Bank Hapoalim to give away shares to customers

Bank Hapoalim is launching a first-of-its-kind initiative in Israel, giving more than a million of its customers the choice of free bank shares or cash, as lenders move to ease public anger over record wartime profits.

According to the bank, Israel’s second largest lender in assets, eligible customers will be able to choose between two Bank Hapoalim shares — worth about 2 shares worth about NIS 128 at current prices — or a one-time cash payment of NIS 100. Those who do not actively select an option will automatically receive the cash. The giveaway will cost the bank around NIS 100 million and is being funded as part of a broader Bank of Israel relief plan.

The scheme comes after mounting criticism of Israel’s banks, which have posted record earnings despite the financial strain on households and businesses during the war with Hamas. High interest rates, which the Bank of Israel has kept at 4.5 per cent to fight inflation, have boosted banks’ lending margins but increased costs for borrowers.

In March, the central bank announced a nationwide framework requiring lenders to provide about NIS 3 billion ($896 million) in relief to customers by 2027. Hapoalim’s contribution is estimated at NIS 400 million annually.

“We are proud to introduce a first-of-its-kind initiative in Israel, where an Israeli company distributes its own shares as a gift to its customers. We will distribute two shares of Bank Hapoalim to a million of our customers who choose to participate,” said Yadin Antebi, CEO of Bank Hapoalim.

“This idea emerged from our wish to invite our customers to share in the profits of the bank, even if the value is a token amount, and express our appreciation for our customers’ loyalty to the bank. The initiative will also enable customers who have not yet experienced the capital market to gain exposure to the possibility of holding securities and to the advantages the financial markets can bring.”

The bank is pairing the initiative with an information campaign and online tools to help new investors understand securities and the stock market. Shares granted under the scheme will also be exempt from custody fees for up to 20 years.

Other lenders are also taking steps. Bank Leumi, Israel’s largest bank, said it will cut a key rate used to price mortgages and consumer loans by 0.25 percentage points from October.