Israeli Court Approves Landmark Class-Action Lawsuit Against Four Major Banks
The Central District Court in Israel has authorized a significant class-action lawsuit against four of the country's largest banks, alleging they failed to pay customers interest on funds held in checking accounts between 2022 and 2025. Judge Shmuel Bornstein ruled that there is a reasonable possibility the lawsuit, based on claims of unjust enrichment, will succeed.
The suit, filed against Bank Leumi, Mizrahi Tefahot, Discount Bank, and International Bank, contends that the banks benefited from using customer funds left in their accounts without paying interest. According to court documents, approximately 400 billion shekels of public money are held in checking accounts, which typically do not accrue interest. The plaintiffs argue that banks should have provided fair interest on credit balances or at least informed customers about options for daily interest-bearing investments.
The estimated damages for the relevant period exceed 15 billion shekels, based on an economic opinion supporting the claim. This case follows a May 2025 amendment to banking law requiring banks to notify customers of credit balances over 15,000 shekels for a continuous quarter and provide investment alternative information.
The banks have rejected the claims, asserting no legal obligation to pay interest on checking account balances or automatically transfer funds to deposits. The Bank of Israel also expressed the view that mandating interest payments on these funds is unnecessary, citing potential impacts on competition and customer investment incentives.
Despite the Bank of Israel's stance, the judge determined it does not preclude the lawsuit under the Unjust Enrichment Law. The court's approval allows the class-action to proceed to the next stage, where the dispute and compensation will be fully examined. The judge noted the vast sums involved and the large number of customers, deeming the class-action the most efficient and fair method to resolve the common issues.