1983 Israel bank stock crisis

The bank stock crisis was a financial crisis that occurred in Israel in 1983, during which the stocks of the four largest banks in Israel collapsed. In previous episodes of share price weakness, the banks bought back their own stocks, creating the appearance of constant demand for the stock, and artificially supporting the prices causing share prices to collapse. The Tel Aviv Stock Exchange closed for eighteen days beginning October 6, 1983. The immediate consequences of the crisis were the loss of a third of the public's investments in the banks, the acquisition of the banks by the government at a total cost of $6.9 billion (for reference, Israel's entire GDP in 1983 was about $27 billion), and the nationalization of the major banks (Leumi, Hapoalim, HaMizrachi, Discount, and Clali). Executives of each of the banks were convicted of criminal charges. Raphael Recanati of Discount Bank and Mordechai Einhorn of Bank Leumi were both sentenced to 8-month prison terms. Recanati's sentence was suspended on appeal when one of five charges was quashed. As part of the settlement, the controlling interest in Discount Bank, as well as the other banks, was ceded to the government.