Bank of Israel Governor Amir Yaron held a meeting with Competition Commissioner Michal Cohen, after the Competition Authority announced that it was considering declaring banks a focus group.
The competition authority’s announcement, which was issued this afternoon, stated, “The checks conducted by the authority indicate that there is clear limited competition between these banks, whose share in managing current accounts for retail customers is close to 100%, especially in receiving deposits from customers in the banking sector.” Retail (households and small and very small companies) It is also evident that these banks hardly provide any banking services separate from the rest of the “banking basket”.
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“From the findings of the authority, as recently presented to the Knesset Finance Committee, it emerges that there are significant gaps between the interest rates on deposits provided to households and small and very small businesses, and the rates paid on deposits of medium and large sizes. The business sector and the private banking sector.
The commissioner studies the announcement of the mentioned banks as a focus group and directs them to take deposits.
The main proposed directives are to prohibit linking banks to take deposits with other services, such as making them conditional on having a current account with the bank, requiring banks to receive deposits from non-bank payment service companies, which will collect deposits from their customers, and requiring banks to provide customers with relevant comparative information.
The Competition Authority says that it has not yet completed its examination and is in the stage of drafting the directives it is studying, while it is consulting with the other concerned supervisory authorities, led by the Bank of Israel.
The Bank of Israel was surprised by the competition authority’s announcement. In a statement in response, it said, “At the request of the Competition Authority, a meeting was held this afternoon, attended by the Governor of the Bank and the Supervisor of Banks, in which the Competition Authority put forward a number of preliminary, unformulated ideas regarding their desire to announce banks to a focus group. Contrary to what has been reported, the Governor did not take And the supervisor has no attitude towards this matter.”
The Bank of Israel is currently trying to foster competition among banks over passing higher interest rates on to public deposits, and has made it clear all along the way that it avoids uniform regulatory penalties. Yaron even sent a strongly worded letter to the prime minister that led to the suspension of legislation on the matter.
Published by Globes, Israel business news – en.globes.co.il – on June 29, 2023.
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