, commercial approach of the Jewish settlement: severe hunger. Few know that, at the Hoffein’s initiative, a and ordered bank notes from America - even though Most of the Jewish population, old and new, would subsist humanitarian aid organization supported by the American nobody knew when the new state would be established, on donations or loans with no requirement for repayment Diaspora was founded – the Joint Distribution Committee. or under what name. At the same time, the Bank printed […] when APC was founded, they hoped that it would be This organization, which literally saved the Jewish population, a second supply of bank notes in Palestine. These bank another charity organization and a source of a new financial is known today as “the Joint”. notes never entered into circulation, since those ordered support. They began to complain when they realized that Under the British mandate, Israel was able to attract capital from the US arrived on time. we don’t hand out money to anyone who asks … Happily, and other foreign banks, but APC, which was officially On August 17, 1948, three months after the Declaration we must admit that we eventually managed to change managed by Hoffein (Levontin retired in 1924) continued of Independence, the Bank signed an accord with the The first Leumi branch in Tel Aviv Siegfried Hoffein

10 | Leumi Corporate Social Responsibility Report | 11 History, Vision and Ethics

Vision and Strategy The Vision of Leumi

> To be the most profitable banking group in Israel over the long term. > To be an international Israeli banking group. > To be a banking group which provides the highest value to its customers, enterprising and innovative in developing initiatives to meet customer needs. > To be the first choice for employees: a stable and secure workplace, which cares for its human resources and rewards employees in line with contribution. > To be a banking group which constantly endeavors to maximize shareholder value. > To be a banking group which is involved and contributes to the well- being of the community, with an emphasis on the future generation.

12 | Leumi History, Vision and Ethics

Background conditions for formulating Leumi’s strategy In recent years, there have been many changes in the business environment, which have required adjustments to Leumi’s strategy. Increasing competition, regulation, global activities of customers are the key drivers that have all demanded strategic review. Increased competition The banking system: Privatization and changes in ownership and Israel’s improved geo-political situation have promoted renewed and more extensive activity of foreign banks in Israel. All these have increased competition among the banks in Israel. In addition, regulation provides for “positive discrimination” in favor of small banks. Insurance and pension fund providers: The deregulation of the pension market, whether by divestment of pension funds or by shrinking of the dedicated debenture market, together with the forecast of increased involvement by insurance companies as buyers of provident and mutual funds, means that insurance companies increasingly compete with banks in many of the latter’s traditionally exclusive areas of activity. Investment houses: New legislation has expanded the scope of commercial activities available to private investment houses and related businesses. This means increased competition with banks in the wealthy client segment, and in non- bank credit mobilization. Increased regulation: Regulation in Israel: In recent years, regulatory bodies such as the Capital Market, Insurance and Savings branch of the Treasury, the Supervisor of Banks, the Israeli Antitrust Authority and the Israel Securities Authority have all shown increasing involvement in banking activity. In addition, we have recently witnessed an increase in the scale of parliamentary involvement in issues relating to limiting of commissions. The tightening of regulation has significantly increased banking costs as well as contributing to increased competition. International regulation: In addition to local regulatory activity, Israeli banks are also affected by global regulatory activity. Local regulation is subject to international conventions and directives, such as the Basel II Revised International Capital Framework (RICF; 2004), International Financial Reporting Standards (IFRS; 2001), the Sarbanes-Oxley Act (SOX; 2002), some of which are relevant exclusively to the banking industry, and others to all business organizations . Notably, Short Glossary the more uniform such international regulation becomes, the more intensive the competition in financial markets. New regulations require substantial financial outlay, since their implementation often means considerable investment in Basel 2 Directive: A framework for capital risk management, developed by an international committee, which supervises computing and other technical infrastructures, essential for compliance. Additional investments are required because of the banking system. changes in work processes, including training and working hours spent in implementing regulations. Regulatory activity IFRS – International Financial Reporting Standards: The international standard of financial reporting which determines thus requires reorganization in order to exploit new opportunities. On the other hand, the Bank must be prepared for that public companies must prepare their financial statements in accordance with international accounting principles. expected loss of income and a changed risk profile as a result of new regulatory requirements. SOX – Sarbanes-Oxley Act – Introduced in July 2002 and designed to protect investors through improvements in the Globalization and international competition reliability and accuracy of financial disclosures by companies in accordance with United States Securities Laws. Despite the growth of the Israeli market in recent years, Israel is still a relatively small economy. This fact, together with the increased capability of Israeli entrepreneurs to expand activity in foreign markets, has encouraged many Israeli companies to expand overseas. We anticipate that increased uniformity in regulatory requirements in Europe, particularly increased adoption of the Basel II directives, together with entry of more international banks into the Israeli market, will increase competition between foreign banks for Israeli clients operating abroad and will allow banks financing Leumi clients abroad to serve them in Israel as well. This means that new foreign players will join the financial sector in Israel and that local banks, including Leumi, will be in competition with them.

14 | Leumi Corporate Social Responsibility Report | 15 History, Vision and Ethics

Leumi’s Strategy > Increasing efficiency. In order to realize Leumi’s vision to be the leading and most profitable bank in Israel in the long term, and in accordance with the changes occurring in the business environment, the Leumi Group has set itself long-range targets for growth in D. Diversification of sources of income subject to positive risk profiles the scope of its business activities and profitability in Israel and abroad. The strategic targets have been determined in the This is a strategic objective, which supports all the other objectives and, is especially relevant this year given new legislation context of managing levels of risk relative to current capital levels and group risk management policy (for more details, see in capital markets. This legislation regulates activities in the capital markets and the sale of holdings, and highlights the Leumi’s Annual Report for 2006). need to focus investment of funds earned from sale of holdings. Given that this new legislation constrains the Leumi’s The Group has defined four main targets that will guide activities in the coming years: ability to spread risk in Israel, the Bank must aim to adapt its risk profile in order to support the growth. Such diversification is possible via the acquisition of financial and real operations abroad and via investment in real holdings in Israel. Adapting banking activities in light of new legislation in capital markets, increasing the rate of growth in line with market growth, increasing profitability, diversification of sources of income subject to positive risk profiles. In order to meet such targets, Leumi must make intelligent use of its technological and human resources, improve A. Adapting banking activities in light of new legislation in capital markets: efficiency in investment and development processes, and focus on improving group processes, whilst increasing the level The new capital market provisions in the law requires Leumi to take a number of different measures in order to comply with of collaboration between the business units. the legislation, and to remain a leading and profitable bank: The following are the steps required to achieve our objectives: > Adapting the activities of the branches and specifically, the investment consulting services for financial products. > Ensure best and most efficient deployment of human resources > Development of financial consulting services. Unleashing the capabilities and personal skills of all Leumi employees in line with their personal aspirations and the strategic > Increasing the range of products. objectives defined by the Bank, whilst continuing to focus on appropriate recruitment and development, job satisfaction > Sales of services to organizations active in capital markets. and reward of employees. > Completion of the sale of capital market companies and ensuring best legal use of the proceeds, generating the maximum > Improve the level of collaboration and knowledge-sharing between business units return in the long run and maintaining an appropriate risk profile. Improvement in collaboration between the Bank’s business units and between subsidiary companies in order to leverage business improvements. B. Increasing the rate of growth through an increase in the volume > Exploit technology to support achievement of business objectives of activities, both in Israel, and abroad: Adaptation of technology to the strategic needs of the Bank and of the Leumi Group, and review of the potential of Extending activities in Israel through: technological advancements supporting development of the entire organization whilst ensuring appropriate assessment > Increasing the number of customers. of the risks involved. > Increasing the scope of activities for Leumi customers within the Leumi Group. > Improving communication channels with customers Extending activities overseas through: Activities that will expand the scope of different channels of direct communication with our customers whilst ensuring the > Mergers and acquisitions. branch remains a central point of service provision for customers. > Leveraging customer contacts in Israel and abroad. > Improvement in operational excellence > Combining activities overseas with activities in Israel. Improved coordination between strategy and business processes, with special focus on strategic discipline and the measurement of progress. C. Increasing profitability, contributing to accelerated growth through: > Improved external relations > Providing solutions for all the financial needs of our different customer groups, whilst continuing to improve the quality of Continued development of Leumi’s community involvement and commitment and nurturing of the Leumi’s relationships our credit portfolio. with different groups within the Israeli community. > Increasing the range of products and services in line with customer needs, whilst continuing to focus on strengthening the relationship with customers over the long term. Notwithstanding the fact that Leumi aspires to ensure that community involvement activities are in line with the Bank’s > Providing the highest quality service with highly trained, skilled and customer-oriented employees. strategic objectives, as well as to develop excellence in all of the areas noted above, there is naturally a significant level of uncertainty in strategic planing. A number of factors will influence achievement of these objectives: The state of the Israeli economy and foreign economies, including continued growth, the security situation in Israel, working relationships within the Leumi group companies, future regulatory changes and the continued influence of the regulatory changes already introduced and for which the precise future implications are not yet known. In addition, we should note that Leumi is in advanced stages of privatization and potential sale of the controlling interest, as will be reviewed later in this report. If this process succeeds, there will undoubtedly be changes in Leumi’s strategy

16 | Leumi Corporate Social Responsibility Report | 17 History, Vision and Ethics

Leumi’s Social Vision

> To contribute to the well-being of the community. > To contribute to strengthening human capital in the periphery. > To educate for values and community involvement. > To encourage personal and business leadership in the community. > To contribute to improving levels of youth education.

Even since its founding, Leumi has focused on the realizing the creation, development and prosperity of the Zionist vision and the State of Israel, through supporting the Jewish community. Today too, Leumi is committed to continuing to contribute to the development and empowerment of the State of Israel based on the belief that the Bank is morally and socially responsible to contribute to the society and community in which it operates. This sense of mission and desire to create change in our society have driven Leumi to focus on the fields of education and act to narrow societal gaps and create equality of opportunity. Our perspective is this focus is necessary for the continued future strengthening of the State.

Formulating our social vision Leumi’s Board of Directors and Executive Management Team are committed to Leumi’s social vision. In addition to the ongoing dialogue within Leumi about the development of our social and community involvement, Leumi maintains contacts with several community organizations. These groups contribute their time and experience to advise Leumi of their vision and desire for social change within Israeli society, and they are a source of information and guidance for Leumi in developing community programs. The formulation of Leumi’s social strategy is not a one-off action, but part of a continuing process of involvement, activity and contribution to society and community. At Leumi, we endeavor to be alert to developments in our social environment and changes taking place in Israeli society.

18 | Leumi Corporate Social Responsibility Report | 19 History, Vision and Ethics

Leumi’s Environmental Vision

> To be an active player acting to protect the environment in Israel. > To raise the awareness of all Leumi employees and encourage them to take personal responsibility for protecting the environment. > To be a leading financial institution in Israel with regard to development of issues relating to protection of the environment and their sustainability.

The State of Israel is endowed with a diverse natural environment with ecological features, which are unique in the world, such as the coral reef in Eilat, and the hundreds of thousands of migrating birds that pass through Israel twice a year. Intensive activity is required to protect and preserve such a natural environment, with continuous dialogue and agreement to create appropriate responses to increasing needs for human prosperity, leisure time and facilities and renewable natural resources, such as water and sand. At Leumi, as all other members of our society, we influence our environment and by our very existence and in the way we manage our business, we leave our footprint on the ecology and on the environment. Leumi, as a financial institution, influences the environment both directly and indirectly. We refer to this in the section of this report relating to environmental matters.

Formulation of the environmental vision During the writing this report, Leumi developed a dialogue with a number of environmental organizations in Israel. A draft of this report was sent for review to “Life and Environment”, the umbrella environmental organization in Israel. It is Leumi’s intention to expand this dialogue in the future.

Corporate Social Responsibility Report | 21 History, Vision and Ethics

The “Leumi Way”

Leumi’s Code of Ethics The guiding principles of the “Leumi Way” Leumi, as a large and leading business influencing the social and economic environment in Israel, also regards itself as The Code of Ethics – the “Leumi Way” – includes the principles, which guide the spirit, values and ethical behavior of leading the way in terms of ethical behavior. We at Leumi are convinced that the activities of the bank and the way in Leumi, as well as a detailed code of conduct underpinning this approach. The values described in the code are universal which we provide financial services to a wide range of private businesses and customers exerts great influence on the human values, relevant to any person, anywhere, anytime, alongside business values, which guide Leumi employees in their way society behaves and on its well-being. Given its central position in our society, Leumi is committed to demonstrating efforts to achieve business objectives. The “Leumi Way” clarifies how these values can and should be demonstrated in the ethical responsibility at the highest level in its relationships with customers, shareholders, employees and with the entire collective efforts by the bank’s managers and employees, each within the framework of his own responsibility, with respect community and society. to all stakeholders – customers, employees and the bank as a whole, shareholders, government authorities, suppliers, In support of this commitment, Leumi has developed a Code of Ethics – The Leumi Way, which defines the values deriving competitors, and the community in general. from Leumi’s vision, and the standards of conduct required to demonstrate these values. It is worth noting that the most basic and essential approach to ethical behavior at Leumi is compliance with the law, policies and procedures. However, this is not sufficient. The Code of Ethics – The “Leumi Way” complements these requirements with a set of values designed to give to all Leumi employees a sense of direction and guidance in those areas in which Formulation of the “Leumi Way” legislation or procedures do not provide a clear answer, or require interpretation. Several thousand employees from all business units of Leumi participated in the development of the “Leumi Way”. The Code of Ethics - the “Leumi Way” commits all Leumi employees in all roles and at all levels including the top executives Participation was in the form of workshops and wide-ranging dialogue designed to identify the values that have enabled of the bank and the members of the Board of Directors to express these values in the way they behave at all times. Leumi to succeed over so many years, and define those values that are most significant to all Leumi employees, and identify the gaps and the dilemmas arising on a daily basis. On completion of this process of dialogue, Leumi’s code of The Leumi Way defines two value tracks, which are interwoven in all the activities of Leumi: ethics, the “Leumi Way” was formulated. The people values track in which the emphasis is on human and moral values: integrity, respect, humanity, fairness, tolerance. These values form our organizational bedrock and they lead us to earn the trust of our customers and the general public. The business values track in which the emphasis is on business values: commitment, responsibility, partnership, professionalism and excellence. These values provide organizational strength and lead us to delivering our vision.

22 | Leumi Corporate Social Responsibility Report | 23 History, Vision and Ethics

Organization Profile

“Leumi was founded as part of the vision of the creation The Assimilation of the “Leumi Way" The “Leumi Way” was launched by the CEO, Galia Maor, at the 2004 Annual Report ceremony, and distributed to all of a homeland for the Jewish nation and linked its fate Leumi employees. This was followed by an ongoing program of assimilation designed to ensure that the code, its values and rules of conduct would become an integral way of life for Leumi managers and employees. to the State of Israel. For over a century, Leumi has Ethics is a most important topic on the Bank’s agenda, and the management is committed to taking uncompromising integrated its commitment to national values with its steps so that all of Leumi’s employees adopt the ethical code and act in its spirit. commitment to professional financial management” The assimilation process includes: From “The Leumi Way”, Leumi’s Code of Ethics > Maintaining ongoing activity of the Bank’s ethical institutions. > Including “Leumi Way” themes in conferences, ceremonies and meetings dedicated to this purpose. > Launching the “Leumi Way” website in the Bank’s intranet. > Training managers to assimilate and model the “Leumi Way” in their units. > Developing supporting tools, such as short films and learning software, which include case studies and dilemmas for analysis. > Integrating training the “Leumi Way” in all professional and development courses for employees. > Integrating training the “Leumi Way” in new employee orientation programs. > Monitoring the code’s implementation in the Bank’s units. > Inclusion of adherence to the code in the annual manager and employee performance reviews. > Assessing the implementation of the code by employees in their daily activities by way of employee surveys. > Assessing the implementation of the code as far as it is perceived by customers by way of customer satisfaction surveys.

Leumi’s ethical institutions > Ethics Officer – an executive management team member whose role is to monitor the assimilation of the Leumi Way and its appropriate integration into decision-making processes > Ethics Supervisor – a senior manager whose role is to lead the assimilation of the “Leumi Way” > Ethics Committee – a committee comprised of a representative of the CEO’s office, human resources, internal audit and senior managers of other divisions. The committee is a consultative body, which supports and assists the Ethics Officer and the Ethics Supervisor in the development and implementation of the ethical code. and in finding appropriate responses to ethical dilemmas that arise. > Ethics Hotline – a point of contact for the use of employees for reporting ethical issues. The Hotline must ensure that all matters referred to the hotline are duly dealt with in the utmost confidentiality and without fear of reprisal. Additional information on the “Leumi Way” can be found on the Leumi website: www.leumi.co.il

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Bank Leumi as part of the Leumi Group

Bank Leumi and its subsidiary companies constitute one of the largest banking groups in Israel, managing wide ranging Subsidiaries, branches and agencies overseas activities, which commenced over a century ago. The Bank is defined as a banking corporation under the Banking (Licensing) The international activity of the Leumi Group is conducted via a network of holding companies, branches, agencies and Law, 1891 and holds a license under that law. As a “bank” and a “banking corporation”, the Bank’s activities are governed representatives. This network spreads over 21 countries and includes 82 offices and branches. The main affiliates of the and delineated by a system of laws, orders and regulations, including, amongst others, the Banking Ordinance, the Bank Bank are situated in the most important financial centers in the world: New York, London, Zurich and Luxembourg. The of Israel Law, the Banking (Licensing) Law and the Banking (Service to Customer) Law, 1891, as well as directives, rules, reach of the Leumi Group overseas is designed to ensure that the Group exploits the business potential of Israeli customers, instructions and position papers of the Supervisor of Banks. local middle-market customers who are active in market sectors in which Leumi has expertise, knowledge and resources The following is a diagram showing the main subsidiary companies of the Bank: required for the provision of financial services, and with international customers who are active in Israel and with the local Jewish communities in which Leumi has branches or representation. The main target populations of the Bank overseas are businesses and wealthy private customers. These customers may choose from a range of financial services, including private banking, investment financing, foreign trade and foreign currency transactions and their derivatives. The collaboration between the Group’s affiliates overseas and the Bank in Israel, and amongst the overseas affiliates themselves enables maximal exploitation of the relative advantage of each individual affiliate. The Bank Leumi has decided to expand the Group’s international activities through the provision of additional services and through mergers and acquisitions, and in this context, the purchase of a bank in Romania was completed in August 2006. Leumi Romania operates 35 branches and offers a range of financial services including the receipt of deposits, credit lines, international trade and foreign currency transactions.

Banking and Finance Capital Market and Financial Services Companies included In Israel > Leumi Card Ltd (100%) on an Equity Basis > The Arab Israel Bank Ltd (99.7%) > Leumi & Co Investment House Ltd (100%) (non-banking companies) United Kingdom Germany > Leumi Mortgage Bank Ltd (100%) > Leumi Gemel Ltd (100%) (3) > The Israel Corporation Ltd (18.1%) Canada Jersey > Leumi Leasing&Investments Ltd (99.5%) > Kahal Employees Supplementary Training Fund Ltd (100%) (4) > Keshet Broadcasting Ltd (20%) Hungary > Leumi Finance Co Ltd (100%) > The Bank Leumi Le-Israel Trust Company Ltd (100%) > Leumi Industrial Development Ltd (99.6%) > Leumi Agricultural Development Ltd (100%) > Leumi Real Holdings Ltd (100%) (1) (2) United States Luxembourg > Leumi Financial Holdings Ltd (100%) Romania

Overseas Mexico Hong Kong > Bank Leumi USA (100%) Panama > Bank Leumi (UK) PLC. (99.7%) (1) A consolidated holding company, whose main holdings are investments in Paz Oil Co. Venezuela > Bank Leumi le-Israel Switzerland (81.9%) (2) A consolidated holding company whose main holdings are in Leumi Card Ltd. > Bank Leumi Luxembourg SA (100%) (3) Leumi Gemel sold the provident fund, which it managed on January 31, 2007, Brazil Chile > Bank Leumi Romania SA (99.7%) and now provides operational services to companies working in capital markets Australia > Leumi International Investments NV (100%) (4) In May 2006, a contract was signed to sell the Kahal operations. Argentina

France Uruguay South Africa Switzerland

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Ownership Structure

Leumi is a public limited company, whose shares are registered on the Tel Aviv Stock Exchange. The shares in the Bank are held by a number of major shareholders (holding of 5% or more) and by the general public. The main shareholders as of Significant changes in the ownership structure of the bank March 1, 2007 are: – The background to privatization > The Government of Israel in the name of the State of Israel – 11.94% of share capital (on a fully diluted basis – 11.26%) and Since its founding in 1902 (as the Anglo-Palestine Bank), Bank Leumi had been controlled by Otzar Hityashvut Hayehudim 19.78% of voting rights (fully diluted – 18.66%). (Jewish Colonial Trust Ltd.). Nevertheless, the Bank’s shares were publicly traded. Following the bank shares crisis of 1983, > Barnea Investments B.V – 9.99% of share capital (fully diluted – 9.43%) and 5% of voting rights (fully diluted - 4.72%). and a “trust company” was created for each of the banks included in the Bank Shares Arrangement (“the Arrangement”). an option to purchase 10.01% additional share capital until May 24, 2007 subject to the receipt of the necessary permits The Israeli Government, on behalf of the State of Israel, contracted with each of these trust companies so that the trust from the supervisory authorities in Israel and abroad. company would undertake to purchase all the shares held by shareholders participating in the Arrangement on the dates > Shlomo Eliahu Holdings Ltd and its subsidiary companies – 9.9969% of share capital (fully diluted – 9.4311%). and in accordance with the provisions stipulated in the Arrangement. > Otzar Hityashvut Hayehudim Ltd. and the JCT Trust Co. Ltd. – 5.07% of share capital and voting rights (fully diluted The Israeli Government, for its part, undertook to loan the necessary funds to the trust companies. BLL Securities (1983) – 4.78%). Ltd. was thus created to purchase Bank Leumi’s shares according to the Arrangement. In 1993, all the Bank’s shares held by BLL Securities (approx. 86.9%) were acquired by the state according to the Bank Shares Arrangement Law (Temporary Provisions), 1993. Since then, the State has pursued a privatization process, including several share sales offers to the The following is a graph showing the The following is a graph showing the general public and to Bank employees, and sales of several parcels of shares to institutional investors outside the stock distribution of shares: distribution of the voting rights: market and a tender procedure in which Barnea Investments B.V. (“Barnea”) was selected as a preferred bidder.

11.94% Divestment of Bank shares held by the State of Israel 19.78% In November 2005, the Bank was informed that, further to the procedure for the sale of up to 20% of the shares of

9.99% the State in the Bank, published by the Accountant-General of the Ministry of Finance and M.I. Holdings Ltd., Barnea Investments B.V. had been selected as the preferred bidder. Barnea is incorporated in the Netherlands and is a wholly- 5.00% owned subsidiary of Barnea S.A.R.L incorporated in Luxembourg, and held jointly and indirectly by Stephen Feinberg and approx. 63% 9.9969% approx. 60% 9.9969% J. Ezra Merkin, through the Cerberus and Gabriel private investment fund groups, which are controlled by Mr. Feinberg and Mr. Merkin, respectively. 5.07% 5.07% For further details regarding the sale process, the terms of the option agreement granted to Barnea, and the due diligence procedure which is taking place at present in the Bank, and also for the terms relating to activities for exercise period of the option which commenced on the date of the sale of the shares, and for the limitations regarding distribution of dividends which apply from the date of the permission of transfer of control to the purchasing parties by the Bank of Israel, see Leumi’s Annual Report for 2006.

Government of Israel 11.94% Government of Israel 19.78% Barnea Investments B.V. 9.99% Barnea Investments B.V. 5.00% Shlomo Eliahu Holdings and subsidiaries 9.9969% Shlomo Eliahu Holdings Ltd and subsidiaries 9.9969% Otzar Hityashvut Hayehudim Ltd Otzar Hityashvut Hayehudim Ltd and the JCT Trust Co. Ltd. – 5.07% and the JCT Trust Co. Ltd. – 5.07% The general public – approx. 63% The general public – approx. 60%

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Structure of the Board of Directors

Bank Leumi is a limited company, subject to the Companies Law, 5749-1999. Shareholders in the Bank exercise their rights Modus operandi of the Board of Directors in the annual general meeting, at which, amongst other things, they elect bank directors. The Board of Directors appoints 1. Procedures for communicating recommendations or instructions by shareholders or employees the executive management team of the Bank. Pursuant to the Companies Law, the General Meeting of the Bank elects the directors by majority vote (with the exception According to the Companies Law, the Board of Directors is responsible for determining Bank policy and supervising the of external directors who are elected by a majority which includes at least a third of all votes by participating shareholders or CEO and her activities, including formulating the Bank’s plans for action, budgeting principles and priorities, reviewing the their proxy who do not have a controlling interest in the Bank, or such that all those who oppose among said shareholders Bank’s financial status and determining its organizational structure. The Board also acts in accordance with directives of the do not exceed more than the equivalent of 1% of all Bank voting rights). In addition, one or more shareholders with at least Supervisor of Banks, including Directive 301 “Proper Conduct of Banking Business – Board of Directors”, which dictates the 5% of the Bank’s equity and at least 1% of the voting rights, or one or more shareholders with at least 5% of the voting functions, composition and methods of operation. rights, are entitled to demand a general meeting of the Bank. Most of the Board’s activity is conducted in plenum, as determined by the various directives of the Supervisor of Banks. In addition, in the case of a general meeting at which an agenda issue may be decided by a written vote (including Board Several permanent and ad hoc committees report to the Board, the key ones being: member election, activities or transactions subject to the approval of the general meeting, and approval of mergers), The Credit Committee – the highest authority for approval of the Bank’s material credit. shareholders may convey their position on such issues to the Bank, which is required to notify the shareholder plenum The Audit Committee – with audit responsibility in several areas, together with a range of functions in accordance with accordingly. The Board may discuss the matter and convey its response to the shareholders. various laws and directives. Pursuant to the Bank Shares Arrangement Law, the public committee, which votes in respect of the State’s voting rights, must vote in respect of candidates for the position of director from a list to be drawn up by an independent public Composition of the Board of Directors committee headed by a judge. It is important to note that according to this law, the State must avoid any involvement in the day-to-day management of the Bank’s business in the period up to the sale of its shares, and that the Bank will not be Board members are all non-executive, and are elected subject to the Bank Shares Settlement Law (Temporary Provision), considered a government corporation or a company in whose management the Government participates for the purpose 5743-1993. The Companies Law requires the Board to include among its members two outside directors, and at least a of any law and for any issue. quarter of its membership must consist of outside directors as defined in Directive 301. The Audit Committee quorum must consist of at least 50% external directors, while the Board and other committees must consist of at least 25% 2. Remuneration of board members, senior officers, and directors, in relation to the performance of the organization external directors. The Chairman of the Board, from time to time, receives a bonus by approval of the general meeting. This bonus is designed As of March 1, 2007, the Board comprised 14 directors, of whom 6 are external, as per the definitions mentioned above. to reflect the financial results of the Bank. Other members of the Board are remunerated in accordance with the regulations applying to external board members. This is not connected to the performance of the board. The remaining members of the Board of Directors do not receive incentives. Board member qualification and expertise 3. Measures taken by the Board of Directors to prevent conflict of interest The Companies Law requires external directors to have professional qualifications or specialized training in accounting and According to the Companies Law, no individual who is “connected” to a public company may serve as an external director financial management, and that at least one of the external directors has expertise in accounting or finance. In addition, in that company. Such “connection” includes work relations, business or professional relations, or performing a role as pursuant to a directive adopted by the Supervisor of Banks, following an Israel Securities Authority directive and subject an employee of the company. According to the Bank Shares Settlement Law, all candidates for board membership must to the Securities Law, the Board took the decision that its membership would always include at least three directors with satisfy the definition of an “external director” in the Companies Law, the State Companies Law and Directive 301 of the accounting and financial expertise, and these directors would participate in discussions on the financial statements, and Supervision of Banks. that at least two of these would be members of the Audit Committee. Currently, all Board members satisfy this requirement In addition, the Companies Law, Bank of Israel Directive 312, and the internal procedure regarding the Bank’s Board of (except for the Chairperson who, according to the directive, cannot be considered a director as described previously). Directors stipulate processes for handling potential conflicts of interest and transactions with individuals connected to the Furthermore, according to Directive 301 each Board member must be knowledgeable, experienced or expert in at least one Bank. These include mandatory disclosure of a personal interest by any office holder or controlling party in a particular of the following areas: banking, finance, economic or business activity, law, administration or accounting. Each candidate transaction, and define the required approval, including the approval of the Board, the Audit Committee and the General for Board membership must be approved by the Supervisor of Banks. Finally, Board members participate in seminars, Meeting, as the case may require. courses and workshops on subjects required for them in order to perform their duties. Moreover, the Board of Directors Moreover, subject to Bank of Israel Directive 301, one of the responsibilities of the Board is to create mechanisms for the has been briefed on the subject of corporate social responsibility. separation of bank activities in different sectors, and between bank and group activities, should such potential conflicts of interest occur. The Board of Directors has created a procedure accordingly.

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The Structure of the Bank Members of the Management of the bank: Bank Leumi is organized into four business lines which are managed by the Corporate and International Banking Division, the Commercial Banking Division, the Retail Banking Division and the Global Private Banking Division, and which receive services from the various staff units. The business lines are focused on different market sectors, with each business line specializing in the provision of financial and banking services to each sector in line with the common characteristics and needs of customer group. This organizational structure enables the Bank’s customers to enjoy a high standard of professional service, and select from a wide range of products, which are tailored to meet their needs. In addition, this structure enables fast and flexible decision-making processes.

Board of Directors Chairman of the Board – Eitan Raff

President and Chief Executive Officer Galia Maor*

From right to left: David Bar-Lev, Ze’ev Nahari, Nahum Bitterman, Michael Bar-Haim, Itzhak Malach, Danny Zidon, Galia Maor, Deputy Chief Executive Officer, Yona Fogel, Zvi Itskovitch, Menahem Schwartz, Rakefet Russak Aminoah, Joseph Horowitz. Finance, Accounting and Capital Markets Ze’ev Nahari, C.P.A.*

Commercial Corporate Banking Global Accounting Finance and Capital Group Legal Human Operations Internal Banking Division Division Private Division Economic Markets Strategy Advisor Resources and Audit Division Rakefet Yona Fogel* Banking Menahem Schwartz, Division Division Professor Nahum Division Administration Division C.P.A.* Michael Russack-Aminoach* Division Ze’ev Nahari, Professor Danny Zidon* Bitterman, Adv.* David Bar-Lev* Itzhak Malach* Joseph Horowitz* Bar-Haim* Zvi Itzkowitch* C.P.A.* Danny Zidon*

Special Construction External Relations Chief Investment Group Secretary Risk Credit and and Public Ties Relations Compliance Advice Jennifer Janes, Adv. Management Department Real Estate Tamar Yassur Officer Division Control Moshe Ingbir Division Meira Karni Shmuel Zlotnik Department Uzi Levy Dr. Ruth Arad

* Members of the Management Team

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The following shows the comparison of the different elements of the balance sheet: The Size of Leumi – Consolidated The Bank Key Financial Data December 31 December 31 2006 2005 % change 2006 2005 % change The financial data reported here relate to the entire Leumi Group (for additional details, see the Annual Report for 2006). NIS millions NIS millions Total balance sheet 289,341 277,862 4.1 241,144 225,690 5.7 Balance Sheet Deposits of the public 231,823 221,828 4.5 200,128 187,687 6.6 As of December 31, 2006, the balance sheet of the Leumi Group stood at NIS 289.3 billion, compared to NIS 277.9 billion Debentures, bonds at the end of 2005 – an increase of 4.1%. and subordinated notes 15,622 17,253 (9.5) 4,821 5,220 (7.6) Deposits from banks 5,241 4,347 20.6 3,578 3,741 (4.4) As of December 31, 2006, the balance sheet of the bank stood at NIS 241.1 billion, compared to NIS 225.7 billion at the end of 2005. Cash and deposits with banks 47,609 35,381 34.6 62,886 51,187 22.9 The total assets managed by the group – the balance sheet plus the securities portfolios managed on behalf of customers, Securities 46,375 47,825 (3.0) 31,686 30,111 5.2 provident funds and study funds – amounted to NIS 694.8 billion, compared to NIS 638.9 billion at the end of 2005 (US$ Credit to the public 183,800 182,632 0.6 125,456 125,485 - 164 billion and US$ 151.2 billion, respectively). Buildings and equipment 3,056 2,843 7.5 2,584 2,410 7.2

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Adoption of Social and Environmental Measures The Maala Ranking In line with Leumi’s aspiration to take a lead in social responsibility, Leumi has adopted social standards and measures, The Maala Ranking for Social Responsibility reflects the degree to which businesses in Israel operate in accordance with which specify performance to the highest possible standards. These standards require high quality management practices, the principles of social responsibility. A ranking process takes place annually whereby businesses declare their management continuous improvement of organizational performance and social commitment to the environment, the welfare of the policies and practices in the following areas of activity: the environment, human rights, working environment, community individual and the community and ethics in business and a commitment to a quality work environment. The standards involvement and ethics. adopted by Leumi are those recognized internationally (ISO standards) and locally (the Maala Index and the BDI ranking). The Maala Ranking encourages businesses to demonstrate transparency, and measure, audit, and improve their processes In addition, according to the magazine, The Banker, in 2006, Leumi was ranked in 156th place out of 1,000 leading banks in order to be included in the social responsibility index. in the world. The Ranking includes companies from the Tel Aviv-100 Index, or companies whose turnover exceeds US$ 100 million, in the following sectors: trade and services, industry, construction and infrastructure. The Maala Index includes the 20 leading companies in the Maala Ranking for Social Responsibility who meet the criteria for inclusion in the Tel Aviv-100 Index and ISO Standards enables investors to select leading Israeli companies who are committed to social responsibility. The international ISO standards define the comprehensive requirements for quality management, as a basis for providing Leading companies in Israel participated in the Maala ranking for 2006, updated on June 18, 2006. These companies improved customer service. Emphasis is placed on processes, customer satisfaction and the evaluation of effectiveness for clearly confirmed their policy and commitment to social responsibility, that included protection of the environment, human continuous improvement. rights, working environment, community involvement and business ethics. ISO 9000:2000 is a family of standards based on international agreement on the good management practices required In 2006, Leumi was ranked amongst the top ten companies in the Maala ranking, as a result of Leumi’s policy to ensure that organization can consistently provide products and services that meet customer requirements (and and practice in protection of the environment, human rights, working environment, community involvement expectations), as well as fulfill legal requirements. Accordingly, the following quality management principles serve as guide and business ethics. for the organization’s senior management in leading the organization to improved performance: For more details regarding the Maala ranking process, see the website: www.maala.org.il. > Customer focus – Organizations are dependent on their customers and must therefore understand their present and future needs, and respond accordingly. > Leadership – The leadership in the organization determines its vision and mission, and fosters a collaborative culture with The BDI Ranking the employees. The Business Data Israel (BDI) ranking is based on a unique methodology for ranking leading companies in the Israeli > Employee involvement – Employees are at the heart of the organization and their involvement makes it possible for them market. The ranking reflects a broad range of parameters, which create leading and successful companies. to utilize their full capabilities for the benefit of the organization. In 2006, Leumi was ranked number five out of Israel’s 500 leading companies, and number 2 amongst > Process-orientation – Good process leads to more efficient utilization of resources and improved results. commercial banks. In addition, in the ranking of “the best companies to work for”, Leumi was ranked 10th of all the companies in the Israeli market, and 2nd amongst banks. The values of Leumi, as clearly reflected in > Total systems view – Identifying, understanding and effectively managing all organizational interfaces contribute to these rankings, are stability, professional training and employee benefit packages. efficiency in the achievement of objectives. The quantitative parameters, which are evaluated in this ranking, are: > Continuous improvement – A permanent objective for the improvement of overall performance. > Scope of activity, including value – added indicators reflecting contribution to the bank’s turnover. > Decision-making process – Effective decisions are based on the analysis of data. > Profitability index: return relative to activity and profit level. > Supplier relationships – The organization and its suppliers enjoy a mutual advantage from a positive business relationship. > Long-term growth rates, product innovation, new technologies, new products and services, and new markets. > A number of business units in Leumi have been awarded the ISO 9001:2000 standard: > The company’s risk rating and its payment ethics. > Operational and Administration Departments: Information Technology Development Department; Security Department; Real Estate and Purchasing Department;, Production and Communications (operational center for > The scope of the company’s contribution to the community and other activities indicative of social involvement by the communications infrastructure). company or its employees. > Internal Audit Department The qualitative parameters, which are evaluated in this ranking, are: Additional information on ISO standards can be found on the Standards Institution of Israel website: www.sii.org.il > How well the company is managed and how highly it and its managers are valued by other managers in Israel. > The company’s working environment – to what extent the company is seen as a good place to work both by existing and potential employees. For more information, visit the BDI website at www.bdi.co.il.

36 | Leumi Corporate Social Responsibility Report | 37 Marketing and Advertising

Leumi’s marketing and advertising campaigns are targeted towards current and potential new customers. Leumi maintains the highest standards of marketing, advertising and fair competition, focusing on the unique added value of its services and products and, furthermore, does not speak badly of its competitors. Leumi’s policy, which is strictly implemented, includes clear rules regarding transparency, advertising accuracy and focus on customer needs. Leumi’s advertisements and promotional campaigns are subject to the approval of various bank authorities, and are based on the following guidelines: > Information contained in advertisements is conveyed truthfully and accurately. > When a price is shown, the total price is stated clearly and accurately. > The advertisement is appropriate to the level of knowledge, understanding and appreciation of the target population > Advertising contents reflect consideration for the sensitivities of various groups in society. > Advertisements avoid content that might cause minors to act in ways that might adversely affect their health or well-being. Leumi campaigns are in line with the “Leumi Way” Code of Ethics and embody values such as humanity, fairness and tolerance, as well as professionalism and excellence. These values, combined with the bank’s commitment to Israel on the one hand, and mobility and globalization on the other, are the defining values of the Leumi brand. The corporate identity of the Leumi brand is integrated into the bank’s corporate culture and marketing-advertising strategy. Leumi’s language communicates progress and technology together with simplicity and warmth, dynamism and creativity, combined with a legacy of stability and proven success. Above all reigns the color blue, which distinguishes the Leumi’s identity from that of the other banks.

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Compliance with the Law and Standards Leumi’s Customers

Leumi is subject to an extensive set of laws and regulations, including directives of the Supervisor of Banks, the Risk and Insurance Supervisor, the Israel Securities Authority and the Israel Antitrust Authority. “Deeply rooted in our sense of responsibility for the success of our customers, and our partnership with them, we Chief Compliance Officer consider our most significant professional challenge to In order to coordinate Leumi's activities in compliance with consumer directives, a Chief Compliance Officer (CCO) has been appointed, reporting directly to the Chief Legal Advisor. His responsibilities include assisting the Board of Directors, be the identification and provision of relevant and high- and the Bank’s management to fulfill their duties and to comply with regulatory requirements in the consumer area and with laws such as those forbidding money laundering and financing of terror. quality solutions for the financial needs, both business and personal, of our customers.“ Claims against the Bank In 2006, the following lawsuits were filed against the bank:112 general lawsuits, 7 class-action lawsuits and 8 labor- From “The Leumi Way”, Leumi’s Code of Ethics related lawsuits. 3 class-action lawsuits were dismissed. At the start of 2007, there are some 327 regular lawsuits, 24 labor related lawsuits and 16 class-action lawsuits pending against the Bank. The key lawsuits against the Bank relate to customer relations, interest rates, risk surcharges, surplus interest, breach of commitment to extend credit, termination of credit arrangements, early repayment charges, guarantees, account management, current account transitions, repossession, provision of service conditional upon other service agreements, and attachments.

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Leumi’s Business Lines: The Right Financial Solution For Every Customer

Our customers are the central focus of all Leumi’s activities. Consequently, we strive to develop comprehensive, tailored and timely financial solutions for all customers, to meet personal or business needs, whatever their business sector. Leumi constantly strives to create conditions, which will provide a high level of service availability in a banking environment, which is welcoming, friendly, accessible and secure. We place utmost importance on the quality of our relationship with our customers. The nature of this relationship between the bank and its customers is determined, naturally, by the quality of service we provide, and high quality service is defined as a strategic objective for Leumi, supported by an extensive program of assimilation of Leumi’s service code at every level of the organization. The guiding principle of our concept of service at Leumi is: “Treat your customers as you would like to be treated, as a customer”. Leumi’s customers come from all sectors of Israeli society and represent the wide range of financial activities in the Israeli market. Leumi’s organizational structure includes four business lines: the Corporate and International Banking Division, the Commercial Banking Division, the Retail Banking Division and the Global Private Banking Division. This structure was developed in order to ensure an appropriate financial solution for the needs of every customer, in line with the nature of his requirements and changing needs throughout his lifetime. As and when the financial activities and status of the customer change, he is referred to the most competent banking professionals who can meet his needs in the most appropriate way. This organizational structure enables Leumi to provide the highest level of professional service, and financial products and services in line with the customers’ unique requirements.

Short Glossary

Business sector: As directed by the Bank of Israel, a business sector is characterized in three ways: a. Involvement in business activities that generate income and incur expenditure (including activities with other sectors of the banking activity). b. Regular formal reviews of results by the bank’s management and the Board of Directors, to allocate resources and evaluate results. c. The existence of separate and distinct financial results. Middle market: Business customers who have a turnover between NIS 20 – 200 million.

42 | Leumi Corporate Social Responsibility Report | 43 Leumi’s Customers

Customers: Households and Private Customers Customers: Small businesses This customer segment includes households with medium to low levels of wealth, customers with growth potential - young Customers in this segment are small to medium-sized businesses operating in various market sectors. These customers are people, soldiers, students and new immigrants, pensioners and wealthy private customers whose main activities are in the served by the Retail Banking Division. investment field. All these customers are served by the Retail Banking Division. Key activities Key activities The Retail Banking Division provides small business customers with a range of financial products and services in accordance with The Retail Banking Division provides its customers with a range of financial products and services in line with their changing the financial turnover of the business, credit needs, and relative to the sector in which they operate. In order to make the service needs, whilst considering factors related to demographics, employment and their financial profile at their different life- more efficient and concentrate it in one branch for the convenience of the customer, the same division also deals with the private stages, which determines their financial needs. accounts of these customers, striving to answer their needs by: > We strive to provide these customers with an efficient service tailored to their needs by: > Continuous focus on improved service through improving our employees’ skills, and improved measures and controls Continuous focus on improved service through improving our employees’ skills, and improved measures and controls of all processes and interfaces with the customer. of all processes and interface with the customer. > Extension of direct marketing and service channels via advanced telephone fax and Internet services. > Expansion of the availability of service to customers by increasing the number of our branches and adapting them to > Development of financial products and services, adapted to the needs of customers through use of information technology meet future customer banking needs, including the use of modern automated equipment. and data mining such as CSR and WHD, and analytical models to forecast customers’ financial activities and needs. > Extension of direct marketing and service channels via advanced telephone, fax, and Internet services. > Collaboration with companies in the Leumi Group, such as Leumi Mortgage Bank and Leumi Card, in order to provide > Development of financial products and services, adapted to the needs of customers through use of information the best comprehensive solution for each customer. technology and data mining such as CSR and WHD, and analytical models to forecast customers’ financial activities and needs. Key products and services > Collaboration with companies in the Leumi Group, such as Leumi Mortgage Bank and Leumi Card, in order to provide the best comprehensive solution for each customer. Small business customers are served by business teams within the branches who specialize in the needs of the segment and are supported by a dedicated Internet site. Leumi specializes in the provision of banking solutions, including advice on Key products and services commercial credit, investment counseling and ongoing business investment, in line with levels of activity and risk. Customers in the household segment are key users of the financial services provided by the branches of the bank all over The key needs of customers in this segment are credit and investment products, and specialized financial products. The the country. However, we also perceive an increase in direct service routes: Internet, Leumi mail, Leumi Call, Leumi Cellular, services provided to these customers include ongoing financing in line with needs, investment financing so that the Leumi SMS, Leumi data machines and internet sites providing focused information. customer can retain and increase his level of business activity, and solutions for financing international commerce. Personal In the credit field, Leumi takes the lead with unique products that enable the customer to enjoy pre-approved loans in all banking services are also provided for the business managers and employees of these customers. the direct service channels, according to different customer profiles and their needs. The customers can select the credit In the field of investments, Leumi offers a range of single-deposit and installment saving schemes, with different levels of products that suit them at the different stages of their life. index linking, for periods that suit the customer. In addition, Leumi offers a range of investments that includes structured In the field of investments, Leumi offers a range of single-deposit and installment saving schemes, with different levels of deposits in local or foreign currency, saving schemes, provident funds and mutual funds. index linking, for periods that suit the customer. In addition, Leumi offers a range of investments that includes structured Satisfaction survey – listening to customers deposits in local or foreign currency, saving schemes, provident funds and mutual funds. Leumi measures the level of satisfaction with the quality of the retail banking division services using customer satisfaction surveys. The following is a list of the monthly surveys conducted in 2005-2006, representing a cross-section of around 70,000 customers each year: > Telephone surveys: Initiated telephone surveys for the purpose of seeking feedback on service levels at the branches. > Written feedback: Customers are requested to provide feedback on postcards provided at the branch. Commissions from household and private customers > Daily satisfaction surveys: Surveys which assist the branch managers and employees on a real-time basis. Effective 1 December 2005, the bank has worked on the principle of a package deal approach to household > Undercover customers: Customers who perform routine transactions in order to evaluate potential issues with service accounts, as follows: provided to customers. A. Transaction commission and fixed current account management charges were cancelled. In their place, 7 new commissions > Internet surveys: Customers invited to provide feedback relating to service levels via Leumi Internet sites. (4 of which are controlled by supervision) were introduced at the commission rate of NIS 1.21 per transaction. This was > Initiated surveys by samples: Surveys commissioned via third-party companies to conduct telephone interviews with in line with the publication, on November 23, 2005, of a general permit of this level of commission for current account customers on a random sampling basis. The data obtained from the surveys are used by the division to learn lessons and transactions by the Supervisor of Prices in the Ministry of Industry Trade and Employment. introduce measures to improve the service. These measures may include: B. The Bank charges commission on a per transaction basis (pay-as-you-go) with a minimal account management > Service monitors and tellers: When required, the Bank installs service desks to give customers guidance in performing commission of NIS 10 per month. banking activities within the branch. At the same time, the Bank increases the number of tellers whose role is to provide C. Alternatively, the customer may select the “Extended Basket” at a cost of NIS 18 per month. A customer who selects support for the service desk, and perform customer transactions. this option may execute a number of transactions within the basket up to a certain limit. If the customer exceeds the > Workshops to improve service levels within the branch: Branch employees participate in workshops, which include role- prescribed number of transactions, an additional charge by transaction is made. In addition, the customer pays a plays with dissatisfied customers and ways of supporting them. commission for those transactions not included in the basket. > Service center on the Internet: This service provides updated information relating to surveys and tips to improve service D. Increases for commissions to household and private current accounts were frozen until May 31, 2006. Even though the to customers. freeze period terminated on this date, Leumi decided not to increase commission levels to these customers. Meetings and conferences During 2006, around 45 conferences were organized for around 13,000 customers in this segment. In addition, several thousand customers attended meetings at branch level.

44 | Leumi Corporate Social Responsibility Report | 45 Leumi’s Customers

The following is a list of the surveys conducted by the commercial banking division in 2005-2006: > Real-time telephone surveys: These surveys are conducted by telephone and timed close to the transaction by the customer. They enable the branch to receive feedback in real time regarding the service provided. > Research based on representative samples: A third-party company conducts telephone interviews with customers according to a random representative sample. The feedback from customers, satisfaction surveys and justified complaints by customers are directed to the Customer Complaints Office, which rates the service levels of the Commercial Banking Division and the branches on the quality of their service. During 2006, the division performed face-to-face interviews with customers, in order to understand their expectations more fully. Findings from these interviews show that customers have a strong feeling of “partnership” with the Division and believe that the bank is genuinely working in the interests of the customers. In addition, these interviews revealed that personal familiarity is one of the most significant factors in establishing trust, though availability and speed of response is no less important. Customers expect that the division’s staff will have a good Customers: Medium-sized businesses knowledge of their business and nature of its activity, and that they will be familiar with the relevant business field. In practice, the Commercial Banking Division’s staff must have both banking and business knowledge and are expected to The commercial banking division serves medium-sized businesses (middle market) and their stakeholders in all sectors of provide valuable suggestions and initiatives to assist the customers in their business. Their professionalism in the eyes of the the economy. customers is tested when exceptional situations arise requiring the Bank to act quickly in providing creative solutions . Key activities Meetings and conferences- talking to customers Service to these customers is provided by dedicated commercial branches all over the country. The central branch of the During 2006, the commercial banking division arranged the following events and conferences: commercial banking division is in Tel Aviv, with a further 24 business branches located in industrial areas and cities. These branches provide expertise in business activity in line with the needs of the customers of this sector. > Divisional customer conference. > Regional and branch-based meetings for between 50 and 100 participants. Key products and services > 4 rounds of professional training meetings for customers, with 20 - 40 customers taking part at each meeting. Products and services are provided to this sector on an individual basis, and they include the financing of business deals using tailored credit solutions, financial solutions for investments and risk-management, financing for international trade and start-up companies. Commercial banking includes activities abroad through Leumi’s foreign branches and offices. Companies served by the Commercial Banking Division may utilize the connections of the bank for foreign activities. Leumi travels to the customer: “Mobile banking” The Commercial Banking Division has a unique organization structure amongst financial institutions in Israel and is therefore Leumi provides a unique mobile banking service, which brings the bank to the customer. The service is provided in selected able to provide a comprehensive “one-stop shop” service ranging from management of current account to a full array of areas that are determined by the amount of employers in each area. The professional team, which includes a senior financial financial services. investment advisor and banker, travels regularly to the place of work and provides banking services to employees, that Customer surveys – listening to customers include investment guidance, provision of credit soloutions and on line services via advanced technologies (but excludes Leumi measures the level of satisfaction with the quality of the commercial banking division services using customer money transactions). During the Second Lebanon War in 2006, the mobile banking branches visited Nahariya, Kiryat satisfaction surveys. At the begining of every year, an annual survey is conducted amongst a representative sample of 1500 Shemona, Metulla, Hazor, Yesod Hama’ala, Shlomi, Nesher, Kiryat Motzkin, Tirat HaCarmel, Carmiel, Kaduri (Lower Galilee customers relating to the performance of the previous year. Regional Council) Meiron (Merom Galilee Regional Council) and others.

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Customers – Corporate customers The Corporate Banking Division serves large corporate customers, including corporations with international business activities who hold a leading position and dominance in their business field. These customers are, in the main, publicly traded, and they represent all sectors of the market. These companies are characterized by a complex organizational structure, which includes many layers of management and wide spans of control. Key activities The services of the Corporate Banking Division are provided by four units, all of them expert in specific sectors of the market. The accounts of corporate customers are managed by commercial branches located all over the country, being mainly in the framework of business sections which specialize in serving large corporations with a range of financial Customers: Construction and Real Estate companies activities, including branches of the Bank overseas. This customer segment includes the leading construction and real-estate companies in the market including infrastructure Business deals relating to purchasing shareholdings and control are served by a dedicated unit which specializes in such projects, and selected middle-market customers who are involved in real estate and construction. The dedicated transactions, given the high complexity and risk involved. Construction and Real Estate Division serve these customers. Another dedicated unit specializes in the financing of investments in infrastructure projects (power stations, purification projects, toll-roads, BOT projects and others.) This unit has developed special financing packages in collaboration with Key activities other players in the capital market. This division provides financing services in the construction sector, using tools for unique analysis and conservative The review and approval of such deals are handled by the relevant credit committee, and by the credit risk management positioning. A significant part of the division’s activities is the financing of projects using the closed construction lending unit in the credit division. This unit is unique to Leumi and was established in 2006 in order to create stricter credit control, method, supported by supervision and close monitoring, with close examination of the projects at all stages. Examination provide higher quality credit management and improve customer service. and approval of the transactions, or their transfer for discussion in the relevant credit committee, are evaluated by the credit risk management unit in the credit division. These services overseas are primarily provided by Leumi USA, Leumi UK and other overseas branches of the Bank. The services of this Division to construction and real estate customers are provided by two key professional sectors: the Key products and services building contractors sector, for middle-market customers whose activity is mainly in residential construction, and the The key products and services provided to corporate customers include ongoing financing in accordance with customer construction companies sector, which provides services to large customers. needs, the financing of investments to maintain and expand activity, the provision of international trade financing solutions (including financing of projects overseas), financing and support for national and international projects, financing for Key products and services mergers and acquisitions, financial products to protect against currency fluctuations, interest risks and price changes of Financing to this branch is intended to cover a range of credit options in order to serve the various sectors: residential, goods, capital market activity and investment advisory services. In addition, the Bank provides services for the managers commercial and office buildings, and construction for trade and industry. The financing policy for 2007 will give preference and employees of these corporate customers including Internet-based financial management. to financing of residential projects in high-demand areas, and continuing support for national projects. Customer satisfaction – listening to customers Leumi measures the level of satisfaction with the quality of the Corporate Banking Division services using an annual customer satisfaction survey, conducted at the start of each year amongst a representative sample of 1400 customers relating to the preformance of the previous year. Short Glossary The results of the survey show that Leumi customers are satisfied with the level of service they receive. Key strengths Closed construction lending: In this system the customer contracts with the Bank for the financing of a specific perceived include fairness and trustworthiness, service quality, professional service and international trade. Responses project which is seperated from the rest of the customer’s activities. The contract is manaded in the format of a “closed received from these customers serve the Division in understanding customers’ needs and developing new activities to economy” enabling the bank to track the progress of the project, including cash flow via a special account set up with a improve service. pre-arranged budget. Conferences and events - talking to customers During 2006, 9 customer conferences were organized by the Corporate Banking Division, with 437 participants. These meetings included lectures on different subjects such as capital markets and foreign currency dealings, international trade, tenders, game theory and guidance for property market investments.

48 | Leumi Corporate Social Responsibility Report | 49 Leumi’s Customers

Customers: Private High Net Worth Customers High-wealth customers, with high-value financial asset portfolios, and customers defined as having a “high net worth”, resident in Israel and overseas, are served by a specialist team of advisors of the Private Global Banking Division. Key activities The Private Global Banking Division provides comprehensive financial solutions on a global basis via teams of professional financial advisors located in 7 special units throughout Israel, and via Leumi branches in the United States, the United Kingdom, Switzerland, Luxembourg and representatives and affiliates in Europe, Latin America, Canada and Australia. This structure is designed to preserve a personal and high-quality service, deep understanding of the customers’ needs and financial preferences. The general criteria used to assign customers to the different banking divisions are as follows: Key products A comprehensive range of specialist products and services is offered to this customer segment, using the most modern Business Customers: technological applications including a dedicated Internet website for long-standing customers. Customer Division/ Sector Amount of obligo Customers enjoy a range of investment products including deposits, share-trading in Israel and overseas, mutual funds, structured products, hedging funds and more. They are also entitled to a range of credit options and investment banking Large businesses and construction companies Corporate Over NIS 100 million services including share-offerings, trustee services in Israel and overseas, offshore support and more. Middle-market companies Commercial Between NIS 6 and 100 million

Customer satisfaction – listening to customers Small businesses Banking Up to NIS 6 million A survey was conducted during April – May 2006 amongst the customers of this segment, focusing on overseas customer satisfaction overseas of the services provided by the Global Private Banking Division. The results of the survey showed In addition, further parameters are applied to assign certain customers to business segments or to a certain division, such significant levels of satisfaction by overseas customers in matters regarding courtesy and personal attention, attention to as complex and unique transactions and projects in the construction industry which may change the classification. requests, fairness and reliability, speed of response and availability. The survey shows that 61% of customers rated Leumi’s service better than other banks, which is higher than a similar rating given to other banks overseas (42%). Private Customers according to level of wealth: Customer's level of worth Conferences and events – talking to customers Customer Division/ Sector Israel resident Overseas resident During 2006, a number of customer events were held, as follows: > An annual conference of the Division, attended by 2,500 customers. High net worth customers Private Global Banking Over US$1 million Over US$ 0.5 million > 7 events for the purpose of granting special benefits packages – 2,000 customers participated. Medium-wealth customers Householders Up to US$1 million Up to US$ 0.5 million

> 5 meetings on the subject of economy, society and banking products – 500 customers attended. Private customers with > 3 cultural events at which 1,600 customers attended. business accounts Commercial Up to US$1 million Up to US$ 0.5 million In total, around 6,600 customers attended the events organized by Private Global Banking Division in 2006.

Short Glossary

High Net Worth: Customers with a high level of financial assets. Obligo: The customer’s total financial commitments.

50 | Leumi Leumi’s Customers

Leumi’s Concept of Service Customer privacy We, at Leumi, are confident that our service orientation is at the heart of our organization, and that every customer is the The commitment to banking confidentiality and the protection of customer privacy are the cornerstones of Leumi’s activities focus of our activities. Every single day, employees of Leumi strive to strengthen the relationship with our customers and with customers. Leumi ensures absolute compliance with the law in this respect, even after closure of customer accounts. build mutual trust in order to continue to be their first choice at all times. At Leumi, we believe that first-class service is Leumi’s Executive Management Team regards data protection as a central function within the banking network, and invests made up of many small decisive moments. significant resources in this field. Leumi’s information privacy program is based on strict procedures and a range of technological applications designed to Listening and improving maintain confidentiality whilst ensuring complete records are available from the Bank’s database at the time required. Leumi operates a round-the-clock dedicated unit, which ensures information security controls are in place. In the spirit of “Leumi listens”, we use many means to identify customer needs and develop services to meet these needs. Activities include: Leumi maintains control and reporting procedures designed to ensure the efficiency of information security systems, confidentiality and privacy of customer information. > Customer satisfaction surveys amongst the customers of all the Divisions, which provide up-to-date feedback on the quality of our service. > Customer events in which customers meet with Leumi managers and with members of the Executive Management team for discussion. > Collation of information from the Customer Complaints department.

Customer complaints The key authority in the Bank for handling customer complaints is the Customer Complaints Office, which reports to the Legal Advisor of the Bank. The Customer Complaints Office provides the Executive Management team with information “Leumi Israel Trade” website wins the prestigious Web Awards prize for the about the quality of the services provided by the Bank. Such information is used for the purpose of learning from experience outstanding website in the commercial category for capital trading companies. and preventing the recurrence of undesirable issues in the future. The Leumi Trade website, enabling customers to engage in online trading activities on the Tel Aviv Stock Exchange, was Customer complaints are logged from various sources: direct complaints from customers, employees, the Bank of Israel, selected in the 2006 Web Awards, a competition run by the People and Computers Group, as the best commercial website the Israeli Consumer Association, the press, the Office of the President of Israel and Members of the Knesset. Complaints amongst companies operating in the capital market. The website criteria considered included usefulness/relevance of the are received in writing, by post or by fax, telephone or the Internet. site, simple and friendly user interface, the ability to conduct transactions online, interactivity, information security, service During 2006, over 8,000 complaints were received. and support, availability, speed of response, and the management of activity peaks. Leumi received the lowest level of justified complaints amongst the top five banks in Israel – 16.5% - for the fourth year running. In addition, according to information provided by the Public Complaints Unit at the Bank of Israel, Leumi’s ranking for responding to complaints was the highest of the five major banks – 94% versus 85% for the other banks.

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Service channels In order to provide the broadest range of services to customers, we at Leumi have developed an approach in which the different service channels are complementary to one another, i.e. the branch channel and direct channels. The branches The Bank’s branches are in actual fact the traditional route for provision of services to customers. Customers visit the branch in person, and conduct their business with banking clerks and advisors. In order to provide the best service to customers who visit the branches, Leumi aims to manage the rate of new branch openings in line with the economic and demographic development of the market in Israel, whilst ensuring maximum coverage of the country. The direct channels Developments in technology and communication in recent years have led to significant changes to customers’ habits in the use of the of the services offered by the Bank. Today, Leumi customers can also visit the Bank virtually at all times, via the machines or 20% discount on current account transactions. 24 hour self-service options available. These include Leumi information terminals, service booths, telephone, fax, Internet, During 2006, Leumi launched the following new direct services in order to increase user-convenience: cash machines, cell phone and computer to computer communication. > “Leumi Mail” – E-mail from the bank via a secure server. At Leumi, we are constantly striving to expand and improve the direct banking channels so that we can provide customers with even greater accessibility. Via these channels, customers may conduct different transactions such as money transfers, > “Leumi Net”– Enabling viewing of several accounts of one customer on one screen. payments, securing loans, savings funds management, ordering checkbooks, and more, all online. So for example deposits > “Leumi SMS” – Information service and notices regarding customer account via cell phone. can now be made via the service, called “Chic-Chac”, which supplies a photocopy of the money transfer document, together > Payment Services – Payment of telephone and electricity bills via the self-service positions in the Bank – Low-cost, fast and easy. with the deposit form. > Air-time charges for cell phones – Payment transfer to cell phone companies from cash machines for purchase of air-time. The amount of transactions conducted via this route continues to grow each year. In 2005, the increase was 14%, whilst in 2006, the increase in customers exceeded 20%. In the telephone service center, Leumi Call, to which all incoming calls to the Bank are routed, customers enjoy a human response to all queries. This service is available all day until 11 p.m. On average, one million calls are received at Leumi Call each month, of which around 85% are dealt with on the spot. In 2006, Leumi Call achieved a high score for its high level of customer service, the pleasant manner of the telephone representatives and their ability to resolve most problems. Leumi enables hundreds of thousands of customers in Israel and overseas to obtain information and conduct transactions via the Internet and by cellphone. In order to support customer demand, Leumi maintains thirty websites: marketing sites, interactive sites for personal transactions including trading in capital markets in Israel and overseas, sites of the overseas branches, subsidiaries, and sites for cellphone interactions. Leumi Trade Israel supports trading in capital markets, capital markets updates, and information from the Tel Aviv Stock Exchange, (but does not include information relating to the customer’s bank account). In addition, using this site, customers can trade in shares on the stock exchange in the United States. Wealthy customers can also enjoy a range of information alerts regarding their account or transactions and events (in accordance with agreed guidelines provided by the customer). Wireless Internet and online information at Leumi branches Leumi continues to introduce new technological improvements to enable customers to conduct additional transactions Leumi enables its customers to enjoy a range of banking services using various Internet sites, and encourages such use other than just banking transactions, while they are at the branch. Leumi has started a pilot for the introduction of Wi-Fi by awarding discounts and benefits, for example, exemption of commission on withdrawal of foreign currency from cash Internet services in the branches to enable customers of the bank, while they are in the branch, to surf the net or check emails using their laptops or hand-held computers.

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Approach to Accessibility at Leumi

In 2004, Leumi became the first of the Israeli banks to receive the “Accessibility Award” from Accessibility Israel (a non-profit organization), for equipping several branches to provide a greater ease of accessibility for customers with special needs. With the help of Accessibility Israel, Leumi has already equipped 55 branches, and will complete a further 30 branches by Cash machine adapted for the use the end of 2007. 41 branches have received the Accessibility Award, a further 14 branches are already accessible and should of disabled customers soon receive awards. The changes made by Leumi to adapt the branches to meet the needs of disabled customers included those relating to physical mobility at the branch and support for customers with sight or hearing difficulties. Specific changes included entrance to the branch, special positions for disabled customers including cash machines and information units, modification of the height of the self-service positions, special check writing units for blind customers, tone announcements in elevators and other services adapted to the needs of the disabled. Leumi is currently in the process of issuing a tender for fitting all the branches with facilities for the visually impaired. This process will continue throughout the next 5 years and will include practically all Leumi’s service positions. Leumi has also adapted its Internet sites to make them more accessible to those with special needs. The following 41 branches have received the Accessibility Award: Ussishkin / Ofakim / Oranit / Azoray Hen / Azorim / Eilat / Em HaMoshavot / Ashdod City / Retail Stock Exchange / Bat Yam / Gan Yavne / Dalyat Al Carmel / Hadassa / Har Hotzvim / Herzliya / Yad Eliahu / Yehud / Kochav Yair / Kikar Rabin / Lehavim / Migdal HaEmek / Ben Gurion Airport / Beer Sheva Industrial Area / Herzliya Industrial Area / Rehovot Industrial Area / Pisgat Ze’ev / Petah Tikvah / Zoran / Concord / Kassem / Katzrin / Kiryat Eliezer / Kiryat Memshala / Kiryat Sharett / Ramle / Ramat Aviv Gimmel / Ramat Hahayal / Shoham / Shehakim / Stampfer / Talpiot. The following 14 branches are due to receive Accessibility Awards (conditional on the activities of the public authority): Bet HaKerem / Bet She’an / HaSharon Private Banking / HaYekev / HaMapilim / Yokneam / Migdal on 17-23 / Millennium / Weizman Institute (counter) / Ra’anana / Kfar Saba Industrial Area / Haifa Shopping Mall / Kiryat Gat / Ramat Poleg / Sha’ar Rishon.

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Leumi’s People

“Leumi is a “warm home” for its employees and their families. We show consideration for the needs of individuals, we are attentive to employee requests and personal problems, and do all we can to understand, and provide support and assistance, particularly in times of trouble or distress.”

From “The Leumi Way”, Leumi’s Code of Ethics

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Leumi’s people: the Bank’s most important resource

Our people – employees of all units of the Bank – are our most important resource. They represent Leumi values and objectives, and contribute their skills, abilities and energies for the benefit of Bank’s stakeholders. We recognize the contribution of our employees to the success of the Bank, we are proud of our people and we take care of them. The Group’s vision also emphasizes our care for our people. We are confident that in a quality organizational culture, we can define common targets for our employees and for the Bank, and that the Bank’s success is demonstrated not only by business success, but also by the quality of our employees, by their satisfaction and by their relationships with those around them. The formulation of our Code of Ethics, the “Leumi Way” in which many Leumi employees took part, is a prime example of this approach. In order to develop our human resources, Leumi has created training programs, performance measures, remuneration methods and welfare programs for employees. At the same time, Leumi has developed communication and feedback channels through which, Leumi listens, learns and understands the needs and desires of Leumi employees. The individual responsible for human resources in Leumi is a member of the Executive Management Team, a senior director, and the Head of the Human Resources Division. This division is responsible for formulating and implementing HR policy, including the selection and placement of employees, remuneration, employee relations, employee development and career advancement, professional banking training, managerial training, general training, assimilation of the Code of Ethics “the Leumi Way”, in-house communications, individual welfare and the general welfare of employees, organizational development and the implementation of corporate social responsibility policy.

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Religion Leumi employee profile Leumi employs people of all religions, as shown by the following data relating to employees in 2006: Leumi is one of the most high-quality and stable workplaces in the Israeli market. The Bank’s employment policy demands Jewish – 97.2% that Leumi maintains diversity and equal opportunity. Muslim – 1.6% The following data refers to the total number of employees including employees on maternity leave and unpaid leave, and Christian – 0.8% employees lent to subsidieries. Druze and Samaritans – 0.4% At the end of 2006, Leumi employed 8,081 employees versus 7,807 at the end of 2005 (including 140 / 129 employees on maternity leave or unpaid leave, respectively). Gender New employees In 2006, the proportion of women amongst all Leumi employees was 61.1%. During the past 20 years, the proportion of women has increased slowly but consistently. In 2006, 753 new employees joined Leumi (546 with academic degrees). This compares with 507 new employees in 2005 (representing an increase of 48.5%) and 335 in 2004. The proportion of women amongst the management population of Leumi has increased rapidly. In 2006, women in management positions reached 45.6%, compared to 17% in 1985. Terms of employment Leumi employees belong to two main groups: permanent employees – 80% and non-permanent employees – 20%. A Proportion of women in management Proportion of women as a total of all Leumi employees proportion of the non-permanent employees are awarded permanent status after a period of up to 4 years employment, provided they meet the criteria established by the bank and the relevant committee. Age 60% 61.20% 61.00% At the end of 2006, the average age of Leumi employees (permanent and non permanent) was 44.4 years, versus 44.7 in 45.6% 40% 2005, and 44.5 in 2004. 60.80%

60.60% Academic qualifications 20% 17% The proportion of employees with academic degrees is continuing to increase, and at the end of 2006 reached 56% 60.40%

of all employees, compared to 52.3% at the end of 2005, 49% at the end of 2004, and 26% at the end of 1995. The 0% 60.20% representation of those holding academic degrees amongst the management of the bank reached 90.1% in 2006. This 1985 2006 2002 2003 2004 2005 2006 increase is due to: Employees of the bank undertaking degree programs. Employees with special needs Increase in recruitment of those with academic qualifications. Leumi employs around 200 employees with special needs, and the Bank takes care to ensure the physical working Retirement of employees who do not hold academic degrees in the context of voluntary redundancy programs snd environment is adapted to meet their needs. Even after these employees leave the Company, Leumi continues to provide natural retirements. them with assistance. Seniority Leumi attempts to employ contractors who employ people with special needs. An example of this is Leumi’s contract with The average seniority of all employees (permanent and non-permanent) was 18.5 years at the end of 2006, versus 19 years a cleaning company who employs disabled IDF veterans for the cleaning of cash machines. Another example is the printing at the end of 2005. The average seniority of permanent employees was 22.4 years at the end of 2006, versus 22.2 years at company, which printed the Leumi Code of Ethics. This company employs 50 mentally-impaired employees. the end of 2005. As can be seen, there is a slight trend towards increase in seniority of the permanent workforce in recent years, due to the increase in retirement age, which counters the effect of the voluntary retirement programs. On the other hand, the increase in the intake of new employees brought down the overall seniority levels in the Bank (permanent and non-permanent).

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Employee Development and Training Continuous professional development Leumi’s management has set an objective to improve the skills and competencies of Leumi employees, through continuous training and job enrichment. This objective is based on the acknowledgement that such employee development contributes both to the achievement of business objectives and to the feeling of partnership and satisfaction of the Computer-based learning Bank’s employees. Computer-based learning is increasingly being used to train Leumi employees. This includes interactive learning software, The Bank’s policy is that every employee will benefit at least once per year from some form of professional or personal prerecorded training modules, synchronous distance-learning courses (courses conducted in real-time, where the trainer development activity, as defined by the bank from time to time. and employees are in different locations, and communicate via a web-based module), web-based courses and simulation programs. Such computer based learning enables the bank to provide a range of dispersed training options, directly to the In 2006, employees participated in 59,167 training days, compared to 47,574 in 2005. The average number of training desk of the employee, and ensure development of skills via exercises, web-based tests and distance monitoring of progress. days per employee in 2006 was 7 days. The training and development budget for 2006 amounted to NIS 5,060 per Today, Leumi operates 270 different computer-based products. employee on average, compared to NIS 5,180 in 2005. (These figures do not include the cost of working hours of participating employees). In 2006, Leumi employees took 104,889 online tests (2005 – 71,408) on banking skills and competencies, legal and regulatory subjects, and computer applications, equivalent to almost 13,000 learning days. The training activities in 2006 focused on improving professional skills, marketing competencies and management training, in line with the Bank’s business objectives. The training activities put emphasis on the broadening of the scope of training activities and use of modern training methods to ensure improved accessibility for all employees. The annual Academic studies training program of the Bank is developed after a thorough process of identification of training needs, agreement of Leumi encourages its employees to acquire academic education by participating in tuition fees and granting additional content of the various courses offered and the training methodologies. Such decisions are made in partnership and with vacation days for taking examinations. Leumi funds 100% of fees for selected professional courses, and 80% of fees for the full involvement of managers of different units of the Bank, in order to ensure a good fit with their actual needs and other academic courses. business objectives. In 2006, 42 employees completed BA/BSc. programs, and 95 employees completed MBA/MA/MSc. programs.

The following is a table showing the breakdown of training days in 2006:

Training topic Number of training days

Banking 38,656

Leadership and management 8,265

Technology and system assimilation 6,933

Data processing 1,695

Other topics: safety, compliance, protection of environment etc 3,618

Total training days 59,167

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Employee Reward and Remuneration

All Leumi employees are evaluated by their direct and indirect managers on an annual basis according to a defined process. This evaluation is based on performance against targets and an assessment of their achievements. The evaluation includes a conversation in which the employee receives feedback regarding his work and his contribution in the past year and a definition of targets for the coming year. The emphasis is on genuine dialogue between the employee and his manager. The remuneration framework for employee targets to reflect actual performance and contribution in remuneration levels. Annual remuneration is differential, based on job requirements, personal performance, annual evaluation and personal potential. In accordance with collective agreements, Leumi allocates a budget to representatives of the employees for team-building and social activities for employees. This budget is managed by the employee committees and is used for organizing various welfare and social activities such as trips, activity days and events. In addition, the employee committees offer a range of benefits to employees such as health insurance, health care, dental insurance, life insurance, property insurance in accordance with agreements developed by the employee committees with various insurance and benefits providers.

Employee retirement and termination of employment Allocation of options and share purchase following the Bank’s privatization In accordance with the Collective Agreement, Leumi does not dismiss permanent employees (except in exceptional In accordance with the Special Collective Agreement, signed in November 2005, in February 2006, an allocation of circumstances) but prefers to offer the option of voluntary retirement, which several hundred employees have already 84,853,960 share options was granted to 7,458 employees at no cost. These options may be converted into the same utilized. Great importance is attached to such voluntary retirement programs, as they enable the Bank to align its employee number of Leumi shares, and represent 6% of the Bank’s share capital. profile with changing requirements, and enable long-serving employees to retire with favorable conditions. In addition, in accordance with a purchase option of May 2006, 7,360 eligible employees purchased 40,274,560 shares of In 2006, 177 employees retired with voluntary retirement packages, and a further 11 employees will retire in 2007 with the Bank from the State of Israel. the same package.

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Internal Communications Dialogue with employees In keeping with the organizational culture at Leumi, and as an integral part of the ongoing process of development and improvement at the bank, Leumi maintains an ongoing dialogue with its employees on a range of topics. These include the subjects relating to the entire organization as well as to specific business unity. Based on this platform of internal communication, Leumi aspires to involve its employees as partners who contribute to managing organizational change, and to equip them with the tools to communicate effectively with bank’s customers and the general public. Internal dialogue is designed to support a feeling of pride, identification and belonging, and serve as a basis for building personal trust and loyalty over time as employees, professionals, customers and ambassadors of the Bank. The dialogue takes place using three main parallel communication channels: > Interpersonal communication. > Communication on a wide basis to all employees. > Internal organizational surveys. Communication channels open to all employees Communication channels that are open to all employees are designed to deliver management and professional messages from the Bank’s Executive Team to managers and employees, and to update employees on a regular basis on what is Interpersonal communication channels happening within the organization. This supports the development of a common language for all employees, and a feeling These are designed to ensure the effective delivery of management and professional messages to employees, and to of involvement and belonging. provide a platform for employees to be in direct contact with management in order to get acquainted, listen, consult and The key ongoing communication channels are: express opinions. The key channels are: > The Leumi Intranet site: This is a portal for all Leumi employees to access all the intranet sites of the Bank, it subsidiaries > Senior management meetings with the Chief Executive: Twice yearly meetings of around 200 Managers at the Senior and various external sites. Manager Annual Conference: The Chief Executive, Galia Maor, also meets senior managers during senior management > Knowledge management system: Using this platform, which is intended to strengthen the connection between staff training programs. units and the field, and between the employees and the management, employees can update their colleagues and the > Manager and employee meetings with the Chief Executive: Meetings held once a year in which a group of managers organization regarding projects, information and issues arising during their work, and can learn and gain professional and employees meet with the Chief Executive, for open conversation on a range of topics. assistance based on the experience of others. This is a multi-directional platform, which has no limits in terms of hierarchy, > Manager and employee meetings with the head of Human Resources: Quarterly meetings in which a group of enabling free interaction at all levels. There are 59 sites in this knowledge management application. managers and employees meet with the head of Human Resources for open conversation on a range of topics. > Leumi TV: Leumi TV enables all Leumi employees to watch a specially developed news edition of current events in Leumi, > Open phone line to Human Resources: As a result of the employee satisfaction survey, conducted in 2005, the HR whilst sitting at their desks in front of their computers. Leumi TV is aired monthly, and covers organizational changes, team defined a fixed and regular time to respond to telephone calls from employees. So far, 280 employees have used this issues of current interest on a national basis, which could affect the Bank, events and ceremonies, updates of outstanding service. employees and presentations of the different units of the Bank and the Executive Management team or other managers. > Divisional conferences: There is at least one employee conference in each division every year. This is a platform for > Newsletter “Kesher Ayin” (Eye Contact): This newsletter is published on a quarterly basis, and covers a range of dialogue within the division. activities relating to the activities of the Bank and employees. > Employee meetings with divisional heads: The Divisional Heads meet on an individual and group basis with their employees for generating dialogue at divisional level. > Internet chats with divisional heads: An open intranet interface for discussion with Divisional heads on professional matters which are relevant to the working environment > Team and Unit meetings: Each team and work unit has a routine of regular meetings at which professional matters are discussed, as well as matters relating to social and cultural issues, values, interpersonal relations etc. > Feedback conversations: Feedback conversations take place annually between managers and employees as part of the

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Internal surveys As part of the dialogue process with employees, surveys are taken throughout the year on subjects such as internal The following is a graph showing the results of the survey according to the subjects surveyed: service, efficiency of procedures and collaboration between the Bank’s divisions. Evaluation ranking

Survey of employees standpoints Level Leumi’s image My unit My experience During September – October 2005, for the first time, Leumi conducted its Survey of Employee Standpoints. The purpose of this survey, as its name suggests, was to listen to employees, and hear their views about the Bank, to support change 5

processes at all levels for the benefit of the employees, the customers and the entire organization. 4.44 4.37 4.37 4.32 4.25 4.11 3.99 3.90 3.70 The objectives were defined as follows: 4 > To obtain a comprehensive picture of how employees see the Bank. > To obtain a view of the employees’ satisfaction levels. > To gain an assessment of the degree of assimilation of the “Leumi Way”, Leumi’s code of ethics. 3 The survey was conducted using a knowledge management application, ensuring anonymity for all responders. The response level was 58% of all employees. The questions in the survey covered three broad areas: 2 > Leumi’s image as an organization – The feeling of employees towards Leumi and its achievements, and attitudes vis-à-vis customers. 1 > My unit – The feeling of employees about their direct managers and the division or unit that they belong to. Vision, objectives Leumi and external Leumi as a My direct manager: My direct manager: My working unit How I feel How I feel as Work procedures and achievements customers desirable workplace professionalism relationships about my job a Leumi employee > The individual’s experience – The employees’ attitude towards work procedures, communications and level of respect between employees. From the results of the survey, it was concluded that Leumi is an organization in which employees are satisfied with their place of work and proud to be a part of. As can be seen, employees ranked Leumi’s image very highly. This ranking drops progressively when employees evaluate their working units and their personal experience of working at the Bank.

The results of the survey were communicated to all Leumi employees in a specially created informational brochure, which was delivered to the desk of each and every employee. The Executive Management team confirmed they would act to improve the areas identified in the survey requiring attention and several processes were implemented as a start in 2006: > Developing a new policy linking evaluation of the employees’ contribution and development to remuneration and promotion. > Strengthening of personal development processes that contribute to excellence. > Greater collaboration between different units in the Bank in the efforts to achieve Leumi’s objectives. > Broadening internal dialogue and communication channels between management and employees. The results of the survey and its conclusions contributed significantly to expanding the Bank’s internal communications, such as the introduction of Leumi T.V. and the “Open Phone Line” to Human Resources Division.

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Employee Relations

Relations between the Executive Management of the Bank and its employees are set within a framework of special collective agreements, the central component of which are the “Labor Laws” to which several collective agreements and arrangements have been added over the years. The collective agreements of Leumi apply to all employees, except for the 100 or so senior professional employees who are employed on the basis of personal contracts. The collective agreements define the frameworks for protection of employee rights in matters of compensation, working hours, vacation and other rights. These agreements are signed by the employee representatives and the management of the Bank. The Employee Council includes representatives from the managers’ committees, signatory rights holders and the works committees, divided by geographical areas, with a National Employee Council having overall authority over the regional committees. Employee relations at Leumi have been positive in recent years, being based on mutual trust, transparency and openness. There is continuous contact between the Bank’s management and the representatives of the employees. In November 2005, as a result of the State of Israel’s sale of its remaning shares in the Bank, a new collective agreement was signed in which employee rights were protected for 5 years.

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Safety and the Work Environment Quality of working environment Leumi’s safety and hygiene policy is designed to ensure that all activities taking place at work in the Bank are undertaken in The quality of the working environment for employees is of great importance to Leumi. Whilst planning the new branches a way which will prevent any danger or risk to the safety and health of employees, customers and neighbors. This is based or purchasing new equipment, many examinations are carried out by ergonomic consultants, designers, and product on full compliance with all legal requirements and other safety regulations applying to these activities. A key element of this quality experts, lighting and aquatics experts in order to ensure the creation of optimal working surroundings that will Bank’s policy is the cooperation with the employees on all matters of safety and ensuring that all up-to-date relevant and improve the work experience of the employees, protect their health, and improve their productivity at work. applicable information is regularly brought to the attention of all employees and available to them at all times. One such example is the design of Leumi Call, where the services of an environmental psychologist were engaged to The Real Estate and Purchasing Unit of Leumi in the Operations Division is responsible for maintaining adherence to all review the working environment and identify employee needs such as: furniture and accessories, meeting-spaces for team safety requirements and for the safety committee, which is headed by the Operations Division head. meetings, lighting, plants and greenery and aquatics. These recommendations were taken into account whilst designing The key safety activities fall into two categories: the call center.

Safety training and assimilation Environmental checks > Training of all employees on matters of work safety, information on safety risks and ways of alerting potential safety hazards. Leumi regularly checks air quality and the presence of radon gas in relevant workplaces. In cases where high gas levels are > Training and qualification of safety officers at the branches. found, they are corrected immediately. In 2006, 9 checks of air climate comfort and 21 checks for radon gas were made in different branches around the country. All checks revealed that gas levels were within prescribed levels. > Distribution of a Safety at Work newsletter which provides relevant updates to employees. In addition, throughout the year, checks are made for radiation from cellular antennae at the branches. In 2006, 11 checks > Development of safety procedures and implementation. were made and results showed that levels of radiation were lower than permitted levels. > Encouragement of all employees to raise safety issues so that risk can be prevented. > The work safety site on the Leumi intranet.

Monitoring and control of safety and hygiene practices at work locations > Safety audits at construction and maintenance sites. > Safety checks at high-risk locations and corrective activity. > Periodical monitoring, checking and auditing of all equipment as required by law. > Review and learning from experience following any accidents at work. > Training of contractors and suppliers whose work is related to safety issues and hygiene at Leumi.

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Caring for the Welfare of Employees and their Families

Leumi is committed to its employees and their families and invests resources in their well-being. This is done in consultation and collaboration with employee representatives. Such activities are conducted by the Welfare Department, which is part of the Human Resources Division, and provides welfare services to all the bank’s employees. The department also serves “Leumi Retirees” as the Bank is deeply commited to maintaining contact with employees who have retired from the Bank. The following is a list of the key welfare activities: > Care for employees and their families: Assistance for solving social, financial, health and family issues, and support in emergencies or cases of crisis and trauma. Training in family finance and housekeeping is provided, as well as preparation for retirement. > Health: Courses are provided in the subject of health and health awareness, and health checks are offered to employees as part of a program of preventative medicine, including bone-density checks, blood tests and others. In 2006, as every year, blood donor campaigns took place in collaboration with Magen David Adom (the Israel ambulance service). > Welfare Fund: This is a fund established jointly by the bank’s management and the employees, and serves to support employees and their families by funding medical treatment and emergency operations, medical equipment purchase etc. > Leisure activities: Three employee clubs are operated by the Welfare Department in Jerusalem, Haifa and Tel Aviv. Activities include lectures, theatre shows, concerts and more. Low cost subscriptions or subsidized tickets to a range of cultural events are provided for employees. > Leumi Retirees: Leumi considers its retirees an integral part of the Leumi family, and maintains close contact, including home visits and the provision of support, including financial support where required. The Welfare Department organizes an annual meeting for all retirees, with the participation of the Executive Management. Retirees also receive benefits such as holiday and birthday gifts, and opportunities to participate in trips, weekend vacations, activity groups, lectures and cultural events organized by Leumi. Some retirees participate in the Leumi musical group.

Sport at Leumi The Sports Department organizes a range of subsidized sporting activities for employees and their families. These include participation in walks, bicycle rides, orienteering, swimming events in the Sea of Galilee and other sports activities, intended for the whole family. The Sports Department also supports various competitive sporting activities within the framework of workplace leagues, organized by Mercaz Hapoel.

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Leumi and the Israeli Economy

“We at Leumi, since the inception of the State of Israel and Employee Privacy up to the present day, have invested significant financial Protection of data regarding Bank employees resources in social and national projects in a range of areas: Bank Leumi’s databases store personal information about employees. This information is protected in accordance with the development of agriculture, commerce and industry, support requirements and provisions of the Privacy Protection Act, the Supervisor of Banks’ directives and Leumi’s own Information Security Unit recommendations. To protect personal information, the Bank implements a strict authorization policy for access of educational, cultural, health and sporting endeavors. to HR information systems and separates the information system development and production working environments. In order to physically secure its data, both against damage and against unauthorized use, the Bank locks data records in a We consider and evaluate the social and economic fireproof safe or in a fireproof safety room. In addition, in order to reduce exposure of information, which might be used for internal embezzlement or external hacking of information systems, the Bank ensures appropriate separation of functions implications of all our business decisions, based on a deep and maintains records and analyses of all information system operations. sense of responsibility.” Employee complaints From “The Leumi Way”, Leumi’s Code of Ethics Leumi employees may file complaints, warnings or request information via the following three routes: Employee Ombudsman Leumi employees can file any complaint on any matter with the Company Ombudsman who also serves as the ombudsman for employees. Each complaint is confidentially reviewed by the relevant authorized bank personnel, and is promptly dealt with. Ethics Office Leumi operates an Ethics Office, which receives employee reports and queries on matters concerning ethics and ethical dilemmas. The Bank’s Ethics Officer, ensuring absolute confidentiality, reviews each matter. No employee is punished or otherwise disadvantaged because of any complaint or referral to the Ethics Office. Sexual harassment The Law relating to Sexual Harassment, 5758‑1998 defines sexual harassment and discrimination as crimes and the basis for legal action, both civil and criminal. Moreover Leumi has determined that such acts constitute severe disciplinary violations, covered by the Bank’s labor regulations. The Bank has assigned a senior advocate from the Bank’s legal department to be responsible for investigation of all matters relating to sexual harassment, and to whom all issues and complaints are to be referred, whether by those directly subject to sexual harassment or by those who observe such behavior in the workplace. All complaints are reviewed thoroughly, and legal options clarified for the parties concerned. At the end of the review process, a report is issued and recommendations submitted to the Executive Management. After concluding how to deal with a specific matter, all parties are informed in writing. In accordance with the law, in matters relating to sexual harassment, employees of employment agency contractors employed in the bank are to be considered in the same way as bank employees.

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Leumi as a driving force in the Israeli market

Leumi’s corporate social responsibility report also relates to the economic impacts of Leumi on the Israeli economy. These are wide ranging in significance, both in terms of Leumi’s direct circle of stakeholders – customers, employees, suppliers Leumi is a major employer throughout the country Leumi is a significant employer in the Israeli economy, and provides income for many families in Israel. The Bank’s branches and shareholders – and in terms of the wider perspective, which includes the community, and the citizens of Israel. We and representative offices are dispersed throughout the country, employing thousands of employees, as can be seen from often refer to Leumi’s direct impacts such as the scale of Leumi’s economic activity in the local market, as is manifested by the map of Leumi branches below. the level of taxes Leumi pays to the State. We also refer to Leumi’s indirect impacts such as the increase in employment levels and supporting growth trends in the market. At the end of 2006, 8,081 people were employed at Leumi (including employees on unpaid leave and maternity leave). The total number of people employed in the Israeli market for October 2006 was 2,568,500. Leumi represents 0.3% of this total. The total value of salaries paid in the Israeli economy up to and including September 2006 to Israeli employees was NIS Leumi – making loans to the public 176,531 million. The total salaries (salaries, not total employment cost) paid by Leumi in this same period was NIS 1,808 The Leumi Group is one of the two largest and leading banking groups in Israel, with a market share of 30% of the total million, which is 1% of the total. credit provided to the public in Israel. The following Information is taken from data provided by the Bank of Israel for the month of September 2006 for the five largest banking groups: Map of Leumi branches

Breakdown of credit to the public (Bank of Israel data, September 2006) Even Yehuda Tirat HaCarmel Kiryat Ata Ofakim Yavne Kiryat Bialik Or Yehuda Yehud Kiryat Gat Azur Yokneam Kiryat Haim Discount 15% Eilat Jerusalem Kiryat Tivon Leumi 30% Ashdod Kochav Yair Kiryat Yam Ashkelon Kfar Saba Kiryat Motzkin Discount 15% Leumi 30% Baka El Garbiya Kfar Kassem Kiryat Malachi Hapoalim 30% Beer Sheva Kfar Shmaryahu Kiryat Shemonah Hapoalim 30% Bet She’an Carmiel Rosh Ha’ayin Mizrahi 12% Bet Shemesh Lod Rehovot 5% First International 8% Bnei Brak Migdal Ha’Emek Ramle Other banks Binyamina Modi’in Ramat Gan 8% Other banks 5% Mizrahi 12% Bat Yam East Jerusalem Ramat Hasharon First International Givatayim Nahariya Ra’anana Gedera Ness Ziona Sderot Jaljulia Nazareth Shoham Gan Yavne Upper Nazareth Tel Aviv-Yafo Leumi pays significant levels of taxes Dimona Nesher Tel Mond Taxes paid represent another measure of the economic impact an organization has in the market. The significant Dalyat El Carmel Netivot taxation levels, which Leumi pays to the different authorities – income tax to the central government and local rates Hod Hasharon Netanya to the local government – support the ongoing development of the market, and are a source of positive influence on Herzliya Acre the country’s economy. Zichron Ya’akov Afula Hadera Arad The total taxation paid in Israel in 2006 (excluding VAT and import taxes on defence items) was NIS 176,183 million. Taxation Holon Furedis related to activities in Israel provided for in the 2006 annual report (including current and deferred taxes) amounted to Haifa Pardes Hanna NIS 2,557 million (around 1.5%). Hazor Haglilit Petah Tikvah Detailed financial data can be found in Leumi’s annual report for 2006. Tiberius Safed Taibe Katzrin Tira Kiryat Ono

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Leumi pays dividends to shareholders Leumi encourages suppliers and independent businesses In 2006, the Board of Directors of Leumi decided to create a new dividend policy as follows: “it is the intention of the Board Part of Leumi’s contribution to the socio-economic development of the Israeli market also rests on Leumi’s activities throughout of Directors to recommend to the General Meeting the distribution of an annual dividend for the years 2006 and 2007 the country. Due to Leumi’s presence in all parts of Israel, Leumi is able to encourage the establishment of business and in an amount constituting at least 50% of the net annual distributable profit of the bank, provided there is no negative provides work for external suppliers, such as suppliers of goods and services required by the Bank on a regular basis. change in the profits of the bank and/or to the bank’s business or financial position and/or in the economic situation and/or In line with Leumi’s sense of social responsibility, Leumi dictates high standards of payments to suppliers, and maintains in the legal or fiscal environment.” relationships based on fair treatment, courtesy, reliability and mutual trust. All dividend distributions will comply with the provisions of the Companies Law, 5759-1999, which provides, amongst In order to strengthen relationships with suppliers, Leumi holds periodical conferences in which Leumi hosts suppliers other things, that the Bank may make a distribution out of its profits provided that there is no reasonable concern that and contractors and maintains a dialogue with them, for the purpose of checking expectations, improving processes and the distribution will prevent the Bank from meeting its present and anticipated obligations when they become due. The creating mutual commitment. Bank is also required to comply with the limits laid down by the Supervisor of Banks such as: minimum capital ratio of not Leumi’s purchasing policy supports supplier diversity in order to widen Leumi’s reach and develop opportunities for small less than 9%, compliance with the requirements of Section 23A of the Banking (Licensing) Law, 5741-1981, which placed and medium-sized businesses. Leumi makes purchases from a range of suppliers who employ diverse sectors of the limits on the percentage of equity that a banking corporation may invest in non-bank (real) corporations, and compliance population. Leumi’s selection of suppliers gives preference, as far as possible, to suppliers who employ weak sectors of the with the limits determined by the Supervisor of Banks regarding granting credit as a percentage of equity and the limits population or which are involved in community contribution. Leumi does its best to promote Israeli made products, giving regarding dividend distributions, such as: that no dividend can be distributed if non-monetary assets exceed equity or if preference to local technology. the dividend distribution would cause such a situation; no dividend can be distributed out of capital reserves or positive The following are some examples of Leumi’s responsibility in the selection of suppliers: differentials arising from the translation of the financial statements of autonomous overseas units or where one or more of the last three calendar years ended in a loss. Printing of banking forms from a range of suppliers who employ working youth. This policy is also subject to the restrictions arising from the privatization process of the Bank, which will apply after the Employment of IDF-disabled veterans for cleaning cash machines and Leumi branch service positions. granting of a control permit to the buyer by the Bank of Israel (fur further details, see the Leumi 2006 Annual Report). Employment of minorities for the distribution of daily post. This declaration of policy does not constitute any undertaking towards any third party (including that concerning the Contracts with suppliers are mainly made via tender. Leumi advises preferences in advance, which include quality and payment dates of the dividend or the rate of dividends in the future). additional considerations other than price. For ethical reasons, Leumi does not enter into contract with suppliers who sell The dividend policy for the years 2003 to 2005 (inclusive) was to recommend to the General Meeting that distribution of at a loss. a dividend in an amount that constituted at least 35% of annual distributable net profit of the Bank, and this is similarly stated as the policy for the years 2006 and 2007 as noted above. Leumi has a responsible policy for employment In December 206, the Board of Directors of the Bank decided to recommend at the General Meeting the payment of a cash dividend to the ordinary share holders at the rate of 101.6% of the net profit for the first nine months of 2006 and the agency employees amount of NIS 2.5 billion at a rate of NIS 1.768 per ordinary share of NIS 1 par value, being a rate of 176.8% on the issued and Employment agencies who employ service providers sign a contract with the Bank that they undertake to pay their paid up capital. This dividend was paid on February 28th.2007 after having received the approval of the General Meeting. employees at least the minimum wage, and maintain all legal employment requirements, including social benefits as required by law and collective agreements. This includes insurance, national insurance, convalescence payments, overtime The following is a table of the distribution of dividends in recent years: hours, health tax and sickness, maternity and all other payments required by law or other arrangement. Leumi has a defined policy for contracts with service providers of cleaning and security services, in which the employment Paid in year For the year NIS in millions agency commits to paying employees their due salaries and respecting their social rights. The Bank, amongst other things, verifies that the calculation of the employee’s salary includes all legally required elements. 2007 2006 2,500 Leumi maintains concern for the safety of employees of employment agencies and makes all agreements with such agencies 2006 2005 1,103 dependent upon compliance with these policies.

2005 2004 1,000

2004 2003 400

2003 2002 -

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Leumi in the Community

Leumi’s financial strength “We are increasing our involvement in the community, and working towards reducing gaps in society, promoting Leumi plays a significant role in the Israeli market, and the financial strength of the Bank has implications for the economy as a whole. equality of opportunity, especially in education. In order to protect the stability of the Israeli banking system, various indicators are assessed. One of these is minimal capital ratio, which indicates whether the bank’s capital is appropriate for its business activities and self-assumed risks. According We are convinced that this represents a platform for to the Bank of Israel directives, this should be at least 9%. The ratio of capital-to-risk on December 31, 2006 was 11.56%, compared to 11.55% on December 31, 2005. This ratio is strengthening future generations in Israel.” higher than the minimum ratio of 9% determined by the Supervisor of Banks. From “The Leumi Way”, Leumi’s Code of Ethics

Indices of financial strength

18 17,491 17 16 16,200 15 15,000 14 14,213 13 13,145 12 11,56% 11,25% 11,55% 11 10,8% 10 10,3% 9 8 7,53% 7,3% 7,5% 7,5% 7 6,8% 6 5.8% 5.9% 5.9% 6% 5 5.4% 4 3 2 1 0 NIS 2002 2003 2004 2005 2006 billions

Shareholders' equity Shareholders' equity to risk assets Primary capital to risk assets Shareholders' equity to total assets in the balance sheet

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Putting Leumi’s social responsibility into practice

Leumi is committed to contribute to the development and empowerment of the State of Israel, based on the belief that the Hadassa Organization, Chairman of the Board of the Sam Spiegel School for TV and Cinema in Jerusalem, Chairman of Bank has a social and moral commitment towards the community in which the Bank operates. the Disabled Persons umbrella organization in Israel, member of the Friends of Atidim, Chairman of the public committee We, at Leumi believe that it is our responsibility to identify weak points within Israeli society and respond to needs by of “Youth Leading Change – Follow Me!” organization and is a regular participant in the various events and ceremonies making focused contributions and by community involvement initiatives. We consider it appropriate to develop solutions they organize. based on partnerships with different groups within society such as the local communities, volunteers, and local leadership, Galia Maor serves as the Chairperson of the Friends of the Society “Children at Risk – the Council for Children in Hostels”, and professional and sponsoring organizations. We believe that social partnerships can reinforce the human capital in the is a member of the Trustees of the Hebrew University of Jerusalem and of the Board of the Open University. peripheral areas, educate the advancement of values and community involvement, and encourage personal and Leumi employees, at all levels of the organization, feel responsibility for the community and the environment, and are business leadership. enthusiastic about supporting the community. They are involved and volunteer in the Bank’s social initiatives and, on a personal In our activities in the community, Leumi emphasizes the empowerment of youth and allocation of resources to increase basis, in independent initiatives of their choice (see the section in this report – Employee Involvement and Volunteering). their chances of development via education, training, improving educational achievements and providing a basis of values The Leumi Group’s activities in the community are, in the main, incorporated under the auspices of the organization “Leumi and motivation for higher education. We are active in dozens of different communities, mainly in the peripheral areas, Follow Me – the Centennial Fund for Tomorrow’s Generation”, which is funded by the Leumi Group, the Bank and its in Jewish, Arab, Bedouin and Druze communities, and with long-standing residents and new immigrants. We act in subsidiary companies. The activities of this organization support education, youth and needy families. collaboration with local education authorities, schools and higher education establishments, central government and local In 2006, the total contribution of Leumi in donations and sponsorships for social causes amounted to NIS 32.69 million. authorities and with social organizations and businesses. This compares to NIS 15.8 million in 2005 and NIS 12.9 million in 2004. We believe in personal example, so our Chairman of the Board of Directors, Mr. Eitan Raff, and our Chief Executive Officer, Mrs. Galia Maor, are both active in the community. Eitan Raff, is a member of the Governing Committee of the

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“Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation”

In 2002, in order to commemorate 100 years of Leumi, and in the spirit in which Leumi was founded, the Executive Management of the Bank decided to create a special society for the community – “Leumi Follow Me- the Centennial Fund for Tomorrow’s Generation” – a registered non-profit society with five key objectives: “Leumi Follow Me – the Centennial Fund for Tomorrow’s Generation” > Increasing the number of high school graduates. Locations of activities in the academic year 2005 – 2006 > Increasing the number of IDF recruits into quality service roles. > Education for values and social involvement. > Supporting personal and community leadership. Ofakim Yarka Petah Tikvah > Supporting community welfare. Or Yehuda Kisra Samiyyah Safed Or Akiva Kaseffiya Katzrin The Society invests in the advancement of educational initiatives for teenagers to improve school grades and educational Eilat Kfar Blum Kiryat Ata achievements. The Society also supports youth in achieving their goals of higher education, increasing their motivation Ashdod Kfar Yona Kiryat Bialik and confidence. Ashkelon Kfar Manda Kiryat Yam The Society also plays a role in dealing with economic difficulties, which affect hundreds of thousands of families in Israel Beer Sheva Kfar Saba Kiryat Gat by supporting them with a welfare program. Bet She’an Kfar Silver Kiryat Malachi “Leumi Follow Me – the Centennial Fund for Tomorrow’s Generation” supported a range of projects in 2006, investing a Bet Shemesh Kfar Raziel Kiryat Shemona total of NIS 8.2 million. In 2005, the Society invested NIS 8.5 million, and in 2004 NIS 6.43 million. The Society’s projects Ben Shemen Carmiel Rosh Ha’ayin are countrywide, reaching over 60 communities, with over 14,000 young people and families of a low-socio-economic Bnei Brak Lod Rishon Le’Zion Bat Yam Lakiyyah Rahat level taking part. Dimona Migdal Ha’Emek Rehovot Kfar Hayarok Ma’er Ramla The Society is active in the following projects: Herzliya Ma’alot Sderot > “Leumi Follow Me! To The Army”, in collaboration with the society “Youth Leading Change – Follow me!”. Wadi Salame Mitzpe Ramon Sheffiyah Hadera Merhavim Shlomi > “Leumi Follow Me! To A High School Diploma”, in collaboration with the society “Youth Leading Change Holon Nahariya Shefaram – Follow Me!”. Haifa Ness Ziona Tel Aviv > “Atidim” project – in collaboration with the “Friends of Atidim”. Hazor Haglilit Upper Nazareth Tel Sheva > “Leumi Follow Me! – A High School Diploma Takes You Further”, in collaboration with the University of Haifa. Tiberias Netivot > Project to “Improve Accessibility of Higher Education in the Negev”, in collaboration with Ben Gurion Tova Netanya Tira Ibillin University of the Negev. Tirat Hacarmel Ein Mahal > “Going For Excellence As Far North As Possible”, in collaboration with the Polytechnic College of Tel Hai. Yavne Carmel Town > Projects in collaboration with the High School for Science and Culture “Shevach-Mofet”. Yehud Acre > “Leumi Follow Me – “High school diploma preparation centers for Ethiopian immigrants”, in collaboration Yafo Afula with Tel Aviv University. Yokneam Arad Yeruham Pardes Hana > “Leumi Follow Me – Growing Tomorrow’s Leadership”, in collaboration with the “Unistream” organization. Jerusalem Pardes Katz > “Ma’aseh Centers” – preparatory program for young immigrant girls from Ethiopia in collaboration with IVN – the Israel Venture Capital Network. > “Hand in Hand to an Academic Future”, in collaboration with the Interdisciplinary Center of Herzliya. > Project “Equal Opportunities”.

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The Society “Youth Leading Change – Follow Me!“ The main objective of this society is to assist teenagers with special educational needs through community involvement. To achieve this, the society invests significant resources in increasing the number of teenagers achieving a high-school diploma, and those who are drafted into the army in worthwhile roles. The guiding philosophy of the society is to provide an “entry ticket” to influential positions in Israeli society. Education for values and community involvement are integrated with the activities, together with encouragement to assume personal and community leadership, thereby having a positive effect on the Israeli society as a whole. Further details on the society “Youth Leading Change – Follow me!” can be found on the website: www.aharai.org. “Leumi Follow Me” – the Centennial Fund for Tomorrow’s Generation” supports two main projects: “Leumi Follow Me to the Army!” and “Leumi Follow Me to High School Diploma” “Leumi Follow Me To The Army” This project, led by The Society “Youth Leading Change – Follow me!” has been running for 10 years and works on the basis that serving in the Israel Defense Forces is a platform for positive change for teenagers. Many teenagers express feelings of alienation from Israeli society in general. Participants in this program develop skills to take responsibility for their own actions, develop involvement and self-confidence, and feel more in touch with our society. Partners in the project are the Jewish Agency, the Joint, “Partnership 2000” and many business partners. In the last 5 years, around 6,000 teenagers took part in this program. In 2006, 2,200 teenagers in 52 groups around the country took part in many different activities. In 2005, around 2,000 teenagers aged 17-18 took parts in 47 different groups. These teenagers are residents of development towns, boarding schools, immigration centers, and cities from Kiryat Shemona in the north to Yeruham and Dimona in the south. Community involvement of the teenagers participating in this program is a key element in creating different perspectives and integrating them into society, and many different activities are organized to enable them to get involved and understand community needs. These include working together with Leumi employees on painting houses of needy people in the Neve Ofer neighborhood of Holon in time for the Passover holidays, distributing food to the needy, renovation of a kindergarten, collecting clothes for needy people and so on.

Leumi Executives in a Stretcher Drill with Leumi Follow Me To The Army! Fifteen hundred teenagers from the “Leumi Follow Me! To The Army” project from across the country concluded a year of training and community activities in two action-packed days, which culminated in a ceremony on Mount Herzl. The ceremony was attended by Leumi Chairman, Eitan Raff, who is also the Chairman of the Board of “Youth Lead Change - Follow Me”, the main supporter of the project through “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation”, and by IDF Chief Education Officer, Brigadier General Ilan Harari. The teenagers, in 70 groups, arrived at the ceremony directly following an overnight stretcher drill in the Jerusalem hills. During the previous two days, the group toured the Mount of Olives and the City of David, visited children in hospital in Jerusalem and participated in a Sports Day at the Zippori Center. These concluding events reflect the nature of the society’s activities throughout the year, which include preparation for serving in the IDF, preparing for the high-school diploma, touring Israel and community initiatives. Understanding of Zionist heritage, national history and much physical exercise are incorporated in the programs. Since its founding ten years ago, the “Leumi Follow Me to the Army” project has grown substantially. It now comprises 25 IDF preparatory groups, nine high-school diploma centers which adopt school dropouts, 5 “Follow Me” communes for senior trainees who have postponed their IDF service for a year to continue volunteering for the community, and four groups of “Follow Me to the Field!” designed to acquaint younger trainees with the movement’s values and the heritage of Israel.

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“Leumi – Follow me! To A High School Diploma” In view of the success of the “Leumi Follow Me! To the Army” IDF preparatory project, “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” requested that the leading donors of the “Youth Leadership for Change” start an additional project, for high-school diploma preparation. with the emphasis on mathematics. “In this way, we try to give them a taste of success, so that they can translate that experience in other areas of their lives. We also require them to join the IDF preparatory course, so that they can learn the way to good citizenship.” Amihay Fisher, Project Manager In 2006, 250 pupils participated in nine learning centers throughout the country, and 240 took the final exams with a pass rate of 94%. Fifteen program graduates became trainers in the program’s learning centers. The learning centers are in Yafo, Beer Sheva, Jerusalem, Tiberias, Hadera, Netanya, Acre, Haifa, Kiryat Gat and Ramle. In 2005, 175 pupils in 18 groups around the country studied mathematics. 90% passed the diploma examinations. Over the last five years, some 600 pupils of 11th and 12th-grade took part in the “Leumi – Follow me! To A High School Diploma” project. In 2006, NIS 2.37 million was invested in this project. In 2005, NIS 2.26 million was invested.

What do the teenagers say about Follow Me! To The Army!” and “Leumi - Follow me! To A High School Diploma”? 97% of the graduates of IDF preparatory course and 93% of the the graduates of high-school finals preparatory course said they were very satisfied with their courses. 96% of the graduates of the IDF preparatory course and 72% of the the graduates of high-school diploma preparatory course said they that the Follow Me program improved their attitude toward life. 75% of the graduates of the IDF preparatory course and 82% of the the graduates of high-school diploma preparatory course said that the program provided them with ability to cope with difficulties. 80% of IDF course graduates completed three years of military service in significant roles. 75% of IDF course graduates who served in the IDF said it made a positive difference for them throughout their service. About half of the program graduates would like to become course instructors (33% as trainers and 16% as assistant trainers) and of these, 11% would like to instruct in high-school diploma preparatory courses, 23% would like to volunteer occasionaly and 16% would like to accompany field trips. Taken from a survey by Geocartography Institute

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The Atidim program In collaboration with the Friends of Atidim The Atidim program was initiated by the IDF, who wished to increase the number of candidates from peripheral areas for In 2005, Leumi invested NIS 480,000 in the project, with 244 pupils participating in the program. Of these, 231 completed its academic reserve program. For this purpose, a non-profit organization called “Atidim” (Futures) was established, with their high-school studies. Of the 147 pupils preparing for their diploma, 114 sat the exams and 75% of them passed. The the objective of delivering various programs for the benefit of young people between the ages of 13-30. Thousands of study centers were situated in Or Akiva, Haifa, Tirat Hacarmel, Kiryat Ata, Nahalal, Acre, Shefaram and Kfar Manda. teenagers take part in the following four kinds of Atidim initiatives: > “Junior Atidim” reinforces mathematics, physics and English studies for the high school diploma. “Program for Access to Higher Education in the Negev” > “Military Atidim” integrates high-school graduates in the IDF’s academic reserve program in the subjects of science, technology, medicine, law and economics. In collaboration with Ben Gurion University > “Industrial Atidim” integrates university students from peripheral areas in the business and industrial community through This program was initiated in 2002 by former President of Ben-Gurion University of the Negev until 2006, Professor Avishai first academic degree scholarships in professional disciplines. Braverman in order to narrow the gaps between outstanding pupils from the South of Israel, some of whom were from low > “Public Administration Atidim” fosters professional leadership in the public sector. socio-economic backgrounds, and those in Central Israel. The program is supported by “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation”, the Ben Gurion University of the Negev, the Ministry of Education, the Sacta-Rashi In early 2005, Leumi’s Board of Directors and Executive Management decided to increase community donations significantly. Foundation, the Atidim Program and the Konrad Adenauer Foundation. Consequently, “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” partnered with Atidim – a national program for realizing the potential of teenagers throughout the country, designed to promote excellence, reinforce the For a three-year period, outstanding 10th-12th-grade pupils receive additional lessons at school in preparing for their high educational infrastructure and increase human capital in the periphery. school diploma. On weekends, they participate in scientific-academic courses at Ben Gurion University. In 2006, around 10,000 young people participated in Atidim, 8,000 of which via the project, Junior Atidim. It is worth In 2006, “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” budgeted NIS 750,000 for this program, in noting that 42% of those accepted for the IDF academic reserve are graduates of the Atidim program. which 1,000 pupils from 31 schools in the Negev region and Eilat participated. 46 academic course groups were opened, and an SAT preparatory course was offered. In 2005, 9,000 young people participated in various frameworks of Atidim, 7,500 of which from 110 schools in 52 communities participated in Junior Atidim. In 2005, the Fund budgeted NIS 650,000 for this program, in which 749 pupils from 28 schools in the Negev region participated. Of these students, 21% were from Bedouin communities and the remainder from other Negev towns “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” has committed a sum of US$ 4.25 million on a and communities. phased basis over a period of five years. In 2005, the sum budgeted for Atidim was NIS 2.2 million, and in 2006, this rose to NIS 3.55 million, including NIS 100,000 for a range of activities including Atidim Conference for industry, and support for residents of the North during the Second Lebanon War. “Hand in Hand to Academic Studies” Addition information can be found on the Atidim website: www.atidim.co.il In collaboration with the Interdisciplinary Center, Herzliya The “Hand in Hand to Academic Studies” project was founded in 1999 by the Interdisciplinary Center Herzliya and the “Leumi Follow Me – High School Diploma Takes You Further” society “Academia” to assist low-achieving school pupils. In 2006, the final year in which Leumi supported this project, in collaboration with Haifa University “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” contributed NIS 100,000. One class of 26 pupils was supported, with 14 University students as coaches. This program was created together with the Haifa University External Studies Department and high schools in the Haifa In 2005, a sum of NIS 150,000 was contributed to the project, in which 10-12th grade pupils from 3 high schools in the area in order to prepare 10th to 12th-grade pupils from Jewish and Arab communities in Northern Israel for their finals Herzliya area took part. in mathematics, English and grammar. Eligible participants could not sit these exams because of poor school results, and the project provides a phased curriculum, which makes it possible for them to do so. Outstanding university students coach participants in their high-school studies within the schools. Around examination time, school pupils also take part in “Excellence As Far North As Possible” preparatory “marathons” hosted by the university. In 2006, Leumi invested an increased sum of NIS 807,600. This enabled participation of 412 school pupils from ten In collaboration with Tel-Hai Academic College communities in the North: Or Akiva, Hadera, Shefaram, Afula, Ein Mahal, Kisra Samiyyah, Haifa, Acre, Ibillin and Carmiel. In the 2005/6 school year, Leumi collaborated with the Tel-Hai Academic College in preparing high-school pupils from the The increased budget enabled a wider reach to school pupils with the increased hours and scope of the program, and Kiryat-Shemona area and Kfar Blum for their high school diploma in mathematics and English. 100 pupils from 10-12th the inclusion of a personal empowerment program. The Arab-Israeli Bank, a member of Leumi Group, is a full partner in grades received coaching from 30 outstanding college students. coordinating the project in Arab communities. 86% of the 12th grade school pupils that sat for the high school diploma In 2006, “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” budgeted NIS 170,000 for this project. examinations in English were successful, as were 83% of the pupils who sat the examination in mathematics.

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“Ma’aseh” Centers – Joint Projects with “Shevach-Mofet” High School for Preparatory School for Female Ethiopian Immigrants Science and Culture In collaboration with IVN – the Israel Venture Capital Network Shevach-Mofet is a High School for Sciences and Culture located in south Tel-Aviv. Most of its pupils are immigrants from This project operates a unique program for Ethiopian girls who have not been accepted for IDF or national service. These the former Soviet Union from all over Israel. Leumi supports several projects, including a Linux course for 24 pupils in young girls suffer from significant learning and social gaps and have difficulties in integrating into Israeli society. The sciences and computers subjects, to prepare them for specialist studies in a new data security program, 10 scholarships program assists these girls to complete their high school studies and take part in voluntary educational and social activity in for outstanding pupils who study simultaneously for a university degree, and 70 scholarships for pupils with financial the community. The project supports development of leadership skills, and provides support on a personal basis. 61 young difficulties. All scholarships are awarded to outstanding pupils from low socio-economic backgrounds. girls participate in the program in three centers: Tiberias, Kiryat Gat and Beer Sheva. In 2006, “Leumi Follow Me – the Centennial Fund for Tomorrow’s Generation” budgeted NIS 150,000 for this project. “Leumi Follow Me – the Centennial Fund for Tomorrow’s Generation” joined this project in 2006, and budgeted NIS Additional information can be obtained from the school’s website: www.shevahmofet.org 129,000 for one year of support. More details can be found on the IVN website: www.israelventurenetwork.org “Leumi Follow Me” – High-School Diploma Preparation “Sikuyim Shavim” (Equal Opportunities) Project Centers for Ethiopian Immigrants This project seeks to offer equal opportunities to underprivileged families throughout the country. The project is managed In collaboration with Tel Aviv University by “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” in partnership with the national daily newspaper Yedioth Aharonot. The project provides assistance in education, welfare and individual support, in line with family needs. At the end of 2006, a decision was taken to start a new project designed to increase the number of high school graduates Contact between the families and municipal social workers are organized by Leumi branch employees who volunteer for amongst Ethiopian immigrants. This program is a joint project with the Tel-Aviv University and absorbtion centers for such activities. Ethiopian immigrants. 40 pupils of Ethiopian origin from the 11th and 12-grades will receive tutoring by university students to prepare them in scientific subjects for high school diploma examinations. In 2006, 200 families in 27 communities joined the project, which has been granted an additional budget of NIS 1 million beyond that budgeted for 2005. In 2005, 326 families in 38 localities participated in the project, with a budget of NIS 2 “Leumi Follow Me – the Centennial Fund for Tomorrow’s Generation” has budgeted NIS 180,000 for this project for one million. academic year. Additional activities in the Equal Opportunities project are: > Passover Food Support Program: For Passover 2006, “Leumi Follow Me – the Centennial Fund for Tomorrow’s “Leumi Follow Me – Growing Tomorrow’s Leadership” Generation” donated NIS 200,000 and bank employees donated additional sums. Food packages were distributed to 1,260 In collaboration with Unistream families across the country. For Passover 2005, 935 needy families received food packages worth NIS 300. Each food package contains basic foodstuffs, matzos, a Hagada for Passover and a greeting card. Food products are donated Unistream is a program for fostering business and community leadership among teenagers in peripheral areas around by employees, collected in the branches, and added to the large-scale purchase of food from the project’s budget. the country. The program is designed to empower disadvantaged communities, assist in alleviating economic difficulties and strengthen Israeli society. This three-year program is organized in groups of 52 teenagers and provides support in > Hanukah Gift Vouchers: For Hanukah 2006, vouchers for purchasing children’s toys coupons were distributed to developing leadership and individual empowerment, business awareness, business skills and community involvement. disadvantaged families around the country. Leumi employees from 40 branches distributed vouchers worth NIS 250 to 200 “Leumi Follow Me - the Centennial Fund for Tomorrow’s Generation” currently supports the activity of one such group in families who participate in the Equal Opportunities program. the Unistream Center of Kfar Yona. For Hanukah 2005, tickets to a musical called A Song is Born were distributed to 8,000 children of low socio-economic The sum of NIS 322,500 has been budgeted for a three-year period. families (musicals and plays for children are a Hanukah tradition in Israel); Leumi employees from 40 branches distributed vouchers worth NIS 400,000. More details can be found on the Unistream website: www.unistream.co.il

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“Young Entrepreneurs” organization

This is another initiative through which Leumi contributes to the development of Israel’s future generation. It is an Another example of a successful company that was set up in the framework of the “Young Entrepreneurs” organization is international project with millions of participants in over a hundred countries around the world. Leumi and the Van Leer “High Team”, created by ORT-Ronson High-School students from Ashkelon. The company developed the “Easy Holder”, Jerusalem Institute launched the Israeli program in the early 1990’s. Later, an independent non-profit organization was a cork disk designed to assist in hammering a nail into a wall. In the European competition held in Switzerland in August created, supported by various public bodies and leading business organizations in Israel, led by the Leumi Group. 2006, with 24 groups from countries all over Europe participating, this product won the Innovation Award. “Young Entrepreneurs” collaborates with schools throughout Israel, in all sectors of the Israeli population. The project offers Leumi supports this project both by providing funds and by providing professional guidance for the young entrepreneurs teenagers the opportunity to start a company to develop an innovative or original business idea. They then experience all who compete in establishing innovative startups. In addition, “Leumi Follow Me - the Centennial Fund for Tomorrow’s aspects of mobilizing initial capital, product development, management, marketing and financing. Product development, Generation” assists schools unable to meet the required participation costs with a budget of NIS 100,000 per year. production and sales of the product are all part of the experience gained by participants. Projects are judged in terms of Bank branches across the country adopt the groups and help them run their businesses. Bank employees also devote their educational process, business innovation and profitability. Tens of thousands of students have participated in the program own time and energy to provide them with ongoing guidance and training on financial and business issues. to date. In 2005, there were 3,000 participants, who started 170 businesses. The Leumi Group supports Young Entrepreneurs with donations of millions of shekels. In 2005 and 2006, this support Leumi also finances their participation in the European contest at an annual cost of tens of thousands of shekels. totaled more than NIS 600,000 each year. An example of a business established through this project is “Challenge”, founded by the Alon Junior High-School pupils in Ra’anana. These young entrepreneurs developed a product called “Stand Up” – a spring designed to keep the toilet seat raised to prevent it from becoming dirty and to maintain good hygiene. In 2005, “Challenge” won the national competition and represented Israel in the European competition in Oslo in the summer of that year. Their CEO was quoted as saying, “We gained a taste of the business world and learned that in the real world, the rules of the game are entirely different from what we had imagined. We experienced a long and demanding business process… ran into considerable difficulties and learned to deal with them as a team and find solutions together… We found out that if we cooperate, we can overcome obstacles”.

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Donations allocated by the donations committee

In addition to the extensive activities described previously, Leumi donates to a wide range of Israeli institutes and non-profit In 2006, the Leumi Group contributed NIS 32.7 million in donations and sponsorships for social and community organizations in Israel, in order to promote social, community, health, cultural and educational issues, and assist the needy. causes. Of this, NIS 29.5 million was in donations. In order to distribute the donations, a donations committee was created, headed by the Deputy Chief Executive of the Bank The following is a breakdown of this contribution by category in the year 2006: and representatives from the Bank’s senior management. In 2006, the key areas of focus were donations to support health related issues, disadvantaged families and handicapped Education NIS 9.6 million children and adults. Health NIS 1.7 million The following provides details of donations made in 2006: Culture and Arts NIS 1.0 million > Health (49.7% of total donations) – NIS 1,583,343 to purchase medical equipment, support research funds, assist organizations such as ILAN (Israel Foundation for Handicapped Children), AKIM, ALUT, the Israel Cancer Association, Society and Community NIS 20.4 million organizing fund-raisers for various hospital units, and support for Save a Child’s Heart – cardiac surgery for children from Total donations and sponsorship NIS 32.7 million developing countries, including the Palestinian Authority. > Society and Community (24.8%) – NIS 793,505 for the preservation of national monuments and commemoration centers, support for IDF orphans’ summer camps, organizing fund-raisers, assistance to the needy and the aged, and The following is a breakdown of this contribution by category in the year 2005: support for Beit Noam – a unique organization supporting handicapped young adults up to the age of 40. > Education and Youth (17.7%) – NIS 562,210 to support organizations promoting social welfare and educational projects Education NIS 10.5 million for children and teenagers, scholarships for university students, support for organizations assisting children at risk, creating Society and Community NIS 5.2 million computer centers, a sports center, and centers for drug-use prevention for teenagers. Culture and Arts NIS 2.1 million > Culture and Arts (7.8%) – NIS 247,776 for scholarships, museums and other cultural institutions, assistance in holding exhibitions, etc. Health NIS 0.8 million

Total donations and sponsorship NIS 18.6 million

Donations and sponsorships of the Split of donations for 2006: The following is a breakdown of this contribution by category in the year 2004: Leumi Group 2003 – 2006 Culture Education NIS 5.5 million & Arts 30 7.8% Society and Community NIS 5.9 million

25 Education Culture and Arts NIS 1.1 million 17.7% 20 Health NIS 0.4 million Health 15 49.7% Total donations and sponsorship NIS 12.9 million Society & 10 Community 24.8% 5

0 2003 2004 2005 2006

Total donations in millions of shekels Health Society and Community Education Culture and Arts

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Additional Activities in the Community

“Righteous among the Nations” For the past 18 years, Bank Leumi has been supporting the 45 “Righteous among the Nations” who live in Israel, together with their spouses. The bank has granted them a status similar to that granted to its retirees. This means holiday gifts twice a year and an invitation to the annual convention together with employee retirees from across the country. In addition, every year before Easter, a special event takes place to commemorate the contribution of the Righteous among the Nations to the State of Israel, with representatives of the Bank’s Executive Management, employee committees and Yad Vashem, and other invited guests.

Student Trainee Program For several years, Bank Leumi has been participating in the Jewish Agency for Israel’s (JAI) trainee program, designed to promote immigration of Jewish youngsters and their absorption in Israel. Jewish students are eligible for this program, which enables them to live several months in Israel, work amongst Israelis and integrate with the population. Hebrew-speaking candidates are selected by the Bank through JAI offices worldwide. Upon their admission, trainees can work in any of the Bank’s branches or in Leumi Headquarters. Although they receive no pay, Leumi finances their travel costs and lunches at the employee restaurant at Headquarters. Following this internship, they receive a letter of recommendation for their university, since this training program is usually an integral part of their course of study. Twenty-five students from the USA, Uruguay, France, Great Britain and other countries have participated in the program over the last three years. Four of them have immigrated to Israel and begun working as regular Leumi employees. Secret Art Secret

Free World Cup broadcasts for Sderot and “ Gaza area residents During the summer months of 2006, the FIFA World Cup was held in Germany. Most of the games were broadcast Leumi’s “Secret Art” Exhibition for Young on a pay-per-view basis. As part of Leumi’s support to the communities in Sderot and bordering the Gaza Strip, Leumi and Handicapped Artists donated game broadcasts to their inhabitants, and offered discounted broadcast packages for the rest of the country. As part of the Leumi Group’s support of the arts and culture, the Secret Art Exhibition was opened in November 2006, The cost of this activity was NIS 10.4 million, and 80,000 residents of Sderot and Gaza area enjoyed the games at at the Leumi House lobby in Tel Aviv. The exhibition showed some 200 artworks, most of which were by young and no cost to them. unknown artists, together with works by handicapped artists supported by ALUT (Israel Society for Autistic Children) and AKIM (Israel Society for the Rehabilitation of the Mentally Handicapped), as well as works by well-known artists. The artworks were presented without showing the artists’ names, so that the visitors could focus on their creativity value. Visitors were invited to purchase the artworks in order to support the young and handicapped artists.

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Employee involvement and volunteering

As part of its overall commitment to the community, Leumi encourages its employees to become more involved with the community, and offers them opportunities to volunteer and contribute. In 2006, around 600 employees volunteered during their free time in various activities for the good of the community. The extent of their volunteering effort is estimated at 12,000 hours, while the extent of the management’s effort is estimated at 500 hours. Many of the employee volunteers participate in “Leumi – Follow Me!” initiatives, where they serve as role models for the trainees. They accompany them on field trips, drills and tours organized by IDF units. They also work side by side with the trainees in various community projects. For example, at the end of 2006, a special project for Hanukah was organized, in which 70 branches of the Bank took part. Leumi – Follow Me! participants joined around 600 Bank employees in a range of activities such as Hanukah parties in Old Aged Homes, candle-lighting ceremonies in Ethiopian immigrant centers, and hospital visits. Around 70 branches planned involvement in similar activities for the Purim holiday in 2007. In addition to the Bank’s initiatives to benefit the community, employees also initiate local and independent projects, and Leumi supports these. In some areas, employees from several branches collaborate in handing out food for needy families, in projects organized by “Latet” – Israeli Humanitarian Aid, and the “We Are All One” organization. Others adopt a center for homeless teenagers, giving of their time and money to celebrate the holidays with them and even include their family members in this activity. Leumi strives to increase employee involvement, and not only with the Leumi Follow Me projects. Experience has shown that there is increased motivation on the part of the staff of the Bank’s branches to take part in community projects that they have an affinity with and which are close to the location of their branch. Leumi is currently carrying out a full evaluation of its employee volunteering programs to define and create a comprehensive framework for employee involvement and initiatives for the community and the environment.

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Leumi and the 2nd Lebanon War

During the summer months of 2006, during the fighting along Israel’s northern borders and the continued rocket strikes against communities bordering the Gaza Strip, Leumi again mobilized its resources to support Israeli society in line with its heritage and as a leading Israeli business organization. Leumi was one of the first to offer wholehearted support to civilians and soldiers along the front lines, and continued to do so after the ceasefire.

Leumi for its customers During the war, the Bank made special preparations to provide quick and sensitive solutions to clients and soldiers in the North in order to maintain its high service standards as much as possible. Here is a list of some of the Leumi’s responses to the situation: > Due to the closure of many businesses, many residents and reservists did not receive their salaries on time. Leumi offered such customers loans equivalent to salary levels, at prime interest rate only, repayable in 18 installments, and with no commission. Loans of up to NIS 50,000 were offered to small businesses with cash-flow difficulties. > Provision of bank services throughout the North using mobile branches. This also included the tent camp built in Nitzanim, in southern Israel, for refugees from the North. > Opening of new cash dispenser machines, including in Postal Bank branches. > Creation of full-service alternative home branches for customers whose regular branches had to close. > Postponing of mortgage payments for four months by Leumi Mortgage Bank > Leumi Card extension of an additional month credit for businesses receiving loans through the Leumi Group credit company. > Extension of Leumi Call’s daily hours of operation to 23:00. In addition, a special call center within Leumi Call was established in order to replace branches, which had to close by order of the military.

Leumi for its employees Leumi employees up North received both moral and practical support throughout the war. They were supported by various units of the Bank, including head office, the branches, the welfare department and the marketing division, and by their colleagues, who organized supportive activities at their own initiative. Here are some of those initiatives: > A 24-hour hotline manned by psychologists and other professionals supported Bank employees in the North in dealing with their personal and family problems, anxiety and stress. An additional hotline was operated by the Welfare Department with social and welfare workers available to assist managers and employees with any problem. > Branch employees in central and southern Israel adopted Northern branches, inviting their employee colleagues to stay in their homes. > Employees from the North and their families were invited for weekends in hotels in Jerusalem. > During the war, branch and unit managers in the North participated in a workshop, which provided them with tools to deal with stressful situations in general, and with the difficulties of continuing to work and operate their branches in a war situation. > Employees drafted for reserve duty and their family members received personal letters and gift packages from the Leumi CEO and from the Welfare Unit.

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Leumi and the Environment

“The environmental aspect of sustainability examines the Leumi for the front-line residents During the war, Leumi provided moral and practical support for front-line residents: The Group’s initiatives impact of the organization on natural systems, including and activities included: ecological systems – land, air and water.” > Distribution of 10,000 toy kits (at a cost of NIS 200 each) to children in northern Israel. > Donation of NIS 150,000 to hospitals in Nahariya, Tiberias and Safed. From “The Leumi Way”, Leumi’s Code of Ethics > Donation of NIS 500,000 for the installment of air-conditioners in all the shelters in Safed. > Donations of TV and DVD sets to shelters of the Mevo’ot Hermon Regional Council. > Preparation of hundreds of food kits for distribution in Nahariya and Acre. > Donation of 4,000 hot meals to needy families in Tiberias. > Hosting of 200 Nahariya residents for a weekend at Wingate Sports Center (including travel to Wingate). > Provision of amusement park events for 1,500 residents and boarding house children from Kiryat Motzkin, Kiryat Shemona, Haifa and Kiryat Bialik, Carmiel, and Ultra-Orthodox-Jewish children from Safed. > Hosting mentally challenged children from AKIM in Northern Israel in hotels at a cost of NIS 50,000. > Bussing children from Sderot to summer camps away from rocket range at a cost of NIS 100,000. > Donation of 40 computers to children in Sderot. > Provision of outings to the Ramat-Gan Safari Park for 400 children from Upper Nazareth. > Distribution of leisure kits, radios and Discman sets CD’s, candies and books to wounded soldiers and civilians in hospitals. The Group’s donations for front-line residents totaled NIS 2.5 million.

Leumi’s effort for revival of burnt forests in the North Following the war, Leumi initiated a project for rehabilitating the forests of the North, burnt as a result of enemy rocket fire. This included the purchase of thousands of seedlings. These were financed collectively by Leumi employees and by the Bank’s Executive Management, which matched their donation. During the Sukkot Holiday in October 2006, thousands of citizens answered Leumi’s call to identify with the North and participated in plantings in the Naftali forests, together with the Jewish National Fund. The contribution for forest rehabilitation totaled NIS 2.6 million.

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Leumi formulates a long-term environmental policy

Sustainable development allows the whole community to satisfy their basic needs and enjoy an improved quality of life values and serve as a role model for society in this regard. without compromising that of future generations. An organization that adopts the principles of sustainability is one To meet the requirements of its daily operations, Leumi consumes mainly office supplies, such as paper, toners, various that uses natural resources wisely and efficiently and relates to the environment responsibly and sensitively. In this way, kinds of office equipment and detergents. Leumi believes that in consuming such supplies, environmental considerations an organization demonstrates its desire to reduce its “ecological footprint” and integrate sustainable principles into its should be taken into account. Careful consumption of supplies shows concern for the environment and the community. policies. For example, paper consumption may be reduced, whether by recycling or through the use of recycled paper. Computer At Leumi, we are convinced that protecting the quality of the environment is a value reflecting the quality of our organization, supplies may be used more efficiently, and more environment-friendly products can be consumed, such as ecologically and the responsibility it perceives for both present and future generations. friendly cleaning materials. Leumi provides financial services and products to the community as a whole, and its activity is administrative in nature. Leumi’s direct environmental impacts are mainly in terms of consumption of natural resources. This does not approach that of industrial plants, but, as a leading financial organization, Leumi feels that it can contribute to supporting environmental The new environmental policy of Leumi At present, Leumi is in the process of formulating and assimilating a policy and principles relating to the environment. This subject is the prime responsibility of the Operations Division of Leumi. Recently, a senior manager was appointed to oversee environmental policy at Leumi, finalize the company policy in this respect, ensure the development of written procedures Short Glossary and develop a work program for implementation. The aspects of this policy include use of paper, energy consumption and efficiency, use of water, recycling, green purchasing, development of “Green” banking products, and other environmental Sustainable development: A term that was coined as a result of the environmental crisis that has affected the globe. areas of impact. The action plan includes measurement of direct environmental impacts, and development of future The signs of this crisis are, amongst others, the contamination of the air we breathe, the poor quality water we drink, the targets: reduction of direct environmental impacts and the creation of conditions for favorable indirect impacts. unchecked use of non-renewable natural resources and the damage caused to ecological systems around the globe. This It should be mentioned that Leumi has never been prosecuted for environmental issues. environmental crisis is largely the result of the unwise use of natural resources, which exceeds their rate of regeneration. Sustainable development is designed to provide a response to the needs of the present generation without harming the needs of future ones. In such a context, the use of natural resources is managed in such a way as to enable maintenance Training and awareness and renewal of natural eco-systems. Leumi employees whose work is related to environmental issues regularly participate in workshops, lectures and specific From the website of the Knesset’s Officer for Future Generations of Israel: www.knesset.gov.il training on the various issues. Recently, these activities have included introductory lectures on the principles of sustainable Ecological footprint: This term is used to refer to the influence of human beings on natural systems, using a measurement development, global warming, and critical environmental issues in Israel. This activity is planned to increase in 2007. of territory. For each person or organization, one territorial unit of a certain size is defined, and this should provide all needs. Leumi continually monitors the latest technological developments in the various environmental areas and studies new From the website of the Ministry for Protection of the Environment www.sviva.gov.il possibilities to improve its environmental record.

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Recycling and reduction of consumption

Recycling and reduction of paper usage One of the raw materials used in the paper industry is cellulose produced from woodchip. Trees play a crucial role in > @VIEW archiving of documents: Leumi’s construction projects, for example, store some 13GB of data, mostly in draft mitigating global warming, as they absorb greenhouse gases and CO2, and emit oxygen. Any tree felled consequently format (thousands of drawings). If these were printed, they would require miles of paper. The “@View” system saves about undermines the Earth’s ability to repair damages caused by human activities and to re-balance the amount of emissions. half of the paper copy costs. Moreover, the process of producing white paper requires the use of chemical bleaching agents such as chlorine. These > Daily memos to the branches: In the past 2 years, the Bank has moved from distribution of daily business information chemicals overburden the sewage systems and, wherever wastewater is not properly treated, they flow into streams from head office to the branches via computer rather than via printed memos. This saves around 3 million sheets of paper and into the ocean and pollute the environment. per year, with a cost saving of NIS 290,000. Paper recycling > Suppliers’ portal: The Bank is in the process of creating a supplier portal, which will enable distribution of information, Another rationale for paper recycling is the volume of buried waste. Today, Israel buries most of its waste underground invoices and all other forms of written communication to suppliers via a special Internet site. in several locations throughout the country. The range of solutions for burial of waste this way is not unlimited, and is > Paper towels: Leumi’s paper towels are from recycled paper only. gradually reducing. Eventually, if proper solutions are not found, central and local authorities will be forced to dig new > Elimination of printed forms: The Bank has purchased laser printers for use by bank-tellers. As a result, many forms waste dumps. Leumi is aware of the importance of reducing paper usage and using more recycled paper products. previously printed in printing houses are no longer printed, and stocks of forms are no longer required. Each form is printed For many years, Leumi has used a paper collection service for recycling of paper. Paper is collected from all branches and on an “as needed” basis. from two main centers, one at the head office in Tel Aviv and one in Lod. The amount of paper collected for recycling is around 800 tons per year (about 50% of the bank’s paper consumption). Recycling of batteries Reduction of paper consumption Batteries contain highly toxic agents, which can cause severe pollution in waterways and rivers. The presence of batteries In 2006, Leumi consumed 1,666 tons of paper, compared to 1,749 tons in 2005. This quantity includes all types of paper in moist environments, such as organic garbage pits, might cause them to corrode and cause their chemicals to pollute used by the bank: forms, printer paper, paper rolls, photo paper, toilet paper, and paper towels. Leumi strives to reduce the environment. To prevent such effects, Leumi chose to join the initiative of the Ministry of the Environment to collect paper consumption of all kinds, and has undertaken various initiatives, which benefit the environment and save batteries in special bins to be sent to a secure pit in Ramat Hovav. The Bank is increasing the number of battery collection operational costs. containers in different locations. The following is a list of Leumi’s initiatives in recent years to reduce paper consumption: At present, Leumi has three such containers in Tel Aviv, Bet Lin and Lod. Jerusalem and Haifa will be added in 2007. > From printed reports to computer reports: The method for viewing and handling computer reports has been revised. Reports, which were printed, are now available on computer, and available via an intranet interface. 2,420 types of reports were cancelled or computerized in this way, out of the 2,470 reports used by the bank in 2004. In this period, paper consumption has been reduced from 56 million sheets to 39 million sheets. The cost saving resulting from this change is around NIS 580,000 per year. > Internal mail without envelopes: Four years ago, the bank decided that non-sensitive internal mail should not be sent in envelopes, but only by folding and stapling the written memo. > Reusable envelopes: The amount of reusable envelopes used by the bank is 250,000 per year. On the assumption that each envelope may be reused 5 times, the saving is around 5 million paper envelopes per year. The cost saving resulting from this change is around NIS 484,000.

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Energy Conservation and Savings

As for most consumers of energy in Israel, the electricity consumed by Leumi offices and branches comes from the Israel The following is a list of ongoing Leumi activities designed to save energy with resulting reduced operational costs: Electric Corporation (IEC) power stations. The direct result of burning coal and gas for the production of electricity is > Lighting: Leumi uses economical 58W fluorescent bulbs; installs economical, low-output fixtures; implements lighting greenhouse emissions. The more we reduce our electricity consumption, the lower the burden on the network, electricity control based on timetables and activity patterns; ensures that at the end of the day, lights are turned off by a designated production, and greenhouse emissions. The move to the use of renewable energy sources, such as solar power or wind turbines, is employee at locations without a smart, automatic shutdown system; purchases fixtures with electronic starters only to save designed to ensure continued supply of energy with reduced or zero levels of pollution. Until such systems are incorporated energy. For example, in the Leumi Computer Center, use of these starters saves approximately NIS 500,000 per year. into the Israeli electricity network on a large scale, each one of us is morally obliged to reduce energy consumption. > Temperature and AC control: Leumi has purchased heat-recovery system-integrated compressors and installed advanced and economical air-conditioning systems, such as the innovative system installed at the Computer Center, which measures Efficient energy consumption the air supply in the air diffusers in the different rooms and communicates with a compressor, which adjusts itself accordingly. This saves a considerable amount of energy compared to conventional central AC systems. In addition, the AC Leumi continuously undertakes initiatives to reduce energy and electricity consumption through energy conservation and systems are operated according to regular schedules. Finally, the shades on the windows facing south are coated to prevent consuming energy, efficiently and economically. These have positive impacts both environmentally and financially. Efforts overheating; in new branches, a special type of heat-resistant glass is used for the windows facing south. to identify potential savings and energy surveys are undertaken in various bank locations from time to time. > Water heating: The boiler’s temperature has been reduced to 45º Celsius; heating systems now use residual heat, created As part of managing Leumi’s operational costs and environmental impacts, electricity consumption by the whole group (all in the air conditioners’ condensation process, to heat water. branches and units) is regularly assessed. The data show that the Bank’s electricity consumption has been relatively stable throughout recent years, despite the constant growth in Leumi’s activity in terms of branch coverage, and the acquisition and rental of new buildings. The nature of the Bank’s activity requires constant addition of heat-emitting computing equipment, which requires further energy consumption for air-conditioning in Israel’s hot climate. Nevertheless, efficient energy consumption means that the increase in electricity consumption has been relatively moderate.

Leumi’s consumption of electricity (in millions of kilowatts) between 2003 and 2006 The Smart Building System in the Leumi House Executive Level 250 In 2004, a “smart” system for automatic shutdown of lighting and air-conditioning was installed on the 7th floor of the 221 223 218 220.5 Leumi Headquarters building in Tel-Aviv. This system ensures energy efficiency and electricity savings. It was installed in 200 order to assess the feasibility of installing similar systems in all the other floors, and in additional bank locations.

150 In order to assess the system’s feasibility, the “smart” floor’s electricity consumption is compared each month to that of a different floor. Data show savings of 10%-15% and above. This means annual savings of thousands of shekels per level, 100 and tens of thousands of shekels, if the system is implemented in the whole building. 71.8 72.5 70.12 74.97 Leumi periodically compares the electricity savings with the cost of installing the system, and calculates the payback time. 50 In view of the rise in electricity costs, the expected payback time has shortened from 7 to 4.5 years. Should the payback time shorten further, the whole building is expected to become “smart”. 0 2003 2004 2005 2006

Area of Leumi locations in square meters (in thousands) Millions of kilowatts

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Water Savings

Fresh water is a scarce resource world-wide. The amount of water available for consumption in Israel is constantly falling. Damage to the coastal aquifer due to pollution or salination, as a consequence of over-consumption and lower water levels, is but one example of the threat to Israel’s water reserves. Another is the country’s dependency on rainwater levels. Although Israel is a world leader in processing sewage water for reuse in irrigation, we are all are still obliged to do whatever we can to reduce personal water consumption, including Leumi.

Controlled water consumption Leumi takes several measures to control water consumption in its branches and offices, including: > Installation of dual flush toilet tanks in all bank bathrooms and waterless latrines in several buildings. > Installation of an air-conditioning system in the Computer Center using systems based on air condensation instead of water condensation. Leumi has resolved to expand its current effort of collecting data on water consumption in additional bank installations over the next few years.

Reducing water consumption at the Leumi Computer Center In 2002, all cooling units in the air-conditioners in this unit were converted from water to air condensation. In addition to the environmental advantage derived from the significant reduction in water consumption, an economic saving of tens of thousands of shekels was achieved due to a reduction in the cost of the different sources of water and their treatment.

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Preference for using environmentally-friendly materials

Leumi believes that environmentally friendly materials should be preferred, even if this entails additional cost. Here are some examples: > Cleaning materials: All cleaning companies working with Leumi are contractually committed to use only detergents that meet the Ministry of the Environment’s standards. > Air conditioner gas: The main environmental problem of the gases used in the previous generation of air-conditioning systems (CFC’s) was that they damaged the ozone layer and formed the hole in the upper atmosphere in the area above the North Pole and South Pole. These gases had been engineered in order to improve cooling capacity. However, it was later discovered that apart from their cooling ability, they could also attach to ozone molecules and separate them from one another, breaking up the natural atmospheric layer protecting organisms against radiation. With the increasing awareness of this damage, many countries, led by the UN, have acted to ban the use of such gases. Accordingly, Leumi has been replacing old air-conditioners as part of regular maintenance. All newly acquired air-conditioners operate on environmentally friendly (non-freon) gases. > Disposable drinking cups: Leumi buys some four million disposable drinking cups a year. Recently, the old cups made of foam polystyrene – an environmentally unfriendly material with low biodegradability – were replaced by paper cups, which are far more environmently friendly, biodegradable and recyclable. > Toner-free thermal printers and printing accessories: Over the last ten years, Leumi has been increasingly using recycled materials such as ink cartridges and toners, whose plastic cartridges are reused. In 2005, the Bank used 36 types of recycled toners and cartridges. In 2006, it used 61 types, at an annual value of about NIS 4.2 million. These now represent 78% of the Bank’s total toner purchases. In addition, Leumi currently uses 145 original toners and ink cartridges at a cost of NIS 1.2 million. During 2005, Leumi bought thermal printers for use at the bank’s information booths. This allowed the Bank to reduce consumption of toner cartridges made of unfriendly plastic, and save the expense of 840 plastic toner purchases per year. Computer recycling Leumi’s environmental responsibility is also demonstrated in the way Leumi disposes of electronic waste including computers. Aware of the environmental dangers of discarding electronic waste, and also out of data security considerations, Leumi has chosen to process obsolete computers in the following ways: > Recycling by an authorized subcontractor who destroys the computers under the Bank’s supervision (including the shredding of magnetic media to ensure information security). > Donation to the community (some tens of computers per year). > Occasional sale of computers.

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Leumi’s indirect impacts

on the environment And for the future? The common view in today’s world is that banks and other major financial organizations play an important role in For the sake of all our stakeholders, both present and future, we attach great importance to the effect Leumi has on the encouraging their customers to take responsibility for their environment. Leumi feels that, in this area as well, it can quality of the environment. It is our intention to continue improving our performance in this area, and to contribute to the contribute in shaping values and guidelines. The most significant environmental challenge faced by the Bank is dealing with increasing awareness and commitment of our employees. Here are some examples of areas we have selected to focus on its own indirect impact and leveraging its economic power to promote the quality of the environment in Israel. in 2007: Starting in 2007, Leumi has taken the following steps to improve its own environmental performance: Waste treatment > Leumi will require new suppliers to declare they have relevant licenses and permits and that there are no legal actions > Leumi will treat waste responsibly and take steps to reduce waste resulting from our activities , using recycling processes relative to the environment pending against them. where possible. > Leumi will encourage suppliers to take measures to improve their environmental responsibility. > Leumi will encourage recycling and awareness of this subject. > Leumi will consider collaboration with environmental organizations, including investment in contributions for Avoidance of greenhouse gas emissions environmental improvements. > Leumi will measure the fuel consumption of all vehicles driven by its employees. > Leumi will include considerations relating to fuel consumption, exhaust emissions, and other environmental factors in relation to company vehicles when purchasing or leasing. > Leumi will increase use of transportation for employees for travel to work and meetings. > Leumi will continue to give preference to international video-conferencing rather than air travel. Green buildings Leumi will, as far as possible, incorporate the principles of “green construction” in projects to renovate and establish new branches and premises. At present, two buildings are undergoing examination for “green building” approval.

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A Look to the Future

Historical buildings

Preservation ensures the continuing presence of buildings with cultural, historical or architectural value in today’s cultural environment. It helps to maintain a feeling of stability and historical continuity, which links the individual to the society in which he or she lives. Leumi preserves historical buildings, owned by the Bank, in collaboration with the Council for the Preservation of Buildings. The Bank uses special innovative construction methods. The preservation work is conducted professionally and includes restoration of walls, plastering of surfaces, and preservation of original tiles and roofs. Amongst the buildings that have undergone preservation are: Maani House: This is one of the first houses of Ahuzat Bayit in Tel Aviv, built at the start of the twentieth century. The building was used for offices from 2003 after a thorough preservation treatment in line with the requirements of Tel Aviv City Council, and integrating current style into the new building. Today, the building is part of the Head Office Management building. Rehavia Branch: The branch was built in 1935-1936 in the Rehavia neighborhood of Jerusalem as a family apartment building. The Bank has preserved the building meticulously in line with the guidelines of Jerusalem City Council and in coordination with the family of the architect who designed the original building. Jordan Hotel: The Bank sold this building, and included in the contract of sale an explicit clause that the purchaser was required to maintain the building. Preservation work was completed last year in accordance with the requirements of Tel Aviv City Council.

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Directions for the next two years

During the intensive work required to gather and consolidate the information provided in this first Corporate Social Responsibility Report, we have participated in a fascinating process in which we gained new insights, some surprising, Supporting our employees about our strengths. As a result of preparing this report, we learned about ourselves as a financial organization, active in We, at Leumi, will continue to support our employees and care for them. We will also continue their training and the community, in the environment and in the Israeli economy. We are all convinced of our collective social responsibility. development, performance evaluation and remuneration, and care for their well-being. At the same time, we will continue We came to understand how this view is manifested in our connection with all our stakeholders at the bank. We are to develop communication channels for feedback to enable us to learn about what is important for our employees. proud of our achievements so far, and it is our intention to continue our activities within the framework of corporate social responsibility in the name of the Bank and our employees. Moreover, we shall broaden the scope of our reporting to include all the companies in the Group so that we can report on an even more complete basis in 2009. Involvement and volunteering of Leumi employees in the community Here are some of the directions we will be taking over the next two years: We, at Leumi, will continue to work on supporting the weaker elements of our society. We will continue to make focused contributions within various community projects. In line with our policy of community involvement and volunteering on the part of our employees, we will continue to use Availability of this report and feedback the leverage of our strength as a leading financial organization in Israel, together with our employees, the people of Leumi It is our intention to present this report to many stakeholder groups, including Leumi employees, customers and the general and their talents, capabilities and willingness, and in collaboration with our community partners, to act for the good of public. At Leumi, we are preparing for broader stakeholder dialogue internally, to talk about the significance of the report, society as a whole. and to develop ways of improving our activities. We will be grateful for feedback from all readers so that we can gain benefit from your responses. Such feedback will service us as a learning platform, help us draw new conclusions and assist us in defining our corporate social responsibility Caring for the environment – reduction in direct impacts actions as we go forward. It is our intention to implement Leumi’s new environmental policy with a focus on energy saving, recycling and reduction of our direct environmental impacts. At the same time, we will act to increase the awareness and commitment of our employees Encouraging dialogue with stakeholders to this important subject. We will broaden the dialogue with stakeholder groups in order to continue to strive to meet their needs and incorporate their requests in our decision-making.

The right financial solution for all our customers We will continue to strive to develop a complete financial solution based on values that meet personal needs, and which provides the most advanced solutions, even at critical moments. We will continue to act to create a banking environment that will guarantee high availability of service in friendly surroundings, accessible and safe.

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Acknowledgements Contributors to the Social Responsibility Report

Leumi, as a large and leading organization, has decided to lead the way by adopting the voluntary reporting process and > Employees of Leumi from the various divisions who contributed much from their experience and knowledge completing this social responsibility report. The important contribution of this first report is in both the collection and consolidation of information about our social > Steering team: and environmental activities and its presentation to the public. Whilst these activities do not feature in a major way in the David Bar Lev – Leader of the team, Head of Human Resources Department annual financial report, the value of such activities is highly significant. Menahem Izental – Capital Markets Division We would like to emphasize that the effort required to produce this report required the involvement of many managers Alon Eldar – Operations Department and employees, and it is only through their support that we have been able to complete this report. We would like to thank all who contributed: division heads, senior managers, members of the steering team, the secretariat, the Bank’s historian, Eyal Biran – Banking Division professional consultants and all those who provided relevant information and comments on the report drafts. Yehuda Berger – Public Relations We are proud to note that the Corporate Social Responsibility Report of Leumi has the approval of the leading international Danny Gitter – Commercial Banking Division organization in the field of corporate social responsibility, the GRI, and meets the most advanced reporting standards. Moshe Genkin – Operations Department Nevertheless, it is important for us to stress that the most significant acknowledgement of our activities at Leumi does not Dafna Dotan – Business Division lie in international approval, but in the feeling of pride of our employees, and in the added value that our customers gain Naomi Zandhaus – Legal Department – and also in the smiles of the teenagers who are provided with an opportunity for a better future. Uri Kahlon – Banking Division Zeev Morag – Internal Audit Department Meira Karni – Legal Department Ehud Rosenbaum – Commercial Banking Division Ruth Shiklar – Legal Department

> Project Team: Eyal Tzofan – Human Resources Department Orit Kot – Human Resources Department

> Consultants: Efrat Avineri – Editing Liad Ortar, Arkada Initiatives Ltd Iris Eldar and team, BDO Ziv Haft Ltd. Elaine Cohen, Potential One Ltd. Tamar Lazar - Internal Communications Igal Feuerstein, Tzeela Levin Peled, Feuerstein Design Ltd.

> Organizations: Talia Aharoni and Momo Mahadav, “Maala” Adv. Alona Shefer Karo, Life and Environment Yuval Wagner, Accessibility Israel

Please address queries to Eyal Tzofan: Human Resources Department, 34, Yehuda Halevi Street, Tel Aviv, Israel. Telephone: +972-3-5143223. Fax: +972-3-5147781

Translated from Hebrew by Elaine Cohen, Potential One Ltd. Edited by Colin Marks for Set Services Ltd. 126 | Leumi Corporate Social Responsibility Report | 127 A look to the Future

GRI (Global Reporting Initiative) index

Leumi prepared this report in accordance with the G3 guidelines of the GRI (Global Reporting Initiative). The report was Details of reporting in accordance with GRI guidelines: approved at level B (see letter from GRI on page 130).

Indicator GRI performance Leumi CSR report number indicator Subjects 2006 reference

1 Strategy and analysis Declaration of senior management, Opening remarks by the Chairman Report Assurance Level of Reporting *+A A +B B +C C description of impact of risks and of the Board and the CEO, History, Self-declaration opportunities, business, social and Vision, Ethics – the "Leumi Way" environmental vision - Leumi’s Code of Ethics Assurance by a third party 2 Organization profile Products and services, organization Organization Profile, Leumi Verification by GRI structure, activities in Israel and Customers abroad, ownership structure, Board G3 Standard disclosures: Profile of the business role, business scope G3 Advanced disclosures: Policy and perceptions 3 Reporting scope Period, alignment with GRI indicators, Reporting Framework, GRI Index G3 Performance indicators and sector indicators external assurance 4 Governance Corporate governance Organization Profile

Verification by a qualified independent expert EC Economic aspects Economic impacts, revenues, Leumi and the Israeli Market, Leumi dividends, employee remuneration, in the Community * +A - the highest reporting level. community investment, taxes and payments to authorities

EN Environmental aspects Management policy, consumption Leumi in the Environment of materials, energy use, water, emissions, waste, recycling, compliance with legal requirements

LA Labor aspects Management approach, employee The People of Leumi profile, labor management, employee relations, health and safety, training and development, diversity of workforce, employment opportunities

HR Human rights Policies relating to human rights, Leumi in the Israeli Market, Leumi supplier compliance, enforcement and Suppliers

SO Social aspects Management approach, community Leumi in the Community involvement, activities, impacts, fines

PR Product responsibility Health and safety of customers, The Customers of Leumi product labeling, marketing communications, customer privacy, compliance

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To: Bank Leumi March 2007

We are pleased to congratulate you at Leumi, one of the leadership members of Maala, on joining the ranks of the leading companies in the world that report on their social and environmental impacts in accordance with GRI guidelines.

Social reporting is a significant element of a comprehensive approach to corporate social responsibility, and an important tool for internal understanding, defining targets and committing to improvement, communication and dialogue with all stakeholders of the business.

As an organization that promotes social responsibility amongst businesses in Israel, we are aware that social responsibility is a continuous process and not a one-off objective. It is in this spirit that we appreciate the steps taken and resources invested by Leumi in developing a social responsibility approach and in facing the challenges that this brings, including complying with international standards.

The publication of this report, Leumi’s inclusion in the top ten companies in the Maala Ranking for 2006, Leumi’s involvement in the community, and Leumi’s continuing aspiration for leadership, all contribute to the benefit that is gained by the Bank, the Israeli market and Israeli society.

Talia Aharoni

General Manager Maala – Business for Social Responsibility

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