Fischer holds emergency meeting in wake of Wall Street crisis

Governor of the Bank of Israel Stanley Fischer called an emergency meeting with the heads of Israel's seven leading banks on Wednesday in wake of the tumultuous days experienced by Wall Street.

The US economy suffered several massive jolts over the past week, as American holdings giant Lehman Brothers' announced it was filing for bankruptcy on Monday. The shocking announcement was followed by a second one, this time made by Bank of America Corp, which announced it was taking over Merrill Lynch & Co. Inc.

The immediate fallout felt on Wall Street following the dramatic announcements threatened American insurance titan AIG, but the company was eventually saved at the last minute by the Federal Reserve, wich made the company an emergency loan of $85 billion.

A Bank of Israel statement said that Wednesday's meeting was called as part of the Israeli banking system's monitoring of the situation on Wall Street. Governor Fischer, it added, will not hesitate to take whatever means necessary in order to protect the Israeli economy.

Once the crisis on Wall Street began rippling through world markets, the Bank ordered all Israeli banks to report their exposure to securities and equities held by foreign banks, in order to conduct a risk assessment.

Israel's four leading banks – Hapoalim, Leumi, Discount and Mizrahi-Tefahot's investments in Lehman Brothers' bonds are believed to amount to NIS 950 million ($267.23 million).

The banks' CEOs briefed Fischer on their respective situation and the steps taken to protect their investments and clients. The Bank of Israel, said the statement, believed the Israeli banks will suffer only minimal exposure to the crisis enveloping Wall Street.

Amit Sharvit and Amnon Atad contributed to this report