Bank of Israel warns banks are exposed to vehicle finance

Cars on forecourt from above
The financial system is “directly exposed” to the risk of default by vehicle-trading firms

Banks and other financial institutions in Israel are increasingly exposed to the market for financing new vehicles, the Bank of Israel warned in a report today (June 26).

The central bank said lenders in the vehicle market may not have accurately estimated how sharply the value of collateral can fall in an adverse scenario, and the financial system is “directly exposed” to the risk of default by vehicle-trading companies.

Banks are exposed through the consumer credit they provide to households

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