Israel’s biggest banks are in the grip of the crisis of confidence and, in some cases, are even bankrupt.
At the same time, some of the world’s biggest and most influential financial institutions, including Citigroup, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS, are also grappling with what they say is the greatest risk to their survival in the financial crisis: a lack of profitability and the risk of contagion.
The banks are still in their golden years, and most of them are still among the most profitable in the world, yet the current financial crisis has taken a heavy toll on the banks.
“There is a lot of uncertainty, but the fact is that it is a very big problem and there is a long way to go before the banks can recover,” said Ben Golan, chief executive of the Israeli bank.
The crisis has left the banks vulnerable to a range of different threats: the spread of contagions, the failure of their financial infrastructure, a financial crisis of trust and a lack-of-confidence among customers.
“They are all on the same side of the financial fence, but they are all at a different level,” said a former senior executive at the banks, who spoke on condition of anonymity.
“The banks themselves have to be ready for a whole range of risks that come along with any financial crisis.”
Banks that have survived the financial collapse in the United States are still struggling with the aftermath of the worst economic crisis since the Great Depression, which took a heavy bite out of the economy.
Some of the banks that have remained intact have suffered losses of $8 trillion to $10 trillion, and their assets have fallen by nearly a quarter.
In the case of Citigroup and Goldman Sachs in particular, the financial turmoil has left them with a significant amount of debt, and the bank has been forced to seek bankruptcy protection, as the U.S. Treasury Department did in November.
The bank has also been hit by a wave of lawsuits and other legal actions, as a result of the collapse of the insurance companies that it had relied on for its mortgage-backed securities.
In addition, the banks are grappling with the fallout from the bankruptcy of other institutions, such as the insurance giant UBS and the hedge fund manager Michael Milken.
“They are trying to sort out their legal issues, but there is no money in their bank,” said one person familiar with the situation.
The financials sector has been a key part of the country’s financial system for decades.
It has been used to finance the construction of highways, dams, power plants and other projects.
Bankers, who are the backbone of the banking system, have been critical of the political leadership in Israel and elsewhere for allowing the financial sector to continue to operate.
They also point to their experience with the Israeli financial sector, which is one of the few that has not been negatively impacted by the crisis.
“In the years that we have been in existence, we have never seen a financial meltdown,” said the person, who is familiar with discussions between the banks and the government regarding how to resolve the crisis and how to get back on its feet.
“It was never our intention to make any big financial mistakes.”
While the banks have been able to recover financially, the crisis has had a profound impact on the way they think about the industry and how they operate.
“We were never expecting this, but it is an important change in the perception of the industry,” said Golan.
“When it happens, there is not the same kind of confidence in the banks anymore.”
The banks, however, are optimistic that the crisis will not have an adverse effect on their business and that they will eventually be able to resume normal operations.
The banks are working hard to ensure that they remain financially stable, and are looking at ways to increase their profits, such for example by restructuring their debt.
“Our aim is to recover and grow,” Golan said.
“But we also know that the economy has to recover.”
The financial crisis is expected to continue for months and perhaps years, as it affects the economy and the international financial system.
“I think it is the most challenging financial crisis in our history,” said Elor Azaria, chief economist at Berenberg.
“This is a crisis that will take years, if not decades to resolve.”
For the most part, the situation is improving for the financial industry, but some banks are struggling.
A bank that did not recover from the financial crash in the U, for example, has seen its share prices fall by more than 60 percent.
“There is an anxiety around the financial system,” said Azaria.
“People are worried that if we go through a financial collapse, we will have lost our way.”
For many, the banking crisis has led to a sense of relief and a renewed sense of purpose, as people try to get on with their lives.
“My friends are very happy,” said Shai Alk