SUPERVISOR OF BANKS

ANNUAL STATISTICS OF ISRAEL'S BANKING SYSTEM 1986-1990

BANK OF ISRAEL Presentation and processing of data in this volume by the Banking Information & Statistical Unit of the Banking Supervision Department in collaboration with the Computer Services Department.

Production by Publication Unit. Bank of Israel Printed by Ahva Press. Jerusalem ISSN 0334-4541 Cat. # 3060391006 CONTENTS Page 1. Introduction vi 2. Institutions Included in the Digest viii 3. Source of Statistical Data xi 4. Definitions xvi

CHAPTER I - INDICATORS. ASSETS AND LIABILITIES. STRUCTURE OF THE SYSTEM. GENERAL DATA (1986-90)

Table I-I: Indicators of Development of Ordinary Banking Corporations. 65-90 3 Table 1-1.1: Assets and Liabilities in Israeli and Foreign Currency 4 Table 1-1.2: Assets and Liabilities in Israeli Currency 8 Table 1-1.3: Assets and Liabilities in Foreign Currency 12 Table 1-1.4: Assets and Liabilities in Foreign Currency by Principal Currencies 16 Table 1-1.5: Assets and Liabilities of Mortgage Banks 20 Table 1-1.6: Assets and Liabilities of Industrial Investment Finance Banks 24

Table 1-1.7: Assets and Liabilities of Financial Institutions £6 Table 1-1.8: Inflation Adjusted Consolidated Balance Sheets of the five Mpj0r Banking Groups 32 Table 1-1.9: Inflation Adjusted Balance of Ordinary Banking corporations 34 Table 1-2.1: Number of Banking Corporations 36 Table 1-2.2: Number of Offices of Ordinary Banking Corporations 37 Table 1-2.3: Number of Offices of Ordinary Banking Corporations. by Banks 38 Table 1-2.4: Selected Data on Offices. Branches and Employees by Locality 40 Table 1-2.5: Banking Corporations by Banking Group 42 Table 1-2.6: Number of Overseas Banking Offices of Banking Groups 44 Table 1-2.7: Institutional Changes in the Banking Corporations 50 Table 1-2.8: Concentration of Ordinary Banking Corporations as measurd by H Index 52 Table 1-2.9: Number of Automatic Bank Machines by Location 53 Table 1-3.1: Consumer Price Index and Exchange Rates of US Dollar and Deutsche Mark 54 Table 1-3.2: Exchange Rates of Selected Currencies - (Transfers and Cheques) 55

ORDINARY BANKING CORPORATIONS

CHAPTER II - FREELY LOANABLE FUNDS AND LIQUIDITY (1986-90)

Table II-I: Freely Loanable Funds in Israeli Currency. Current Prices 58 Table II-2: Freely Loanable Funds in Israeli Currency (December 1990 Prices) 60 Table II-3: Deposits of the Public Subject to Liquidity Requirements. the Liquidity Requirements and Surplus or Deficit in Israeli Currency Monthly Average 62

III Table 11-4: Interest Rates on Liquid Assets in Israeli Currency 63 Table 11-5: Liquidity Requirements on Liabilities or Assets in Israeli Currency, by Interest Bracket 64 Table 11-6.1: Average Interest Rates on Liquid Assets in Israeli Currency according to Liquidity Requirement until 24.2.88 67 Table II-6.2: Average Interest Rates on Liquid Assets in Israeli Currency according to Liquidity Requirement from 25.2.88 68 Table II-6.3: Average Interest Rates on Liquid Assets in Israeli Currency according to Liquidity Requirement from 15.2.90 69 Table 11-7: Interest on Liquidity Deficits in Israeli and Foreign Currency 70 Table 11-8.1: Interest Rates on Monetary Loan, until 25.11.87 71 Table 11-8.2: Interest Rates on Monetary Loan from 26.11.87 72 Table 11-9: Summary of Liquidity Requirements on Foreign Currency Deposits 73 Table 11-10: Fixed Term Auctioned Borrowing 74 Table 11-11: Application of Saving Schemes Funds 75 Table 11-12: Investment Requirements for Saving Schemes 76

CHAPTER III - DEPOSITS (1986-90)

Table III-I: DeposHs of the Public in Israeli Currency, by Type of Deposit 80 Table III-2: Deposits of l.hePublic in Foreign Currency, by Type of Deposit 82 Table III-3: Deposits of the Public in Foreign Currency by Type of Deposit by Principal Currency 84 Table III-4: Earmarked Deposits in Israeli Currency by Source of Deposit 86 Table III-5: Earmarked Deposits in Foreign Currency, by Source of Deposit 88 Table III-6: Earmarked Deposits in Foreign Currency, by Source of Deposit, by Principal Currencies 89 Table 111-7: Number of Deposits of the Public by Locality 90 Table 111-8: Selected Data on Deposits of the Public by Locality 92 Table 111-9: Deposits, Withdrawals, and Balance of Saving Schemes, by Monthly Deposits and Non Recurring Deposits 94 Table 111-10: Deposits, Withdrawals and Balance of Saving, by Schemes 95 Table III-II: Average Effective Cost on Unindexed Deposits of the Public 96

CHAPTER IV - CREDIT AND CONTINGENT ACCOUNTS

Table IV-I: Credit to the Public in Israeli and Foreign Currency by Type of Credit 98 Table IV-2: Credit to the Public in Israeli Currency by Type of Credit 99 Table IV-3: Credit to the Public in Foreign Currency by Type of Credit 100 Table IV-4: Credit to the Public in Foreign Currency by Type of Credit, by

IV Principal Currencies 101 Table IV-5: Contingent Accounts in Israeli and Foreign Currency 102 Table IV-6: Contingent Accounts in Israeli Currency 103 Table IV-7: Contingent Accounts in Foreign Currency 104 Table IV-8: Contingent Accounts in Foreign Currenct by Principal Currencies 105 Table IV-9: Credit to the Government 106 Table IV-lO: Credit by Industry in Israeli and Foreign Currency 107 Table IV-11: Credit to the Public by Industry in Israeli Currency 108 Table IV-12: Ordinary Credit by Industry in Foreign Currency 109 Table IV-13: Acceptances and Contigent Accounts of Large Borrowers by Industry 110 Table IV-14: Average Effective Cost of Unindexed Credit to the Public 111 Table IV-15: Estimated Effective Annual Cost to Borrowers of Non-Directec 'hree Month Credit in Foreign Currency, Selected Currencies 113 Table IV-16: Number of Accounts on Credit to the Public Accounts and Securities by Locality 114 Table IV-17: Selected Data on Credit to the Public and Securities by Locality 116

CHAPTER V - SECURITIES TRANSACTIONS (1986-90)

Table V-I: Securities in Israeli and Foreign Currency 120 Table V-2: Securities in Israeli Currency 121 Table V-3: Securities in Foreign Currency 122 Table V-4: Securities in Foreign Currency by Principal Currencies 123 Table V-5: Book Value of Securities Portfolio (Quoted and Unquoted Securities), Five Major Banking Groups 124

CHAPTER VI - INTERBANK DEPOSITS (1986-90)

Table VI-I: Interbank Deposits in Foreign Currency, by Country of Deposit 128 Table VI-2: Interbank Foreign Currency Deposits by Home Country 130 Table VI-3: Interbank Deposits in Foreign Currency (in Israel and Abroad), by Principal Currencies 132

CHAPTER VII - FINANCIAL RESULTS (1986-90)

Table VII-I: Composition of Adjusted Capital, Five Major Banking Groups 135 Table VII-2: Profits and Loss Statement: Five Major Banking Groups and their Banking Corporations 136 Table VII-3: Net Interest Profit before Loan Loss Provisions: The Five Major Banking Groups and their Banking Corporations 138

v Table VII-4: Operating Fees: the Five Major Banking Groups and their Banking Corporations 139 Table VII-5: Other Income: The Five Major Banking Groups and their Banking Corporations 140 Table VII-6: Salaries and Related Expenses: The Five Major Banking Groups and their Banking Corporations 141

CHAPTER VIII - MORTGAGE BANKS (1986-90)

Table VIII-I: Credit Granted and Credit Balances by Recipient, Mortgage Banks 145 Table VIII-2: Balances of Credit Granted by Mortgage Bank to the Public by Destination 146 Table VIII-3: Credit Granted by Mortgage Banks for Residential Purposes 147 Table VIII-4: Sources and Application of Funds (Cash Basis) of Mortgage Banks 148 Table VIII-5: Inflation Adjusted Consolidated Balance Sheets of Banking Groups: Mortgage Banks 150 Table VIII-6: Consolidated Profit and Loss Statement: Mortgage Banks 152

CHAPTER IX - INDUSTRIAL INVESTMENT FINANCE BANKS (1986-90)

Table IX-I: Sources and Applications (Cash Basis) of the Industrial Investment Finance Banks 154 Table IX-2: Inflation Adjusted Consolidated Balance Sheets: Industrial Investment Finance Banks 156 Table IX-3: Consolidated Profit and Loss Statement: Industrial Investment Finance Banks 158

CHAPTER X - OVERSEAS BANKING OFFICES (1986-90)

Table X-I: Assets and Liabilities of Overseas Banking Offices 160 Table X-2: Assets and Liabilities of Overseas Banking Offices: Subsidiaries 162 Table X-3: Assets and Liabilities of the Overseas Banking Offices: Branches and agencies 164 Table X-4: Deposits of the Public and Credit to the Public of Overseas Banking Offices 166

CHAPTER XI - MISCELLANEOUS (1986-90)

Table XI-I: Money Supply 168 Table XI-2: Current Accounts of the Public 169 Table XI-3: Turnover of Clearing House, 1986-90 170

VI 1. INTRODUCTION

This is the thirteenth issue of the Annual Statistics of Israel's Banking System. As in previous years, we are presenting data series for five years.

The Annual Statistics is published concurrently with the Annual Survey of Israel's Banking System. In addition to these two publications, the Banking Supervision Department publishes Current Banking Statistics (looseleaf binder) with monthly updates.

The data in the Annual Statistic are based mainly on returns of banking corporations to the Supervisor of Banks and relate mostly to the activities of the banking system in Israel. Starting from the last issue, the activities of overseas subsidiaries, agencies, and branches have been included in a separate chapter. The data based on the banks' annual financial reports to the public also include such activities.

Figures for the entire banking system are summed over all banking corporations, Le. no consolidation is made.

The reader's attention is directed to some changes in the definitions, the manner in which the statistics are presented, and the method used for calculating rates of change, as well as to the footnotes to the tables.

Suggestions from readers for improving the layout or content are welcomed.

2. BANKING CORPORATIONS IN ISRAEL

The banking system comprises 29 ordinary banking corporations fully subject to the Liquidity Regulations, as well as 9 mortgage banks, 8 investment finance banks, and 9 financial institutions not fully subject to the Liquidity Regulations, and 3 joint service companies. The ordinary banking corporations comprise 24 banks, 2 merchant banks, 2 foreign banks and 1 financial institution fully subject to the Liquidity Regulations.

Supervised Banking Corporations in Israel, 31.12.90

Ordinary Banking Corporations 1. Banks Aliya-Leumi Bank Ltd American Israel Bank Ltd

VII Arab Israel Bank Ltd Bank Hapoalim B.M. Bank Leumi Le-Israel B.M. Bank "Massad" Ltd Bank of Palestine Ltd, Gaza Bank "Yahav" Le-Ovdei Hamdina Ltd Barclays Discount Bank Ltd The First International Bank of Israel Ltd Kupat Haoved Haleumi Leashrai Vehisachon Be-Netanya Aguda Shitufit Ltd Israel Bank of Agriculture Ltd Israel Building Bank Ltd Israel Continental Bank Ltd Israel Discount Bank Ltd Israel General Bank Ltd The Maritime Bank of Israel Ltd Mercantile Bank of Israel Ltd Otsar Hahayal Bank Ltd Poalei Agudat Israel Bank Ltd Kupat Ashrai Vehisachon Aguda Hadadit Ltd Petah Tikva Trade Bank Ltd Union Bank of Israel Ltd United Mizrahi Bank Ltd

2. Merchant banks "Eitan" Merchant Bank Ltd Leumi and Co. Investment Bankers Ltd 3. Foreign banks Bank Polska Kasa Opieki S.A. (PKO) Cairo-Amman Bank

4. Financial institution fully subject to Liquidity Regulations Otzar Hashilton Hamkomi Ltd1

Specialized Banking Corporations 1. Mortgage banks Atzmauth Mortgage and Development Bank Ltd Bank "Adanim" Mortgage and Loans Ltd Bank of Jerusalem for Development and Mortgages Ltd Israel Development and Mortgage Bank Ltd Leumi Mortgage Bank Ltd Mishkan-Bank Hapoalim Lemashkantaot Ltd "Tefahot" Israel Mortgage Bank Ltd The First International Mortgage Bank Ltd2 Carmel Mortgage and Investment Bank Ltd

2. Investment finance banks a. Industry Discount Bank for Industrial Finance Ltd Industrial Bank Ltd Industrial Development Bank of Israel Ltd

1 Included in the data of ordinary banking corporations as from June 1989. 2 Known as "Merav" Mortgage Bank Ltd until December 1987.

VIn Israel Ampal Industrial Development Bank Ltd The International Bank for Industrial Finance Ltd Leumi Industrial Development Bank Ltd Mizrahi Bank for Industry and Agriculture Ltd b. Agriculture Leumi Agricultural Development Bank Ltd

3. Financial institutions Eshnav - Issuing Company of "Tefahot" Israel Mortgage Bank Ltd "Gahelet" Gmul Hisachon Lehinuch Ltd Gmul Investment Company Ltd "Hesech" Kupat Hisachon Lehinuch Ltd, Haifa The Investment Corporation of the United Mizrahi Bank Ltd Leumi Finance Company Ltd Leumi Nahal (Investment Company Properties 82) Ltd Meniv Issuing and Management (1985) Ltd3 "Mashavim" United Mizrahi Bank Issuing Company Ltd

4. Joint service companies4 Automatic Bank Services Ltd Clearing House Center Ltd Israel Credit Cards Ltd

3. Licensed as a financial institution in September 1986 instead of Clal Issuing for Industry Ltd. 4. Statistics for these companies are not included in this publication.

IX 3. SOURCES OF DATA

The data in this volume are based mainly on returns of the banking corporations to the Supervisor of Banks. Additional information is drawn from the Bank of Israel's Regulations, and data on price indexes comes from the Central Bureau of Statistics. Unless stated otherwise, most of the figures concerning the bank's balance sheets are derived from monthly returns on assets and liabilities. Another source of information is banks' annual financial reports to the public. These are adjusted for inflation and submmitted in accordance with the Supervisor of Bank's Regulations. The data for each year are taken from the most recent financial report.

Presentation of the data

1. Three types of table have been used, according to the composition of the data: (a) Total figures -- local + foreign currency in NIS. (b) Local currency -- in NIS. (c) Foreign currency -- in US$.

2. For most series, we present annual figures for the last five years and quarterly or monthly figures for the last two years (end of period), unless otherwise specified.

3. The following indicators are also shown: (a) percent change over preceding period; (b) composition (percent).

Calculation of real rate of change

1. For figures stated in NIS, the nominal data are converted to December 1990 prices by the CPI (month of return = 100).

2. Nominal rates of change are given for figures stated in US$.

x 4. DEFINITIONS 5

Corporations

Banking corporation (bank, foreign bank, merchant bank, mortgage bank, investment finance bank, financial institution, joint service company) as defined in the Banking (Licensing) Law 5741-1981 and in the Banking Order (District of Gaza and N. Sinai)(No. 745) 5741-1981.

Ordinary banking corporation a banking corporation fully subject to the Liquidity Regulations: bank, foreign bank, merchant bank.

Specialized banking corporation - a banking corporation not fully subject to the Liquidity Regulations: mortgage bank, investment finance bank, financial institution.

Banking group - a banking corporation together with the subsidiaries included in its consolidated balance sheet.

Subsidiary - a company, 50% or more of whose voting rights or issued share capital (at par), or the right to appoint 50% or more of its directors, or the right to appoint its managing director, are vested in a banking corporation.

Associated company - a company, 25% or more of whose voting rights or issued share capital (at par) or the right to appoint 25% or more of its directors are vested in a banking corporation of which it is not a subsidiary; and a nonsubsidiary in which the banking corporation has invested, the investment being recorded by the equity method.

Related company - a company controlled by the persons or companies who control the banking corporation.

Bank abroad - including overseas offices of the reporting banks and of other Israeli banks.

Offices

Jffice - premises at which banking business is transacted: head office or branch.

Branch - an office at which a banking corporation receives financial deposits or otherwise conducts business with its customers, including mobile branches.

Restricted branch - a branch restricted to specific kinds of operation or specific days of business.

Exchange counter - a branch whose activities are confined to foreign-exchange transactions, mostly in hotels and at conventions or fairs, and where no customer accounts are maintained.

Branch extension - one or more departments of a branch operating in separate premises and considered an integral part of the branch.

Israeli office - includes offices in Judea, Samaria and the Gaza District.

5 The definitions under Assets and the sections which follow it refer to data drawn from returns to the Supervisor of Banks. The definitions of data in financial reports to the public can be found in the Supervisor of Banks' regulations on the pxeparatinn of annual reports by banking corporations.

XI Overseas office - representative office, agency, branch, or banking subsidiary.

Representative office - overseas office at which one or more persons represent the bank in the host country. This type of office is restricted to establishing connections with customers and transmitting information and is not authorized to conduct banking business.

Agency overseas office permitted to execute specific kinds of banking transactions; generally not permitted to accept deposits or conduct trust business.

Population

Public individuals and corporations, including specialized banking corporations and excluding the government, Bank of Israel, ordinary banking corporations, and banks abroad.

Foreign resident - a person who is not an Israeli national or who is not a resident of Judea, Samaria or the Gaza District and who, if in Israel, holds a transit or tourist visa or a visitor's residence permit; a corporate body whose registered office and principal place of business are not in Israel and which is not registered in Israel as a foreign company and which is not a representative office, branch, or agency in Israel of such a corporate body; a person on the staff of a foreign mission and who holds a diplomatic passport of a foreign state or an employee of the United Nations who holds a UN travel document. This category also includes any person who, under regulations issued by the Minister of Finance, is regarded as a foreign resident for purposes of the Exchange Control Law 5738-1978 and regulations under this law.

Israeli resident a person or corporate body that is not a foreign resident, excluding ordinary banking corporations, the government, and the Bank of Israel.

Assets

Deposits with ordinary banking corporations - deposits with and loans to ordinary banking corporations and the Post Office Bank.

Deposits with banks abroad - deposits with and loans to banks abroad; includes negotiable certificates of deposit.

Negotiable certificates of deposit of banks in Israel - certificates (at cost) issued by the reporting banking corporation and repurchased by it before maturity or issued by another banking corporation; this includes loans to wholly-owned subsidiaries of the issuer whose sole activity consists of trading in that corporation's certificates. Note: CDs were replaced by SROs (PACHAK q.v.) from July 1987.

Credit to the public - ordinary credit, directed credit, and credit from earmarked deposits.

Ordinary credit credit from the bank's freely loanable funds, excluding the bank's participation in directed credit and in credit from approved earmarked deposits; includes debit balances in current accounts.

Nondirected credit ordinary credit plus the bank I s participation (from freely loanable funds) in credit from approved earmarked deposits.

Directed credit - credit approved by the Bank of Israel under a general or specific permit, irrespective of its source (Bank of Israel, the reporting bank's own funds, or other source) .

XII Directed loans of mortgage banks - loans granted in accordance with an arrangement with the government, the Jewish Agency, The World Zionist Organization, a local authority, or one of the companies listed in the appendix to the "B"anking Order, either from earmarked deposits of any of these institutions or from the bank's freely loanable funds, with the exception of supplementary loans given on the bank's initiative and from its freely loanable funds. (See: Banking Order (Early Repayment Fees) 5742-1981.)

Credit from earmarked deposits - credit granted from approved earmarked deposits, excluding the participation of banking corporations from freely loanable funds.

Credit to the public in foreign· currency credit to Israeli residents and foreign residents.

Credit to the government credit to the government of Israel from approved earmarked deposits, credit from freely loanable funds, including deposits with the Treasury against saving schemes and foreign currency depositd of the public.

Customers' acceptance liability customers' obligations to the bank ~')r acceptances for bills of exchange and documentary credit.

Securities - debentures, shares, and other securities.

Debentures - government loans, debentures of subsidiaries and ott.er corporations and institutions, including convertible debentures and notes.

Shares - shares of subsidiaries and other corporations, including units in unit trusts.

Buildings and equipment bank buildings and equipment (at cost less accumulated depreciation) .

Other accounts current-year expenses less current-year income, intangible assets (e.g. goodwill), deferred expenses, pension, severance pay, and vacation pay funds, bonuses from the Treasury for saving schemes (until maturity), and amounts receivable from the Treasury on account of linkage and exchange-rate insurance of liabilities (until redemption date), gold and sums in transit.

Sums in transit - checks not yet presented, sums in transit between branches and other sums in transit (e.g. securities, dividend coupons, and checks in foreign currency).

Gold coins, bars, and certificates conferring rights to gold, held for the bank's own account.

Other assets - residual item.

Liabilities

Capital - equity and subordinated capital notes.

Equity - paid-up share capital, reserves and surpluses, and share subscriptions.

Reserves and surpluses - capital and other reserves and undistributed surpluses (correct as of date of last published financial statement).

Share subscriptions - receipts on account of shares for which there is an unconditional commitment to purchase by the buyer and to issue by the banking corporation.

XIII Subordinated capital notes - convertible and nonconvertible.

Debentures and other notes - unsubordinated debentures and notes.

Deposits of ordinary banking corporations deposits and loans from ordinary banking corporations, including the Post Office Bank.

Deposits of banks abroad deposits and loans from banks abroad, including deposits of specialized financial institutions abroad.

Total deposits in Israeli currency - deposits of the public, the government, and banking corporations and approved earmarked deposits.

Deposits of the public in Israeli currency ordinary deposits, time deposits, approved savings, linked long-term deposits, negotiable certificates of deposit, and earmarked deposits.

Ordinary deposits - demand deposits (check and other accounts), drafts payable, and deposits and creditors n.e.s.

SROs (Self-renewing overnight)(PACHAK) (current deposit account) - demand deposits subject to the following conditions: (a) no overdraft; (b) not checkable; (c) no transfer except to customer's own account with the same bank; (d) not indexed.

Time deposits (PAZAK) - unindexed deposits for one week or more.

Time deposits (PATZAM) - time deposits for six months or more, exchange-rate indexed.

Approved savings deposits (including the bank's participation in bonuses) in saving schemes approved by the Minister of Finance under the Encouragement of Savings (Guarantee of Loans, Income Tax Reductions) Law, 5716-1956 (includes principal, bonus, interest, and indexation differentials accruing on principal and bonus).

Indexed long-term deposits - index-linked deposits of NIS 100 or more held for an average period of at least two and a half years.

Negotiable certificates of deposit (Israeli currency) unindexed time deposits (whose conditions are approved by the Governor of the Bank of Israel) of NIS 50 or more and which are transferable only in their entirety. Note: CDs were replaced by SROs (q.v.) from July 1987.

Approved earmarked deposits earmarked deposits of related companies (proceeds of new issues), provident funds, and specialized banking corporations and other deposits approved for purposes of the Liquidity Regulations.

Deposits of the public in foreign currency - restitutions deposits, resident deposits, and nonresident deposits.

Restitutions deposits deposits deriving from restitutions payments to individuals and deposited in accordance with Section 6 of the General Permit (official regulations issued under the Currency Control Law, 5738-1978).

Resident deposits - restricted deposits in accordance with Sections 2 and 5 of the General Permit, and deposits in Jordanian dinars.

XIV Nonresident deposits - unrestricted deposits of foreign residents and of certain categories of Israeli residents, such as new immigrants, temporary residents, shipping and airline companies, and exporters; it also includes customer credits not yet classified.

Earmarked deposits - approved and not approved deposits.

Government deposits deposits of the government in connection with loans to taxpayers, participation in directed credit funds and other deposits (whether or not subject to liquidity requirements).

Jewish Agency deposits - earmarked deposits.

Loans from the Bank of Israel - discount-window ('monetary') loan, loans from directed-credit funds and other directed credit, and other loans.

Acceptances the bank's liability on acceptances for bills of exchange and documentary credits for imports.

Other accounts - current-year income less current-year expenses; income received in advance, accrued expenses, and provisions; includes account interest except for interest accrued on saving schemes and indexed long-term deposits which is included with saving schemes.

Sums in transit - credit transfers to other banks not yet presented for clearing and other sums in transit.

Other liabilities - residual item.

Liquidity

Deposits in Israeli currency subject to the Liquidity Regulations - ordinary deposits, time deposits, negotiable certificates of deposit and unutilized balances of earmarked deposits. The liquidity requirement against approved saving schemes and indexed long-term deposits may be reduced by the amount of approved debentures or deposits with the Treasury.

Foreign currency deposits subject to the Liquidity Regulations deposits of the public, deposits of ordinary banking corporations in Israel less deposits with such banking corporations, deposits of foreign banks less deposits with foreign banks.

Gross liquidity requirement the amount of liquid assets that a banking corporation is required to hold under the Liquidity Regulations against deposits of the public; nondirected credit; unutilized balances of earmarked deposits and participation of the Bank of Israel and the government in directed credit funds; investment shortfall in approved investments in connection with saving schemes and indexed long-term deposits; surplus foreign-currency assets or liabilities under Section 18a of the Liquidity Regulations; and special liquidity requirement. Before deduction of liquidity exemptions and recognized differences.

Nonresidents' foreign-currency deposits subject to the Liquidity Regulations - foreign currency deposits subject to the Liquidity Reglations, excluding deposits of residents and of ordinary banking corporations in Israel.

Other liquidity requirement gross liquidity requirement excluding the requirement on deposits of the public.

Net liquidity requirement - the gross liquidity requirement less recognized differences and liquidity exemptions.

xv Secondary liquidity requirement in foreign currency deposits with the Bank of Israel (other than primary liquidity cover) and deposits with foreign banks and debentures quoted on foreign stock exchanges which an ordinary banking corporation is required to hold against foreign currency deposits subject to the Liquidity Regulations.

Liquid assets in Israeli currency - deposits with the Bank of Israel considered as liquid assets under the Liquidity Regulations, banknotes and coins, and discount-window loans by the Bank of Israel.

Liquid assets in foreign currency - Deposits with thp Bank of Israel conisidered as liquid assets under the Liquidity Regulations.

Liquidity surplus (deficit) - the difference between liquid assets held ~nd the total net liquidity requirement.

Contingent Accounts

Contingent accounts - liabilities on behalf of customers for acceptances, letters of credit in connection with imports and exports of merchandise, credit guarantees, and other guarantees and obligations.

Documentary credits documentary credits for the finance of imports and exports of merchandise to and from Israel.

Credit guarantees liabilities on behalf of customers: (a) guarantees, letters of indemnity or other written obligations given to the lender or guarantor as guarantee for the discharge of the borrower's liabilities; (b) discounting of bills other than with the Bank of Israel on condition that the buyer has right of recourse on selling bank; (c) guarantee of payment for goods and services to the supplier; (d)"guarantee of payment for leased equipment to the lessor.

Guarantees and other liabilities - all types of guarantees that are not credit guarantees and all types of liabilities on behalf of customers which are not included above, excluding futures transactions in currencies and commodities.

Miscellaneous

The effective rate in annual terms was calculated as follows:

DY ] DP + l)DP _ 1 . 100 DM where: monthly cost - A days in computation period - DP days in reported month DM days in year DY Calculated from debits and credits of all customers.

Debit balance in demand deposits - overdraft account plus overdraft

Overdraft account - current account for which an overdraft facility has been arranged in advance. Debit balances also include drawings in excess of the agreed limit.

Overdraft - debit balance in a current account for which no overdraft facility has been agreed in advance.

XVI Average effective cost of debit balances in demand deposits - nominal interest rate, commitment fees. and the higher interest charged for withdrawals in excess of agreed limits. Calculated from debits (all customers of seven major banks).

Effective cost of debit balances in demand deposits in excess of the agreed limit - average effective cost of debit balances in demand deposits. minus average interest on debit balances in excess of agreed limit. plus the full rate of interest on debit balance in excess of agreed limit.

Prime rate - basic interest for preferred customers with overdraft accounts.

Nominal interest rate - prime rate plus risk premium.

Effective cost of nondirected foreign-currency credit - applies to foreign currency credit extended during the month of the return on which. until the beginning of August 1987 interest surcharge was payable to the Bank of Israel. Consists of interest, the difference between buying and selling rates for foreign currency. the Peace for Galilee levy (until February 1990). and commission on conversion of currency. The calculation assumes that the credit is granted for a year on the conditions in effect in the month of the return. Monthly interest in foreign currency is calculated as follows: (a) the average interest rate for the month is calculated for each of the five major banks on the basis of the arithmetic mean of daily interest-rate quotations; (b) the monthly averages so calculated are weighted by the credit balances of the five banks.

Money supply - currency in circulation and demand deposits of the public.

Freely loanable funds - funds that the bank may lend at its own discretion. Freely loanable funds are equal to total assets excluding contingent accounts less funds subject to Bank of Israel Regulations (such as the liquidity requirement on deposits and credit. investment requirement on saving-scheme deposits and indexed long-term deposits. Bank of Israel loans for directed credit. and credit from earmarked deposits) plus the liquidity deficit.

Deposit in saving schemes - arnountdeposited in saving schemes during the month.

Withdrawals from saving schemes - withdrawals during the month (principal. interest, and indexation differential), whether before maturity or at maturity.

Dicontinued saving schemes for new savers old optional schemes, children & youth schemes. housing schemes. other schemes, multipurpose and teenagers, Ledira, Lakol Tzarnud, Garnish, 2,000, dollar-indexed, dollar-index linked. La-oved. Maskoret, special multipurpose, La-matroid,Ratsif, dollar monthly income. dollar linked continued, Tesua A, Tesua B, Tesua continue A, currency-basket indexed. dollar-indexed B. dollar monthly income B, dollar-indexed B continued. dollar-indexed continued. Tesua C. dollar monthly income continuation. dollar-indexed C. dollar monthly income C. dollar-indexed continued C. dollar-indexed continuation B. currency-basket indexed B. currency-basket monthly income B.

;aving schemes for new savers - Teshura, Teshura continuation. dollar. dollar cont .• monthly deposits. dollar monthly. Ledira C. m.o.d. employees'motorization B.

XVII MINIMUM LARGE-BORROWERS' INDEBTEDNESS TO BE REPORTED (BY CAPITAL OF REPORTING BANKING CORPORATION)a

Inflation-adjusted capital (NIS million) 0-3 3-35 35+ Minimum indebtedness (NIS thousand) 30.6.84 to 31.3.87 70 165 300

Inflation-adjusted capital (NIS million) 0-5 5-50 50+ Minimum indebtedness (NIS thousand) 30.6.84 to 31.3.88 85 200 360

Inflation-adjusted capital (NIS million) 0-8 8-90 90+ Minimum indebtedne~s (NIS thousand) 30.6.88 to 31.3.89 100 240 430

Inflation-adjusted capital (NIS million) 0-10 10-120 120+ Minimum indebtedness (NIS thousand) 30.6.89 to 31.3.90 120 290 520

Inflation-adjusted capital (NIS million) 0-15 15-150 150+ Minimum indebtedness (NIS thousand) 30.6.90 to 31.12.90 150 350 650 a Dates are dates of change of reporting requirements.

XVIII