Mizrahi Tefahot Bank Ltd., an Israeli mortgage provider, fell the most in more than three weeks as the central bank issued draft directives aimed at shielding the financial system from rising house prices.
Shares of the bank fell 1.2 percent, the biggest decrease since Jan. 27, to 38.75 shekels the close in Tel Aviv. About 1.4 million shares were traded, almost triple the three-month daily average, according to data compiled by Bloomberg. The Tel Aviv Banking Index rose 1.1 percent.
Mizrahi, Israel’s fourth-biggest bank by assets, derived 29 percent of its retail banking revenue from mortgage lending in the first nine months of 2012, according to its financial statement. The Bank of Israel told lenders to set aside more money to protect against losses from home loans after house prices and credit surged. It also asked lenders to set aside more provisions for debt that hasn’t been repaid.
“Mizrahi is the most affected because it is mainly a mortgage bank,” Terence Klingman, head of trading at Psagot Investment House Ltd. in Tel Aviv, said by phone. “The Bank of Israel wants to fight a real estate bubble with these steps.”
Governor Stanley Fischer has been trying to contain a real estate boom fueled in part by expansionary monetary policy aimed at boosting growth. The new guidelines, effective Jan. 1, come after house prices climbed about 50 percent in the past decade, according to the Central Bureau of Statistics. Housing credit in Israel has jumped about 76 percent in the last five years, the central bank said today.
Shares of Mizrahi have advanced 0.7 percent this year compared with a 4 percent gain in the Tel Aviv Banking Index. Bank Leumi Le-Israel Ltd. and Bank Hapoalim Ltd., the nation’s two biggest lenders, today increased 0.8 percent and 1.7 percent, respectively.