Banking and Finance

Score: 1.0
Estonia's sound, prudently regulated banking sector is considered the strongest and most developed in the Baltic States. "At the end of 2004," reports the Economist Intelligence Unit, "Estonia had six commercial banks, three foreign bank branches and six representative offices of foreign banks." Its universal banking system allows banks to engage in a wide range of financial activities, including insurance, leasing, and brokerage services. The government welcomes foreign participation in the banking sector, which is dominated by foreign banks. According to the U.S. Department of Commerce, "the Estonian banking system is dominated by two foreign controlled banking groups: Hansapank (Swedbank) and Uhispank (Skandinaviska Enskilda Banken)." Estonia's largest bank in terms of assets and market share, Hansabank, became 100 percent owned by Sweden's Swedbank in April 2005. The Embassy of Estonia reports that the government does not have a stake in any bank. The U.S. Department of Commerce characterizes Estonia's financial sector as "modern and efficient…. Credit is allocated on market terms and foreign investors are able to obtain credit on the local market."

Banking and Finance

Score: 3.0
Although the government is divesting itself from the banking sector, it retains significant shares of some of Israel's largest banks. According to the Economist Intelligence Unit, "The five largest banks - two of them majority government-owned - dominate the sector, although a number of more nimble private and foreign banks have enjoyed some success. Virtually all Israeli banks are universal banks, offering both traditional corporate and retail services, while also pursuing capital-market activities." The top five banks control over 95 percent of total banking assets, and the top two (Bank Hapoalim and Bank Leumi) control 60 percent. The government is pursuing plans to sell its stake in Bank Leumi and Israel Discount Bank. The Economist Intelligence Unit reports that the government owns the Industrial Development Bank but is selling it off and winding down its loan portfolio. The U.S. Department of Commerce reports that investments in the banking and insurance sector require prior government approval. The government is in the process of forcing banks to divest their asset management operations and insurance companies.