Israel stands behind banking system-Finance minister

TEL AVIV (Reuters) - Israeli Finance Minister Roni Bar-On reassured the public on Sunday that the government would stand behind the stability of the banking system.

"The picture in our hands shows that currently there are no concerns that any bank might collapse," the minister said at a meeting of the government.

"Nevertheless, I must say ... the government of Israel, out of concern for the public's deposits and in order to guarantee the public's confidence in the financial system, will stand behind the stability of the financial system."

Since the founding of the State of Israel 60 years ago bank account holders have never been hurt and the government will act accordingly in the future, the minister added.

Central bank governor Stanley Fischer later added his reassurance to the public in a television interview saying he had full confidence in the Jewish state's banking system.

"No Israeli bank will collapse ... no Israeli will lose deposits in an Israeli bank. That is 100 percent certain," Fischer told Channel 10.

Israel does not insure bank deposits, unlike other countries such as the United States, but there have been increasing calls for the government to do so.

The Yedioth Ahronoth newspaper reported on Sunday that the government would announce in the coming days a plan to insure deposits at commercial banks.

Bar-On also addressed the public's fears regarding the decline in returns of long-term investment funds and pension funds, saying the government should not act hastily but must weigh any action carefully.

"There is a great deal of public pressure on the government to announce a plan or to act by intervening in the markets," Bar-On said. "I do not rule out intervention. This is part of the government's obligation even in a free market. However, intervening too soon is as wrong as intervening too late."

(Reporting by Tova Cohen; Editing by Jan Paschal)