Yair Avidan, the supervisor of the banks, during the debate in the finance committee (photo: Knesset spokesmen, Noam Moshkowitz, Knesset spokesmen)
The Finance Committee, chaired by MK Moshe Gafni, approved the proposal for banking regulations aimed at separating Cal from Discount Bank.
The regulations come as part of a key step recommended by the Committee for Increasing Competition in Common Banking and Financial Services (Strom Committee): separating banks with a wide scope of activity from the credit card companies under their control, with the aim of enabling competition in which the credit card companies would be competition for the banking system.
During the discussion, the parties sharpened their positions. The
supervisor of banks, Yair Avidan
, who opposes separation at this stage, participated in the discussion and presented his opinion, according to which there is a significant difficulty in determining positively and unequivocally that the time has come to change the definition of "a bank with a wide scope of activity".
Avidan also presented that there is no clear, supportive and well-founded information to justify such a step that violates property rights, and that the main arguments in favor of the separation are assessments regarding the potential of the step, while the arguments against the step are at a higher level of certainty.
"It is clear to me that there is no smoking gun here and no information that requires separation. I am aware that I am in the minority. I must mention the date of the separation of the credit companies, the period of the corona virus and its effect, and indeed many things were done as part of the reform. That is why I am convinced that time has value despite the legislation when there is a recommendation on Separation. In my opinion, it should be clear and valid to make such a significant decision, especially when there is a violation of property rights."
Alongside this, Avidan emphasized: "I want to say very clearly as the supervisor of the banks, that as long as the committee decides to separate Kal from the Discount Group, it will not destabilize the Discount Group."
The chairman of the committee, Gafni wondered at the words: "Why is it in Laumi and Po'alim but not here?
On the part of Discount Bank, the bank's position has been sharpened following the claims of the various finance bodies, and it is claimed that there is no proper factual basis to justify making a decision at this time, there is no proof of benefit to the consumer in the process because the time is not yet ripe for making a decision, and the effect of the regulatory reforms designed to increase competition in the system, still did not manifest itself significantly.
The representatives of the bank also argued that there is no need to make a decision at this time, when the possibility of forcing the sale of Al will exist at any time in the future through legislative measures that the government intends to lead in order to complete the move, and postponing the date of making the decision is good for competition.
This will "keep the sword of separation above Discount's neck" and encourage it to continue taking significant competitive steps, beyond those it would have taken in its absence.
In addition, the increase in the credit prices of the credit card companies will be avoided as a result of the separation.
Along with these, the bank argued that if it is decided to separate Kal from the bank, the prohibition on selling Kal to institutions should be repealed in accordance with the regulations, when, "a situation in which three credit card companies are 'on the shelf' - but only one is prevented from being sold to an institutional body - It is a discriminatory and illogical situation."
According to the bank, it is not clear when the team at the Ministry of Finance that is supposed to discuss the issue will publish its recommendations and advance the legislation, to the extent that it will be implemented.
MK Moshe Gafni, Chairman of the Finance Committee (Photo: Knesset Spokespersons, Noam Moshkowitz Knesset Spokespersons)
During the previous discussion on the subject, the Treasury and other representatives of the regulators presented a uniform position that the separation of credit companies from banks contributed significantly to competition in the credit granting industry.
It allowed the credit companies access also to customers who traditionally only took loans from banks, and the separation of Cal and Discount will further expand the competition.
Regarding the sale of Kal to institutions, a team was established in the Ministry of Finance to examine the matter.
The representative of the Ministry of Finance, Itai Temkin, clarified that they intend to publish by February 23 a position regarding the issues that have arisen and present them to the Minister of Finance within the framework of the Arrangements Law, after which they will be able to come and present the matters to the committee.
It should be noted that the Strom Committee, which examined the separation in the past, set a priority for the separation of the companies belonging to the largest banks in the banking system, which each hold more than 20% of the banking system's assets.
With regard to the credit card company owned by the medium-sized banks - as one that is controlled by Bank Discount, and is also held by an international bank - the committee recommended that at the end of a period to be determined later, an examination will be conducted that will determine the necessity of its separation based on the development of competition and the competitive conduct of this company.
The Strom Committee's recommendations were anchored within the framework of a law to increase competition and reduce concentration in the banking market in Israel, which entered into force on January 31, 2017, according to one of its sections, "in the period that expires four years from the date of commencement of a law to increase competition and reduce concentration in the banking market in Israel (legislative amendments), the nine "Z-2017, and until the end of six years from the aforementioned starting date, the Minister of Finance, with the consent of the Governor and the approval of the Finance Committee of the Knesset, taking into account, among other things, the state of competition in the credit market, may determine, regarding the definition "a bank with a wide scope of activity" in subsection (a ), a rate lower than 20%, provided that it is not less than 10%."
In accordance with the provisions of the law, last year the implementation committee examined the issue and on December 21, 2022 published its recommendation according to which it is correct to amend the definition of "a bank with a wide scope of activity" as follows that Discount Bank will be required to part with Kal. The approved regulations are intended to anchor the recommendation of the implementation committee."
According to the provisions of the law, the separation must begin within up to 3 or 4 years, depending on the percentage of the bank's holdings in the means of control of the credit company.
The chairman of the committee, MK Gafni
, said in conclusion: "The law is intended to increase competition. We will monitor and accompany what is going to be done in the future because there are sensitivities here. I request that the budget department update the committee within a month regarding the issues that need clarification."
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