March 14 (Bloomberg) -- Barclays Capital plans to open a research and development center in Israel, where the government is seeking to develop a technology hub for international financial-services companies.
Barclays is the first company to take up Israel’s offer of special incentives to financial-services companies that set up research facilities in the country, Finance Minister Yuval Steinitz said. The government will subsidize a portion of the salaries of the planned 200 employees of the center, which will be located in Tel Aviv, during the first five years of operation, ministry Director General Haim Shani said.
Israel wants to capitalize on its technology industry to help boost growth following the world crisis. The plan to lure financial-services companies to open research centers is part of a program, unveiled in June, to bolster the country’s technology industry through steps ranging from a plan to bring expatriate scientists back to Israeli universities to a government “safety net” for investment in venture-capital funds.
“This is an important day for the Israeli economy,” Steinitz told journalists in Jerusalem today. “We are at the beginning of a process whose aim is to turn Israel into a financial-services center.”
The government is in talks with other international financial-services companies that are considering opening research centers in Israel, Shani said, adding that he “wouldn’t be surprised” if another firm “on the level of Barclays” announced such a move by the end of the year. He didn’t name companies with which the government is speaking.
The government is hoping that the development of a research hub can be parlayed into the development of a center for international financial services in Israel, including trading, analysis and back-office activity, Shani said.
The global financial industry is the largest consumer of technology and is responsible for 23 percent of the world’s total annual expenditures on technology, the Finance Ministry said in June. While many Israeli companies are already supplying products to the industry in the fields of data storage, security and communications, they don’t have a “significant” share of the global market, the ministry said.
Ministry officials have met with representatives of financial-services companies in London, New York and Hong Kong in the past year in an effort to draw them to Israel.
The government will pay 40 percent of the wages of employees, up to a maximum wage of 25,000 shekels, during the first year of operation of the Barclays center, Shani said. This amount will be gradually reduced to 25 percent by the fifth year of operation. Companies that open research centers in outlying areas of the country will enjoy higher subsidies, he said.
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