Application by Bank Leumi, Discount Bank, to Postpone Dissolution of Partnership in Visa ICC Rejected

The end of 1999 is the deadline for a change of ownership. Assessments are that Discount Bank will sell its holdings to Bank Leumi.

"Globes" learns that Anti-Trust Authority director general David Tadmor has rejected an application by Bank Leumi and Discount Bank, partners in the Visa ICC credit card company, for an extension for dissolving their partnership.

Tadmor determined, at the beginning of the year, that one of the two banks must sell all its holdings in Visa ICC by December 31, 1999.

The banks are not expected to appeal Tadmor’s decision, unless he decides to permit two other banks, such as Mizrahi and First International, to be partners in a credit card company such as Visa Alpha.

Tadmor announced that the decision to dissolve the partnership between Bank Leumi and Discount Bank in Visa ICC was meant to boost competition in the credit cards sector. He did not, however, rule out the possibility of a future partnership between two banks in another credit card company.

Leumi and Discount take exception to the Commissioner’s position on this matter, claiming that he should not discriminate in favour of small banks and against large ones, in matters concerning partnerships in the credit cards sector. They maintain that the dissolution of the partnership between them will not boost competition in the credit cards sector but rather will secure Bank Hapoalim-owned Isracard an advantage.

Market assessments are that Discount Bank will waive its holdings in Visa ICC in favour of Bank Leumi. Bank Leumi holds 65% of the credit cards company, and Discount Bank holds 35%. However, the two banks are equally represented on the company’s Board of Directors.

The Banking Law provides that where two banks are partners in a credit cards company, one of them must reduce its holding to 20% not later than by December 31 1998. The banks sought and obtained an extension of one year from the Anti-Trust Commissioner. At the beginning of 1999, Tadmor determined that in the case of Visa ICC, a scaled-down holding of 20% would not meet the case, and one of the partners must pull out of the company altogether.

Visa ICC has 1.3 million credit card holders. Its annuals sales turnover amounts to NIS 50 billion and it works with 45,600 business firms.

Published by Israel's Business Arena September 9, 1999

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