The ratings on Israel-based Bank Leumi le-Israel B.M. are based on its strong domestic banking franchise and robust liquid financial profile. The ratings are constrained by the bank's 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 consequent impact on the bank's business prospects and financial performance. Given Leumi's significant market share, its risk profile and operating performance directly reflect the health of the Israeli economy. The bank has recently been benefiting from the export-led recovery of the economy as well as increased domestic consumption. However, the situation remains vulnerable to political turbulence. Leumi's privatization was finally completed at year-end 2005. This does not impact
