Bank Leumi CEO Opposes Mandatory Interest on All Checking Accounts
Translated & summarized from Calcalist by baba
Hanan Friedman, CEO of Bank Leumi, expressed opposition to a mandatory, uniform interest rate on all checking account balances, citing the need for banks to maintain liquidity. While Leumi offers some interest under specific conditions, data shows minimal interest paid on most household checking accounts. This stance emerges amidst a class-action lawsuit alleging unjust enrichment by banks from customer checking account funds.
The story in 5 lines · by baba
- Bank Leumi CEO Hanan Friedman opposes mandatory, uniform interest on all checking accounts.
- Friedman cited the need for banks to maintain liquidity for on-demand customer withdrawals.
- Data shows Bank Leumi paid interest on only 3.12% of household checking accounts in August.
- A class-action lawsuit alleging unjust enrichment from checking accounts was approved against Leumi and others.
- The lawsuit covers the period from April 2022 to May 2025.
Hanan Friedman, CEO of Bank Leumi, has publicly stated his opposition to a mandatory, across-the-board interest payment on all checking account balances. Friedman explained on the social media platform X that his objection is to a uniform requirement that would apply to every customer and every balance, regardless of changing economic conditions. He emphasized that a bank's primary role is to safeguard public funds, a trust that allows customers to access their money on demand without commitment, unlike fixed deposits.
Friedman elaborated that the immediate availability of funds in checking accounts limits the bank's flexibility in using that money for loans, thus justifying a lower or no interest rate compared to deposits. However, he clarified that his opposition is not to paying interest on checking accounts altogether, noting that Leumi currently offers some interest under specific conditions. Data from August shows Bank Leumi paid interest on only 3.12% of household checking account funds, with an average rate of approximately 0.03%.
The current beneficial arrangement, part of a Bank of Israel framework, offers 1% interest on balances up to 10,000 shekels, but only for customers who meet strict criteria, including salary deposits, a mortgage or securities portfolio, or significant monthly credit card spending.
Friedman also suggested that customers with funds beyond immediate needs consider Leumi's various deposit options, including those with daily, weekly, or monthly withdrawal windows. The article notes that Friedman did not mention money market funds, which offer daily liquidity and potentially higher returns than bank deposits, and are subject to disclosure requirements by the Bank of Israel.
This discussion comes as a class-action lawsuit against Leumi and three other banks was approved in September. The suit alleges that these banks unjustly enriched themselves from customer checking account balances between April 2022 and May 2025, the latter date marking the implementation of a law requiring banks to inform customers about high checking account balances and savings alternatives.
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