Bank of Jerusalem continues to diversify its financial activity, this time with an exceptional move in the local market: A private deal for the securitization of bank mortgages amounting to about NIS 500 million, which received an AA- rating from the international rating agency S&P. This is a deal initiated by the bank itself, completing a series of actions it has carried out in recent years – including the sale of mortgage portfolios to institutional entities and the provision of mortgages through a syndication model.
According to the details of the deal, the bank sold a portfolio of bank-owned mortgages to a designated corporation (SPV), which was funded in two parts: A senior part through a loan from a financial entity, and a subordinated part through a private bond issuance. The senior component, as mentioned, was rated AA- by S&P, indicating high stability of the portfolio backing the debt – thus allowing the bank to receive significant funding while maintaining a relatively low risk level.
The current deal is expected not only to contribute to the bank’s growth but also to serve as a significant precedent for the development of the securitization market in Israel in general – especially regarding the leveraging of bank mortgage portfolios, which are considered a safe and attractive asset by investors.
Bank of Jerusalem has over 60 years of experience in the mortgage field, but in recent years it has become one of the most active entities in expanding credit sources through moves in the capital market. Since 2018, the bank has sold credit totaling more than NIS 5 billion to institutional entities. As of today, the mortgage portfolio managed by the bank stands at about NIS 16 billion, of which about NIS 3.3 billion has been transferred to institutional entities. In 2024 alone, it executed a deal worth NIS 2 billion in collaboration with an institutional entity using a syndication model.
According to Yair Kaplan, the bank’s CEO, this is a strategic move: "Despite the uncertainty due to the war and Operation 'With the Lion,' we chose to act with financial initiative and use securitization as a tool to expand our credit sources. Mortgage regulation in Israel is strong, and alongside it is stability in the real estate sector – which makes the deal safe and attractive."
Moshe Omer, Deputy CEO and Head of the Strategy and Financial Management Division, added: "The development of the securitization market will help increase the availability of credit and reduce its cost for households and small businesses. This is a move that places Bank of Jerusalem at the forefront of banking innovation."
The deal was led by Oded Kravitz, Head of the Financial Innovation Department at Bank of Jerusalem, with the professional support of Yaakov Elashvili (Y.K.A Finance) and the legal support of Sarit Weistuch, Head of the Legal Advisory Division at the bank, together with the law firm Herzog Fox & Neeman.