Yehuda Assia
From the early 1920s and until the mass immigration to Israel, for some thirty years, the Jews of Baghdad were the dominant factor in commerce industry and local banking.
After the British conquered Baghdad in 1917, they established three banks: the Ottoman Bank; Eastern Bank and the Shahin shehi of Iran. the management was British however all of the clerks in these three banks were without exception, from the Jewish community.
In addition, dozens of small, local banks (sarrafs) were established. Kadouri Zilkha was the first to expand beyond Baghdad. In 1926 the Zilkha bank established a branch in Beirut and he left the management of the bank in Baghdad in the hands of Menashe Paniri. After this he opened a branch in Cairo. Following the Second World War Kadouri Zilkha founded a financial company based in Geneva, called Merilis S.A. and sent his brother-in-law Salah Bashi to run it. After a number of years he bought a bank in Geneva named Societe Bancaire. Kadouri Zilkha also established a financial company in New York called the American Nile Corporation. I myself lived in Bangkok for eight years and was involved there in banking and gold trading. Most of the transactions involving the transfer of gold to the far east were performed through the office which I managed and which employed 150 clerks. In 1945 I traveled to the US and studied banking at Columbia University. In mid 1949 I immigrated to Israel and entered into a partnership in a very large factory called Magen Chatwood which manufactured chassises for buses, safes and other things. At the same time I held negotiations with the Israeli government regarding the establishment of a bank in Switzerland. In December 1950, after signing a contract with the Israeli government, the Israel-Swiss bank was established in Geneva. The purpose of the bank was to attract investment funds which were so desperately needed by the country in that period. After four years we opened a subsidiary in Paris called Societe Bancaire and in 1955 established the Foreign Trade Bank in Israel which today is known as the First International Bank of Israel.
Despite the fact that during its early years our bank, the Swiss-Israel Trade Bank was relatively small, we succeeded in attracting hundreds of millions of dollars in investments by means of certificate transactions. We issued loans of tens of millions of dollars to the Ministry of Defense, the Jewish Agency, Zim, El Al, Israel Chemical Corp., Mekorot, Solel Boneh, the Weizmann Institute and the Citrus Marketing Board We sold these notes to our customers without the bank's guarantee. This method was our invention. Fifty percent of the bank's shares were held by the Government of Israel and fifty percent by a group which I headed. The bank expanded in a spectacular manner and became the fifth largest commercial bank in Geneva.
Our subsidiaries in Israel were: the Foreign Trade Bank and the Israel-Arab bank. We have expanded to 60 branches across the country. In addition, the bank has opened branches and subsidiaries in London, Manchester, Paris, Montevedeo, Buenos Aires, Montreal and other cities. In 1967 the Israel-Swiss bank and its branches and subsidiaries employed 2500 workers 900 of whom were in Israel. In May 1956 the government of Israel sold its shares in the bank to the Israel Central Trade Company and two years later I sold my shares in the bank. At the beginning of 1965 I returned to Israel in order to raise my children there and here I managed the Foreign Trade Bank. I was also elected chairman of the Banking Board. At the end of 1969 I returned to Geneva and founded an investment bank called Assia S.A. and in 1981 we merged with the CBI investment bank and I was elected to the board of directors until I resigned and returned to Israel in 1991. Today this bank is known as Union Bankaire Prive and it is the second largest private bank in Switzerland. To this point I have told my own story. How have other bankers integrated in Israel?
In Baghdad the Jews were a wealthy and flourishing community with a high level of education and culture far above the rest of the population in Iraq. At the same time when the mass immigration arrived in Israel, we found ourselves in great difficulty. On the one hand we were wrenched from roots and immigrated to a new country. On the other hand our education was far below our brethren who had arrived from Europe as well as the Sabras who were born in the country.
Baghdad had no Universities on a level with those in Europe. While there were institutions of higher learning for Medicine, Education and Law the disciplines of Banking and Business administration were virtually non-existent and began to be established only in the mid 1940s.
In addition banking in Israel was concentrated in the hands of the three major banks: Bank Leumi, Bank Hapoalim and the Discount Bank. The truth was that there was no place for smaller banks. There were a few such as the Jafet bank, ElernŐs Bank, Feuchtwanger and some others. However these smaller banks disappeared and even the larger banks nearly went bankrupt following the scandal of the bank share regulation in 1984.
The main problem which existed then and remains until today is that there is no capital market in Israel. From the establishment of the State until the time of the great bank collapse, all of the pension funds in the country have been in the hands of the government who for its part feeds them only to the four major banks and a little bit to the Clal Concern.
Add to this the interest law that forbids the banks from lending money at a rate above 11%. The companies that are able to obtain such loans are only those that are affiliated with parties of the left or those that the "king wishes to favor". The interest law was even included in the coalition agreement. Despite this, the general public pays a higher interest of between 22 and 30% and the difference between this rate and that fixed by the government is collected by the banks in strange and different ways. Thanks to the pension and severance funds the banks manage to exist. However, under these conditions the Iraqi community was unable to infiltrate the ranks of the formal banking community and therefore a number of financial companies were established which operated outside the supervision of the Bank of Israel. Only one bank was established by Nissim Sharbani, the Credit Bank, and in the end it went bankrupt. Another small bank, the Kupat Milweh for Iraqi Olim was established by Sasson Nawi and Eliyahu Huri was sold to Bank Leumi.
The Foreign Trade Bank that I controlled managed to exist thanks to money sent to it from abroad. It was also the only bank not involved in the bank share scandal.
From this it may be learned that the Olim from Iraq founded almost no independent banks, they also did not become members of the board of directors of the established banks and were not part of the senior clerks in the banking industry, with a few exceptions, such as Zadik Bino and myself. The area in which the Jews of Iraq were so outstanding and where they made there major contribution was in middle level clerking. Many of the Jews who served as clerks in Iraqi banks integrated into this field in Israel and contributed to all of the banks.