Strong domestic franchise; Strong liquidity; Likely government support if needed; and International banking network, which diversifies risks of domestic operation. High, although improving, economic risk in the domestic market; Divestment of some operations driven by the banking authorities result in onetime capital gains, but reduce recurring revenues; Weak, but improving, asset quality by international comparison; and Tight core capitalization given the risky environment and concentrations. The ratings on Israel-based Bank Leumi le-Israel B.M. (Leumi) are based on its strong domestic banking franchise and high liquidity. The ratings are constrained by its weak, but improving, asset quality and tight capitalization within a risky operating environment, primarily the Israeli economy, which is concentrated and vulnerable to shocks; and the impact that this
