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The Israel Discount Bank (IDB) ranks third among Israeli banks and carried out a successful international share offering in Mar 1996. IDB will be less affected by new legislation imposing the sale of non-financial asset than will the two other major state-owned banks in Israel, though IDB will have to sell the Mercantile Discount Bank, an affiliate. IDB has a conservative portfolio and is unlikely to present investors with unpleasant surprises, which makes it attractive to foreign investors.

Isareli banks have seen a rise in profit and have benefited from expansion into non-banking areas such as stock broking. This looks set to change due to legislation which imposes divestment of non-financial assets by banks. Further legislation is scheduled that will reduce the role of banks in the capital market. Bank Hapoalim, the most profitable Israeli bank in 1995, is especially likely to be affected by these changes. Foreign competition could also become a problem for Israeli banks.