There are intensifying disagreements between the Ministry of Finance and the Bank of Israel over divesting the banks of their credit card subsidiarie ahead of the publication by the Ariav Committee of its recommendations. The Ministry of Finance prefers to publish the committee's recommendations after its members have reached a consensus but it does not rule out the possibility that there may be issues over which there is no consensus and which will be decided by a majority vote. The Bank of Israel is willing, in principle, to accept recommendations that have not been adopted unanimously, but not on issues of concern to the banking sector.
The decisions reached by the Bachar Committee on capital market were all reached unanimously, but sources at the Ministry of Finance have made it clear that this precedent is not binding, and that presenting the majority view, alongside that of the minority, is "accepted practice in many commissions."
Sources at the Ministry of Finance said in response, "The Ariav Committee was formed to draw up recommendations designed to enhance the local capital market and develop a global financial industry."
Supervisor of Capital Markets, Insurance and Savings Yadin Antebi and Antitrust Authority director Ronit Kan are in favor of separating the credit card companies from the banks. The Bank of Israel's representative on the committee, Deputy Governor Prof. Zvi Eckstein, and Supervisor of Banks Rony Hizkiyahu are strongly opposed to it. Israel Securities Authority chairman Zohar Goshen supports the position taken by the Bank of Israel, and considers the introduction of legislation for the credit provider sector a fitting alternative.
The Bank of Israel has stated unequivocally that going public with the Ariav committee's recommendation on so sensitive an issue without consulting it first, would be unacceptable. "It's not on, and there's nothing to talk about," said one official. The central bank has even prepared its own position paper on the separation of credit card companies from the banks.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2008
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