Israeli banks tightened controls on securities accounts linked to Russian nationals, even those holding Israeli passports, signaling broader scrutiny in cross-border finance.
In a developing move, major Israeli banks began physically separating and isolating securities accounts held by individuals of Russian nationality from those belonging to taxpayers in Russia, a measure described by Mark Oigman, the founder of SmartGen Ltd, as a response to new supervisory instructions and market oversight pressures. This shift marks a pivotal moment in how the Israeli banking system handles complex cross-border ownership and custodian compliance when third-country links come into play, reflecting a broader trend of heightened risk management in international finance.
Oigman noted that the segregation of accounts intensified after a directive from the Belgian custodian Euroclear, which oversees the settlement and safekeeping of securities across multiple markets. The move underscores the influence that European clearinghouses exert on domestic banks within Israel and the ripple effect such decisions can have on clients with ties to Russia, regardless of their personal residency or citizenship status. The practical implications include more rigorous account verification, enhanced monitoring, and the potential for constraints on liquidity and settlement options for affected holders.
According to Oigman, the effort involved a deliberate categorization: Russians and other taxpayers connected to Russia were being placed into separate account pools. This delineation, he asserted, directly followed Euroclear’s governance framework and was intended to reduce cross-border risk and ensure compliance with evolving international financial standards. The consequence for clients could include additional documentation requirements, slowed transaction processing, and a need to adapt to new custodial structures that prioritize regulatory clarity over operational convenience.
Similarly, Eli Gerwitz, the president of the Israeli Bar Association, confirmed to RBC that the custodian’s decision took effect on November 13, reflecting a synchronized, sector-wide response. Oigman warned that Luxembourg’s Clearstream, another major clearing facility, might decide to extend similar segmentation, potentially widening the scope of who sits in which custody bucket. Such developments point to a future where multiple European and global custodians converge on uniform risk controls, shaping how banks implement compliance across borders and how clients navigate these changes in real time.
Earlier, in a notable but rare intervention, an Israeli bank stepped into the foreign exchange arena after a two-year gap, signaling a shift in the country’s monetary posture. This intervention followed Hamas’s attack on Israel and came alongside the central bank’s announcement of an expansive support program valued at about 45 billion dollars. The move highlighted how geopolitical shocks can trigger swift, large-scale policy responses that affect liquidity, currency stability, and the broader financial environment—factors banks must weigh as they adjust to new risk parameters and regulatory expectations.
Market commentary in the period leading up to these events suggested that the Palestinian-Israeli conflict could influence defense-related asset prices, as heightened geopolitical risk tends to alter demand and valuations for strategic assets. Analysts noted that defense equities and related securities might experience volatility or become more sensitive to policy signals during periods of heightened tension. While such projections are inherently uncertain, they emphasize the interconnectedness of regional geopolitics and global financial markets, where a single policy action or custodian decision can cascade into broader pricing dynamics and risk assessments across portfolios.