Sources inform ''Globes'' that Israel Discount Bank (TASE: DSCT) will, in two weeks, inaugurate a plan to pay interest on positive balances in customers' checking accounts. In the past few months, the bank has been reviewing such a plan, but delayed a decision because of the change in CEOs. A decision was made on the details of the plan, after new CEO Reuven Speigel took up his post two weeks ago.
Discount Bank will automatically offer interest on the positive balance in checking accounts. The amount of the interest will be derived from the interest for short-term deposits (pakams) in the same amount for the month; the bank did not set a precise figure. Interest will be paid on positive balances of up to NIS 5,000
The bank believes that in cases of higher balances in checking accounts, customers will ask to open a short-term deposit, but it cannot be ruled out that if a customer has a larger balance, the bank itself will initiate an approach to the customer.
Customers will make only a few shekels on the interest payments, since prevailing interest rates are very low. Sources believe that Discount Bank's subsidiary Mercantile Discount Bank will also offer interest on checking accounts.
Israel's two largest banks already operate different versions of similar plans. Bank Hapoalim (TASE: POLI) offsets credit interest from debit interest, which gives customers a large benefit, because debit interest is substantially higher than credit interest. Bank Leumi (TASE: LUMI) automatically offers credit interest at 70% of the interest rate on short-term deposits. This is the version adopted by Discount Bank.
Published by Globes [online], Israel business news - www.globes-online.com - on January 31, 2011
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