The government agreed at Sunday noon to guarantee deposits made at Trade Bank, by a majority of 15 ministers to one. Trade Bank is under special receivership after an NIS 250 million embezzlement scandal led to the its collapse.
Prime Minister Ariel Sharon took the opportunity to slam Bank of Israel governor David Klein, and Supervisor of Banks Yitzhak Tal, both of whom were at the meeting.
"I don't understand how you failed to discover it, considering your claim that the banks are tightly supervised," Sharon said to the Bank of Israel executives.
Sharon demanded that he be presented with the exact details of the embezzlement, the magnitude of which is not entirely clear. He also decided that another debate be held on the subject within two weeks.
The degree of government guarantee will depend on the sums deposited. Depositors of up to NIS 4 million will get their money in full. Above that ceiling, the depositors will get 95% of their money back. The government also decided not to distinguish between individual and institutional depositors.
The decision is subject to the approval of the attorney general.
The sole dissenter, Dan Meridor of the Central Party, said that before making decisions the government should discuss insuring deposits at all the banks.
The government also decided not to compensate Trade Bank's owners, their relatives and their companies for losses incurred by the bank's collapse. Nor will it lend a hand to any party thought to have had a hand in the embezzlement.