Emirates: Bank Leumi became the second Israeli lender after Hapoalim to have signed agreements with UAE banking giants to expand their presence in the second biggest economy of the region.

Israel's second-biggest bank said on Tuesday that it had signed memorandums of understanding (MoUs) with First Abu Dhabi Bank (FAB) and Emirates NBD to help strengthen bilateral relations between the UAE and Israel.

Israel's biggest bank Hapoalim signed an MoU with Emirates NDB on Monday.

According to the MoUs, the banks agreed to advance ties with financial institutions in both countries, providing services such as clearance, credit lines, and foreign currency trade.

Shmulik Arbel, head of the corporate and commercial division at Israel's Bank Leumi, is a firm believer on the business potential the UAE presents for Israel.

"We, at Leumi, believe there is a golden opportunity for collaborations here and we intend to be an active party," Arbel said at a recent online conference.

Leumi believes it can help Israeli business clients set up activity in the UAE and Emirati entities launch operations in Israel.

A symbolic act

Leumi, which was founded on February 27, 1902, in Jaffa as the Anglo Palestine Company, said its agreements with the UAE banks would help enable the countries to implement economic relations. In a symbolic act, it said it had transferred $180 to each bank. The lender said it had been approached in recent weeks by dozens of clients seeking to transfer funds to and from the UAE.

"Until now, they had to do this through European banks," Leumi said.

Leumi said its subsidiaries Leumi Partners and Leumi Tech would help forge ties between Israeli companies and UAE investors and wealth funds.

Bank Leumi recorded significant decline in net income during April-June 2020 quarter as it dropped to $200 million from $266 million in the same period last year. It posted $133 million during January-June 2020 period compared to $581 million in the same period last year.

The bank attributed decline in income to a significant increase in the loan loss expense, which stems primarily from an increase in the collective loan loss provision and a decrease in non-interest finance income.

Exploring opportunities

Emirates NBD group CEO Shayne Nelson said the MoU with Hapoalim will support the two countries' shared objective of enhancing economic and commercial engagement.

"The MoU will open new business and trade opportunities for our clients and further enhance our leading position as a trusted banking partner to businesses across the Menat region," he said.

Dov Kotler, CEO of Bank Hapoalim, termed the agreement with Emirates NBD a breakthrough achievement and said it will allow Israeli clients to transact directly in the UAE and subsequently in other countries. "It is a great honour to be the first bank to sign such an agreement that will contribute to the establishment of the relationship between the two countries."