Last of Israeli pounds deposited in banks of Lebanese city (5)
I believe the answer is:
lille
'city' is the definition.
(I know that Lille is a city)
'last of israeli pounds deposited in banks of lebanese' is the wordplay.
'last of' indicates one should take the final letters.
'pounds' becomes 'LL' (two L's - the pound symbol is based on L).
'deposited in' means one lot of letters goes inside another.
'banks of' suggests removing the centre (the banks are the sides of the word).
'lebanese' with its middle removed is 'le'.
The final letter of 'israeli' is 'i'.
'i'+'ll'='ill'
'ill' going within 'le' is 'LILLE'.
(Other definitions for lille that I've seen before include "European city" , "Industrial city of northern France" , "City of northern France, close to Belgium" , "N. French city" , "Stop before Paris" .)