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. The ratings also factor in likely government support in the event of a financial or systemic crisis as we consider Leumi to be a systemically important bank. 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
