Otzar Hashilton Hamekomi was founded in 1953, as an exclusive channel for the Israeli Government to transfer funds to municipalities and other local authorities. The bank received funds from the State, granted borrowings to municipalities, and enjoyed the resulting fees and interest rate gaps. Since it could offset the municipalities’ debts against their allocations, Otzar Hashilton Hamekomi enjoyed perhaps an unprecedented position in world banking: a bank without bad debts.
The bank’s founders’ shares, which included 51% of its voting rights in general meetings, were evenly split between the State of Israel, Merkaz Hashilton Hamekomi (Union of Local Authorities), and a partnership between Bank Leumi, Bank Hapoalim and Discount Bank. The State, municipalities and the banks held approximately 60% of its ordinary shares, while the remaining ordinary shares were held by other entities. The board of directors included ten members: four representatives of Hashilton Hamekomi, three of the government and three of the banks.
In 1998, it was decided to privatize the bank. Three years later, the bank was sold to European banking group Dexia, which specializes in municipal funding, and changed its name to Dexia Israel.
One of the signatories of Otzar Hashilton Hamekomi’s financial statements in the early 1960 was Mordechai Zagagi (1898-1977), Israel’s first accountant general. In 1958, Zagagi was appointed chairman of the Securities Committee, which later became the Israel Securities Authority, and Zagagi served as its first chairman.
(From Barlev collection of Securities Certificates)
