The First International Bank of Israel: Over a Century of Shaping the Israeli Economy

The First International Bank of Israel (FIBI) stands as a pivotal player in the Israeli financial landscape, boasting a history spanning over a century. From its modest beginnings as part of a general bank in the early 20th century, through its evolution into an independent institution focused on the diamond industry, to its current status as a leading and diverse banking group, FIBI’s journey is compelling. Its story largely reflects the economic development of the State of Israel itself, the challenges it faced, and its ability to adapt and grow. This article will delve into the bank’s historical roots, review key milestones in its development, examine its current structure and services, discuss its future strategies, and assess its lasting impact on the Israeli economy.

From the Beginning: Founding, Growth, and Initial Role

The roots of The First International Bank of Israel are embedded in 1919, with the establishment of the “General Bank for Commerce and Industry,” which was under British ownership. During this period, the British Mandate was beginning to solidify its presence in Palestine, and there was an acute need for modern financial institutions capable of supporting the growing commercial and agricultural activity. The General Bank played a vital role in providing credit to local businesses, aiding in infrastructure development, and serving as a crucial banking foundation in a land that was then in its nascent stages.

A significant development occurred in 1937, with the founding of “The Central Mortgage Company Ltd.” Its purpose was to provide long-term credit and support urban construction and development—a particularly pressing need due to waves of immigration. In 1951, after the establishment of the State of Israel, The Central Mortgage Company changed its name to “Bank for Mortgages and Savings.” Concurrently, in 1959, “The Israel Industrial Bank Ltd.” was founded, focusing on providing medium to long-term credit to industry, a sector considered a key growth engine for Israel’s developing economy. During these years, the banking institution that would later become The First International Bank solidified its foundation, recognizing the necessity for a strong and stable financial entity capable of serving the young nation’s economy.

Becoming “The International”: Mergers, Crises, and Turning Points

The most significant turning point in the bank’s history occurred in 1972, with the merger of the “General Bank for Commerce and Industry,” “The Israel Industrial Bank,” and the “Bank for Mortgages and Savings” into a single, strong banking entity – The First International Bank of Israel Ltd. This merger aimed to create a larger, more efficient bank with greater competitive capability against other major banks in Israel. The creation of FIBI allowed for the consolidation of resources, expansion of service offerings, and reaching a broader customer base, both in the private and business sectors.

FIBI, like the rest of the Israeli banking system, faced significant challenges during the 1980s, primarily the bank share crisis of 1983. This crisis rocked the Israeli economy and led to extensive government intervention. The First International Bank, like other banks, sustained blows but survived the crisis and managed to recover. It continued to expand its activities, focusing on niche areas where it gained expertise, such as the diamond industry, where it became the leading bank in Israel and gained a global reputation. Furthermore, the bank began to expand its operations into the capital market, banking services for small and medium-sized businesses, and the private sector, building a reputation for personalized service and financial expertise.

The First International Bank’s Impact on the Israeli Economy

The First International Bank of Israel plays a fundamental and significant role in the Israeli economy. As a leading bank, it is a crucial factor in driving economic growth by providing credit to households, small and medium-sized enterprises (SMEs), and large corporations. This credit facilitates investments, expansion of business activities, job creation, and the financing of critical infrastructure projects. The bank’s contribution is evident across a wide range of sectors, from high-tech to industry, real estate, commerce, and agriculture.

Beyond its direct business activities, the bank is also a major employer in Israel, providing livelihoods for thousands of employees in diverse roles, from customer service and financial advisory to technology and capital markets. Its commitment to corporate social responsibility is evident through its various philanthropic initiatives, community investments, and partnerships with non-profit organizations focused on education, culture, sports, and assisting underprivileged populations.