The business sector is warning that a wave of insolvency is expected in 2024 due to several factors affecting the Israeli economy.
The president of the accountants association warned that construction contractors are facing liquidity problems, and the chair of Mercantile Bank stated that they’re preparing ways to assist clients.
These fears were expressed on July 5 at the conference of the Institute of Certified Public Accountants in Israel, which dealt with the future of the economy.
The future projected difficult economic situation is due to the slowdown, the increase in interest rates, and the difficulties in repaying mortgages. Chen Schreiber, president of the Institute of Certified Public Accountants in Israel, said that from reports in the field, he’s heard that firms and especially small businesses are having trouble repaying credit.
According to him, a particularly difficult problem is in the real estate sector. He fears a return to the situation that existed at the beginning of the previous decade, when many contractors ran into liquidity difficulties and debt settlements were made with them.
Contractors are bidding on tenders
Schreiber said that fewer contractors are bidding on tenders, which indicates fear about the future and difficulty in obtaining financing. He added a call to banks to show more patience and flexibility in providing solutions and not to rush to ‘grab the irons’ and punish clients facing repayment problems. Instead, these customers must be provided with close support to help extract them from their financial difficulties.
Attorney Etty Deutsch, executive chair of Mercantile Bank and the Visa Cal credit company, also said she expected an increase in the number of clients with cash flow problems. Deutsch said that Mercantile will provide all possible solutions to customers to help them find solutions such as spreading out payments and deferring some mortgages.
Hanan Meltzer, chair of Migdal Insurance and Financial Holdings Ltd, revealed that Migdal will soon enter the mortgage market, and as part of this move, it purchased a loan portfolio of NIS 350 million from the Bank of Jerusalem. Meltzer said that there’s a shortage in the mortgage market, and Migdal’s entry into this market will increase competition and meet clients’ needs.
