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Today (Tuesday), Michal Cohen, who is in charge of competition, announced to Bank Leumi, Bank Hapoalim, Discount Bank, Bank Mizrahi (including Bank Yahav) and the International Bank that she intends to declare them a concentration group in the basket of banking services for retail customers and give them instructions in the field of deposits, subject to a hearing .
The Competition Law gives the Commissioner of Competition the authority to determine that a limited group of people who run businesses are members of a concentration group if in the industry in which they operate there are conditions that allow little competition or if there is little competition in practice, and there are also instructions that the Commissioner can give that may prevent harm or fear of actual harm to the public or in competition between them in the industry, or to increase competition between them in the industry.
As of the end of 2022, the five banking groups together control 98% of the total assets of the banking system, when they are led by the Leumi Group and the Hapoalim Group, which together hold about 57% of the total assets of the banking system, followed by the Mizrahi Group, the Discount Group and the International Group.
Over the years, the number of active banks in Israel has been reduced (until the recent entry of Bank One Zero).
The banking system in Israel is characterized by barriers to entry and transition.
The entry barriers and transition barriers in the banking system, along with its other characteristics, facilitate the stabilization of a coordinated equilibrium between the players in the industry.
For example, the large banking groups have an incentive for the competition between them to be competition between "banking baskets", in which the customer consumes all banking services from the bank where he manages his current account, instead of competition between free services (which can be provided separately and not as part of the banking basket) Therefore
, the commissioner is considering declaring the aforementioned banks a concentration group and giving them instructions in the area of deposits. The commissioner's decision is subject to hearing the banks, which may present their claims to it. In addition, the competition commissioner holds consultations with the financial regulators before making a final decision.
The expected instructions
1. Instructions aimed at creating a free cash deposit, independent of the current account or other banking operations performed by the customer, as well as making a cash fund available to retail customers as a similar non-banking product that can be used as a brake on the bank deposit.
2. Instructions requiring the banks to present relevant comparative information, including information on a financial fund, to customers in a "push".
3. Imposing an obligation on the banks to accept a deposit from non-bank entities that will seek to act as "money centers".
The non-banking entities will be able to collect funds of the general public and turn to banks for the purpose of depositing them in a deposit.
4. Reducing barriers in transferring deposits between entities separately from the rest of the banking basket.
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