"The Banking Supervision Department's position on the collaboration between Union Bank of Israel (TASE:UNON) and Direct Insurance - Financial Investments (TASE:DIFI) is not unequivocal. Had Supervisor of Banks Yoav Lehman found that the cooperation contravened regulations, he would have ordered it canceled immediately," said a senior banker today.
The banker added, "The fact that Lehman has been satisfied with reaching an agreement with Union Bank, under which the campaign will be called off at the first agreed-upon date, i.e. on September 1, shows that his position on the matter is neither unequivocal nor final."
Lehman sent a letter to all the banks yesterday praising them for increasing competition in the household sector, but warning them against encouraging customers solely through the use of sales campaigns.
Lehman added that he rejected the interpretation of one bank - referring to Union Bank - regarding gifts given under a marketing campaign, and that it violated the law.
The banker said Lehman apparently received statements from the large banks expressing their reservations about Union Bank's marketing campaign, and that pressure from these banks on Lehman was behind the halt to the campaign.
Union Bank and Direct Insurance have launched a marketing campaign under which the bank provides for free a vehicle insurance policy worth up to NIS 2,250 to new customers. The campaign has encountered fierce resistance, lead by the Association of Insurance Agents and Brokers in Israel (AIBAI), which objects to banks marketing insurance policies, since that would directly affect insurance agents.
Under Bank of Israel regulations, banks may give gifts of up to NIS 250 only, which was the main reason for canceling the campaign.
Published by Globes [online] - www.globes.co.il - on August 17, 2004