Fischer slams lack of competition among banks

Bank of Israel Governor: It's no wonder people reacted as they did to the fees hike.

At a speech before the Association of Banks in Israel today, Governor of the Bank of Israel Prof. Stanley Fischer devoted many of his words to bank fees and customer services, which need improvement. Fischer also exploited the dais to thank outgoing Supervisor of Banks Yoav Lehman, and to stress the challenges his successor Rony Hizkiyahu will face.

“The challenge before the Bank of Israel and the new supervisor is to strengthen competition in the banking system, especially in retail banking,” he said.

“The Bachar committee handled competition in credit and the capital market, and there’s a need to strengthen competition in banking services for households and small businesses. I want to refer to the latest incident, in which one bank raised fees and other banks followed suit, resulting in the impression of anti-competitiveness. It is no wonder that the public and its representatives in the Knesset reacted as critically as they did. Here too, competitive behavior will benefit customers, the bank, and the banking system.”

Fischer continued his criticism, saying, “Another fact that does not add to competition is the long, even ludicrous, list of fees. I don’t understand why the Israeli banking system acts in this way, when banks in other countries earn most of their living on the spread between the interest rate they pay and the interest they receive… It would be far better if a foreign bank was to enter retail banking in Israel, and I hope it will happen.”

Fischer spoke about the need to improve customer services at banks. “There are too many justified complaints, and the banks should devote resources in preventing these situations. I support the Bank of Israel’s intervention in the consumer sector, but I want the responsibility to fall where it belongs, on the banks.”

Published by Globes [online], Israel business news - - on November 23, 2006

© Copyright of Globes Publisher Itonut (1983) Ltd. 2006

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