Bank Leumi CEO Defends Checking Account Interest Policy Amid Public Scrutiny
Bank Leumi CEO Hanan Friedman defended checking account interest policies on X, citing liquidity constraints, while data shows minimal payouts and active class-action lawsuits.
Bank Leumi CEO Hanan Friedman continues his active engagement on X (formerly Twitter), addressing the controversial issue of interest on current accounts. Following a viral introductory post, Friedman invited the public to vote on key topics, leading him to publish an extensive defense regarding why banks do not uniformly pay interest on daily checking account balances.
The Logic Behind Current Account Liquidity
Friedman argued that opposing a mandatory, blanket requirement to pay interest on all current accounts stems from the fundamental obligation of banks to safeguard public funds. Money in a checking account remains immediately accessible, allowing customers to withdraw or transfer funds instantly. According to Friedman, this high liquidity limits the bank's flexibility, contrasting sharply with fixed-term deposits where funds remain locked for specific periods.
The option to use your money at any moment differs from a commitment to leave it in a deposit. The longer and more predictable funds remain available to the bank, the stronger the basis for offering higher interest.
While acknowledging that banks do utilize a portion of current account funds for lending, Friedman emphasized that strict regulatory caution is necessary. He maintained that while paying interest under specific conditions is feasible—and currently practiced to a limited extent—imposing a sweeping legislative mandate is counterproductive.
Reality of Payouts and Class-Action Pressure
Despite these explanations, financial data reveals that Bank Leumi paid interest on just 3.12% of household current account funds last August, with an average yield of approximately 0.03% across all checking balances. Current benefits remain restricted to clients meeting stringent criteria, such as maintaining a mortgage, investment portfolio, or high monthly credit card usage under guidelines monitored by the Bank of Israel.
The public debate is further intensified by ongoing legal pressures. The Central District Court recently certified a class-action lawsuit against Bank Leumi and three other major financial institutions, alleging unjust enrichment from current account balances amid rising interest rates.
