Last week burglars broke into an apartment in the ground floor of the building where I live in Tel Aviv. The apartment has bars on the windows; nonetheless, the burglars were able to remove the bars and enter via the window. In addition to a laptop computer, a significant sum of cash was also taken. I've lived in the same building since 2007, and this is the third time the same apartment has been broken into! Amazing...
Why am I mentioning this? Well, it is simply a good reminder of why we have banks. People should never keep significant sums of cash in their homes -- whether stuffed in a mattress or under the floor tiles. And this is not only because of the fear of theft. There is also the threat of fire or some other calamity (earthquake?).
Another reason is that of inflation. Significant sums of cash saved in the home lose value over time simply due to inflation. In 2009 inflation in Israel was 3.9%. Now you may claim that is no big deal. But if that same rate continues for a second year the cumulative loss in value to your cash hoarding will amount to 7.97%. After a third year your loss in value is 12.2%. Basically, it is a loss that really isn't justified.
I mention the items above just because sometimes I really have a hard time understanding why I put up with the crap that the banks dish out to us. And there is no shortage of stories of the crap they dish out. Just in the last month I have two stories from two different banks that really highlight the lack of customer service on the part of the banks.
The first story relates to Bank Hapoalim. I currently am NOT a customer of Bank Hapoalim but I thought I would consider opening an account there. But first I want to know what their commissions are and how they compare to my existing bank. The obvious place to get this information is from the bank's website.
There are good websites in the world, and there are bad websites in the world. Well, the Bank Hapoalim website is off the scale when it comes to clarity and ease of use. To put it plainly, it sucks. To be fair, all the banks in Israel have the same problem, they overload their homepages with ads trying to convince us to open an account with them or to take a mortgage. Useful information is buried and you really have to hunt for it.
Fine, after perusing the Bank Hapoalim website for several minutes I still couldn't find the link to their list of commissions. So, I clicked on the "Contact Us" tab and wrote them a note. I asked them for a list of their commissions. I noted in my message that I understand the list of commissions may be on the website, and if this is the case, then to please send me the direct link. My message to them was short and precise.
The bank's response was equally short and precise: "Kiss my ass, we do not want you as a customer." Actually, this is my interpretation from the Hebrew. A more direct translation would be, "The price list appears on the bank's website." They did NOT provide a direct link to the commissions, but they added a phone number for Internet support. The message was signed "The Center for the Treatment of Public Inquiries".
Why am I mentioning this? Well, it is simply a good reminder of why we have banks. People should never keep significant sums of cash in their homes -- whether stuffed in a mattress or under the floor tiles. And this is not only because of the fear of theft. There is also the threat of fire or some other calamity (earthquake?).
Another reason is that of inflation. Significant sums of cash saved in the home lose value over time simply due to inflation. In 2009 inflation in Israel was 3.9%. Now you may claim that is no big deal. But if that same rate continues for a second year the cumulative loss in value to your cash hoarding will amount to 7.97%. After a third year your loss in value is 12.2%. Basically, it is a loss that really isn't justified.
I mention the items above just because sometimes I really have a hard time understanding why I put up with the crap that the banks dish out to us. And there is no shortage of stories of the crap they dish out. Just in the last month I have two stories from two different banks that really highlight the lack of customer service on the part of the banks.
The first story relates to Bank Hapoalim. I currently am NOT a customer of Bank Hapoalim but I thought I would consider opening an account there. But first I want to know what their commissions are and how they compare to my existing bank. The obvious place to get this information is from the bank's website.
There are good websites in the world, and there are bad websites in the world. Well, the Bank Hapoalim website is off the scale when it comes to clarity and ease of use. To put it plainly, it sucks. To be fair, all the banks in Israel have the same problem, they overload their homepages with ads trying to convince us to open an account with them or to take a mortgage. Useful information is buried and you really have to hunt for it.
Fine, after perusing the Bank Hapoalim website for several minutes I still couldn't find the link to their list of commissions. So, I clicked on the "Contact Us" tab and wrote them a note. I asked them for a list of their commissions. I noted in my message that I understand the list of commissions may be on the website, and if this is the case, then to please send me the direct link. My message to them was short and precise.
The bank's response was equally short and precise: "Kiss my ass, we do not want you as a customer." Actually, this is my interpretation from the Hebrew. A more direct translation would be, "The price list appears on the bank's website." They did NOT provide a direct link to the commissions, but they added a phone number for Internet support. The message was signed "The Center for the Treatment of Public Inquiries".
If this is the same kind of service I should expect as a customer, then I really have no incentive to switch over to Bank Hapoalim.
My second story relates to Bank Leumi. In this case I am a customer. I happen to have a rather contentious issue with the way the branch is managing my account. It is nothing urgent but I would like an answer, and perhaps a change in policy if possible. I once raised the issue with a clerk in the bank and he said he couldn't change the situation. Understandable. Clerks are limited in their powers. I believe the bank manager has much more control. So, I would have to reach the manager.
But for a simple peon like myself, access to the branch manager is unheard of. Fine, so I wrote an actual letter, addressed to the "Branch Manager", and sent it via the Israel Post. It has been over a month and I still have NOT received a response. Well, perhaps he is busy. So, I sent a copy of the letter to the "Public Inquiries" department at Bank Leumi's headquarters in downtown Tel Aviv. I only sent this letter a few days ago, but I hope they will be able to address my concerns, or perhaps get the branch manager to respond to my original letter.
What can I tell you? It truly is a struggle to get service from our banks in Israel. And the sad part is that all the banks appear to have the same disregard for their clients. We just gotta put up with it.
In a future post, I will tell you why I have TWO bank accounts...
Monday, April 19, 2010
Sayeret Economics Will Help You Make Smart Financial Decisions in Israel
This is my first posting here on "Sayeret Economics" and indeed my first ever writing on a blog platform. I want to start by telling a little story.
I am originally from the US, but I have been living in Israel since 1991. When I came to Israel I brought a few US dollars with me, and as a responsible individual I deposited those dollars into a local Israeli bank (Bank Leumi) for safe keeping. In 2006 as I was preparing for an overseas journey I thought it would be nice to have cash dollars with me. So, I wanted to withdraw some of my dollars from my dollar account. Israeli banks have a (notorious) reputation for charging their customers for everything. In order to avoid any surprises I sent the bank an e-mail message asking them how to withdraw my US dollars and what the commission would be.
The bank's response floored me. First of all, even the idea that I had to pay the bank a fee to withdraw US dollars after I had physically deposited the US dollars there myself is an absurd concept. I gave them dollars, why should there be a fee for me to retrieve those exact same dollars? Fine.
But what even more disturbed me was the commission. Even though this occurred in February 2006, I kept the bank's e-mail response just for its entertainment value. The bank wrote (originally in Hebrew, the translation is mine): "Martin, if you withdraw the money from one of the branches of Bank Leumi it will cost you between 1.5% to 2% of the amount you withdraw".
I told them in my original e-mail the amount I wanted to withdraw. Yet, they responded by saying the commission will be between 1.5% to 2%! I still don't understand how much I would be expected to pay if I physically went into the branch and took my money out. Would I pay an average, meaning 1.75%? If the clerk is in a good mood that day I'll be asked to pay the lower amount; alternatively, if the clerk is bitter for whatever reason will I be forced to pay the higher amount? I was left in the dark!
I wish that was an isolated story, but sadly it is not. And this is the inspiration for this blog. I want to expose the embarrassing behavior of Israeli banks that continue to give their customers poor service and even unprofessional advice.
In addition, I will be granting readers my insights into how to better handle any savings they may have. I know it is hard to accumulate savings in this country. Nonetheless, there are more than a few who are doing all right, but just don't know what to do with the funds. Many friends tell me they put their savings into a bank deposit account. It breaks my heart to hear this, because the banks are making a killing from these deposits. Savers have much better options, and if they just put a little effort into researching these options (like by reading my blog), then they will increase their savings performance substantially.
Why me? Good question... As I mentioned previously, I am originally from the US, so I am familiar with a competitive banking environment where banks place a strong emphasis on customer service. Next, I worked in Israel in the office of an investment portfolio manager for close to two years. Therefore, I am familiar with the investment vehicles (stocks, bonds, etc.) that are available to individuals. Finally, for three years I worked as a senior equity analyst covering the Tel Aviv Stock Exchange (TASE). From this experience I gained a deep knowledge of the Israeli capital market and how to analyze investment opportunities.
I write this blog using military terms, even titling this blog "Sayeret Economics" because the investment environment in Israel can easily be described as a field of battle. I'm not going to go into details here, but I believe anybody who has spent any time here in Israel knows that the banks are a false ally and only pretend to help their customers.
In Hebrew "Sayeret" is a special unit or commando forces. The most well known such unit is the "Sayeret Matkal", which is the "General Staff Reconnaissance Unit". This unit has been known to enter deep into enemy territory to achieve its goal of destroying a specific target, or retrieving information. This is what I want to do for the readers -- get you the information you need in order to make intelligent investment and savings decisions in Israel.
That's it for now. Stay tuned...
