Judicial jitters and war angst prompt Israelis to shift funds overseas
Israel fintech firm GMT reports 50% surge in the number of Israelis wanting to move money out of the country and into foreign banks for investments into global markets or property
Sharon Wrobel is a tech reporter for The Times of Israel
Israelis are increasingly seeking to transfer their funds abroad, mainly to the US and Europe, amid growing fears over the government’s efforts to weaken the judiciary and fire gatekeepers, and a prolonged war that continues to take a toll on the country’s economy.
According to financial services company Global Money Transfer (GMT), there has been a 50 percent increase in the number of Israelis seeking to exchange and transfer money overseas.
“In the last two or three weeks, we’ve seen a large increase in the number of customers, mainly Israelis, who call us explaining that they want to transfer anywhere between NIS 50,000 ($13,600) to NIS 500,000 ($136,000) or more out to an overseas bank, to invest in the stock market in the US or Europe, or to purchase real estate abroad,” GMT CEO Eran Sarouk told The Times of Israel. “On Sunday, my customer service manager called me saying he had a crazy day as more than 70 people called on a day when there is no FX market.”
The surge comes in the wake of the government’s dismissal proceedings against Shin Bet chief Ronen Bar and Attorney General Gali Baharav-Miara. On Saturday night, tens of thousands of people once again rallied in Tel Aviv and throughout Israel to demand the return of the 59 hostages still held in Gaza, and to protest against government moves to revive and advance judicial legislation.
GMT said that the requests for fund transfers fall into two main categories: the majority involve Israelis asking to move their investment portfolios, including savings and pensions, to the US and Europe, while a smaller portion are exploring relocation options.
“At the beginning of the war in October 2023, customers told us that they were considering leaving the country because they were afraid, but now many are worried about the future of their finances and about leaving their savings in Israel due to the stock market’s downward trend, credit rating downgrades, the recently passed budget, continued war costs and growing expectations of tax hikes – including on capital gains and inheritance – to cover the deficit,” Sarouk said. “When so many uncertainties come together, and people don’t know what the future will bring, and there is a growing fear of even potential asset nationalization, it prompts many to move their investments abroad.”
Sarouk elaborated that Israelis are asking to transfer their money to accounts they open at large global banks such as Citi or HSBC, or with big brokers in the US and UK. Others are seeking to move funds abroad to buy real estate in nearby Europe, including Cyprus, Greece, Portugal, and recently also in Thailand, he said.
Founded in 2001, GMT is an Israeli fintech firm offering payment services and international money transfers for Israeli citizens, migrant workers, and employers. The firm employs about 90 people, including customer service personnel at its Tel Aviv-based office. GMT operates a network of more than 350 service and deposit points across the country, as well as an advanced digital platform for its financial services.
The return to intensive military operations throughout Gaza on March 18, along with the beginning of the dismissal process of Bar and Baharav-Miara, has led to weakness and volatility in the local financial market. Just over a week ago, Israeli stock market indices dropped sharply, recording their steepest fall since October 2023, due to investors’ fears of possible consequences of a continuing war and a constitutional crisis.
Last week, the TA-35 index fell by 1.6%, the TA-90 index, by 1.8%, and the TA-SME 60 index, by 1.3%, according to Tel Aviv bourse data. Price declines were also recorded in the bond market – government bonds fell by up to 2.4%, and corporate bonds, by up to 2.2%.
Funds tracking domestic share indices saw continued net sales of $220 million last week, following sales of $130 million a week earlier. During the same period, funds tracking international share indices recorded net purchases of $60 million, following purchases of $30 million in the earlier week. Funds tracking domestic bond indices saw net outflows of $25 million, compared with sales of $15 million a week earlier.
Sarouk noted that Israelis started moving capital abroad following the proposed judicial overhaul in January 2023, and the trend intensified at the beginning of the war after October 2023, before calming down at the beginning of 2024.
“Before the proposed judicial overhaul, we would get about two to four requests for big overseas money transactions a week, often from Israelis relocating or who have decided to live abroad,” said Sarouk. “At the beginning of 2023, because of the proposed judicial overhaul, we got about 50 to 60 phone calls daily.”
“When the war broke out in the period after October 7, 2023 to about January 2024, requests for large money transfers soared, and then it settled down to about 5 to 10 calls a day,” he recalled.
The Times of Israel Community.