Four of the Six Largest Companies on the Stock Exchange Are Banks—A Stagnant Market Failure
Four observations on banks, their owners, the public, and the Tel Aviv Stock Exchange
1. The Banks Are in Control
Leumi is the largest entity on the Tel Aviv Stock Exchange, followed by Hapoalim. Teva and Elbit maintain the high-tech sector’s presence, though they operate in specialized fields—pharmaceuticals and defense. Behind them are two more banks: Mizrahi and Discount. Some may celebrate this, particularly bank executives, employees, and investors. But in reality, it’s a sign of stagnation for the stock exchange.
A market that leans heavily on banking, with little sectoral diversity, is a dormant one—lacking innovation and real activity. The Tel Aviv Stock Exchange’s management is responsible for failing to attract companies worth tens of billions to list locally. But the blame also lies with the banks' stock prices, which have surged in recent years, propelling them to the top. The reason? Banks generate profits that leave no room for doubt—this is a cartel thriving at the public’s expense. The Bank of Israel supports and protects them, preventing real competition. Essentially, as the banks’ regulator, the Bank of Israel facilitates a massive wealth transfer from customers to shareholders. Customers earn zero interest on their checking accounts while paying high fees, feeding the banks’ profits, which are then distributed as dividends and drive up share prices. Each year, the banks tighten their grip on the market, cementing their status as its undisputed rulers.
2. Who Controls the Banks?
Banks dislike criticism. They push back, saying, “What do you want? Rising bank stock prices are good for the public—they own the banks.” By "public," they mainly refer to institutional investors—pension funds, provident funds, and investment vehicles overflowing with bank stocks.
But does the loss suffered by customers correlate with their gains as investors? Absolutely not. And let's not forget that there are also controlling shareholders: the Ofer family, the Bino family, and the Wertheim family.
To put it simply, there are two extremes. On one end, there are people with minimal pensions, where every shekel matters, and the banks extract hefty fees from them each month, offering little in return for their savings. On the other end, there are individuals heavily invested in banks, profiting significantly, for whom banking fees are negligible. Banks are ultimately a mechanism for transferring wealth to the wealthier.
3. The Regulator's Failure
Every four years—or, in reality, every one to two years—a new batch of Knesset members and ministers takes office, tasked with serving the public interest. But they fear confronting the banks. Time and again, the banks emerge stronger. There is no regulator willing to shake up their dominance. Their power, money, and army of lobbyists consistently dilute well-intentioned legislative efforts into weak, ineffective laws.
4. The Public’s Silence
Nothing will change unless the public rises up. But the public is misled. The banks pour massive sums into advertising, sponsoring reservists, newlyweds, evacuees, victims, the injured, and bereaved families. They polish their image to appear socially responsible and compassionate. It’s a sham. This is PR at its finest, and it works.
But here’s the truth: If you add up all their charitable contributions, it still wouldn’t come close to the one thing they are morally obligated to do—but refuse to: pay interest on checking accounts. Their donations don’t even amount to half or a quarter of what customers lose annually simply because banks refuse to offer interest.
But they play it smart. By giving small amounts to select groups—like reservists—they distract from their moral duty to give fair financial returns to everyone, consistently.
