“Private banking” is usually known as financial services received by individuals with high income. You can find departments of private banking in every bank in Israel. To be eligible to receive private banking services in Israel, some banks request a minimum amount from their clients (from $500 to $1 m).
Moreover, it is possible to establish institutions such as asset management and consulting company or insurance company for providing reserve funds. However, in order to be able to conduct private equity services in Israel it is mandatory to obtain a portfolio manager license.
Conditions for licensing
Candidates who are planning to apply for a license must:
- Prepare an action plan including its implementation;
- Prove the competency of the Board of Directors members;
- Ensure compliance with the governmental economic policy;
- Check mutual reciprocity in licensing between banking corporations in Israel and the business’ country of origin;
- Confirm the interest of the general public in the offered services.
Forms of organizations
Israeli banks have their own private banking departments. For non-Israeli banking institutions, the rules are the following: they must obtain a license that authorizes the management of financial establishments. However, most of non-Israeli banks do not get such a license and, therefore, are not allowed to process banking operations in the state of Israel.
Procedure of licensing
The process of obtaining a license lasts a minimum of 6 months and includes five steps.
There are several reasons why a license can be revoked. It can happen if a company:
- Requests for revocation;
- Starts a self-liquidation process;
- Did not yet start or already finished operation;
- Cannot follow the relevant requirements including the capital ones;
- Violated laws of Israel.
Besides these reasons, a company’s license can be revoked if it is an interest of the general public or if it is subject to liquidation (an order or an appointment of a liquidator have been issued).
Additionally, special disciplinary tribunals examine providers of investment advice in Israeli. In case tribunals find out that some regulatory provisions were violated, they can impose fines on license holders.
Settling investment disputes
Customers of investment advice providers have an opportunity to file a complaint against them via the Baking Supervision Tribunal. The ISA has recently obtained a right to penalize licensees who violated regulatory conditions. Furthermore, these organizations can suspend or revoke licenses in cases when licensees do not meet obligatory requirements. When it comes to imposing civil fines, it can only be done by the Civil Fines Committee.
In Israel, the process of filing claims in investment disputes is performed through courts of jurisdiction that are relevant to the subject. It is crucial to remember that violation of rules in ownership, provision of advisory services, or trading in securities is considered criminal offenses. Accordingly, such cases are punished by law.
Would you like to receive personal advice on the Israeli banking sector? Specialists from COREDO are prepared to help you in numerous procedures such as obtaining a license or registering a subsidiary of a foreign bank in Israel.