BoI approves Nacht, Shashua's digital bank

Marius Nacht, photo: Tamar Matsafi
Marius Nacht, photo: Tamar Matsafi

Former accountant general Shouky Oren will be chairman and Gal Bar Dea will be CEO of the new bank.

Bank of Israel Governor Prof. Amir Yaron and Supervisor of Banks Hedva Ber havew approved the country's first new bank in many years. Ber and Yaron are granting a banking license for a digital bank founded by Check Point cofounder Marius Nacht. Mobileye and OrCam cofounder Amnon Shashua is a minority shareholder in the digital bank.

The new bank's chairman will be Shouky Oren, while Gal Bar Dea, a former senior executive in Pepper, Bank Leumi's digital bank, will be CEO. Nacht and Shashua received approval for controlling a bank several days ago. The most recent previous bank to receive approval from the Bank of Israel was Poalei Agudat Israel Bank in 1978.

The Bank of Israel said, "Governor of the Bank of Israel Prof. Amir Yaron and Supervisor of Banks Dr. Hedva Ber notified entrepreneurs Marius Nacht and Prof. Amnon Shashua that the Bank of Israel Banking Supervision Department had completed the examination process, and that the Governor was ready to grant a license for the bank and a permit for control of it." According to the business plan presented by the entrepreneurs to the Banking Supervision Department, they will found a digital bank with no branches, and to focus on providing banking services to households, including providing credit, accepting deposits, managing current accounts, and providing buying and selling services for securities.

"I am very excited. This is an important day. After a great many years, we have completed the process and granted approval for founding a new bank. This bank will be owned by entrepreneurs Marius Nacht and Prof. Amnon Shashua, two very serious people. We examined them and their business plan over the past year," Ber said today, adding, "The Banking Supervision Department and the Bank of Israel believe that they can achieve a breakthrough in banking with their knowledge and experience in other industries. They have taken on the mission in order to change the market." She also said that she hoped that Nacht and Shashua "would achieve change through the technology that is making these things possible."

Providing approval does not mean that the new bank will begin operating immediately. It is actually just an essential step enabling Nacht and Shashua to continue their preparations, including recruiting people and establishing a computer system. "The entrepreneurs and the setting up team have been in touch with us for over a year," Ber said today, adding that people at the new bank believed that they would begin operating with the public only 18 months from now - in 2021. Nevertheless, the Bank of Israel believes that "The existing banks seeing this measure will already realize that the walls that protected the previous banking have fallen, and that there is a new player here, who will generate competitive pressure that the public will begin to feel in fees, personal attitude, and more." At the same time, Ber did not say whether she thought that the new bank's entry would cause prices to fall. What she did say was, "There are additional aspects to competition."

Approval for the digital banks will enable it to further its preparations for going to the market and the end consumers, among other things because of cooperation with the banking computer services center, which won a state tender, led by TCS from the TATA group. TCS will provide a computer system for banking activities that will be offered to all small and new banks, and to credit and deposit associations. The tender winner will receive a state grant, but only after contracting with at least one bank, in this case the bank led by Nacht.

According to Ber, other groups of entrepreneurs were in touch with the Banking Supervision Department for the purpose of founding a bank, including the Postal Bank and Yesh Tahalich. Ber went on to say, "We changed the process for granting a license, and I invite every entrepreneur who wants to found a bank to get in touch with us."

Shashua commented, "We are proud to be the first group in 40 years to get a license from the state for founding a new bank in Israel - and we of course praise the Bank of Israel and the Ministry of Finance for having the vision and courage to encourage innovation and competition in banking. It should be stated that we are in the initial founding stages, and have a long way before us."

Approval of the bank constitutes a significant step in realizing the goal set by the Banking Supervision Department for itself a number of years ago: proactively enhancing competition in the banking system in various ways, one of which is by granting a license for one or more new banks. In order to reach the point of granting a license, the Bank of Israel changed the rules, made things easier, and removed barriers to founding a new bank. Among other things, the initial capital requirement for founding a bank was lowered from NIS 400 million to the current NIS 50 million requirement.

As Ber said today, the Bank of Israel hopes that by granting a license for a new bank, it will generate competitive pressure on the entire banking system, thereby leading other far more established banks to make competitive and active offers to customers. The Banking Supervision Department is in effect following the example set by the Capital Markets, Insurance, and Savings Authority, which last year allowed two digital insurance companies to begin operating: Etti (Ester) Elishkov's Libra, which is already selling individual insurance, and which insurance market sources say has had a greater effect on the market than her actual sales, and weSure, led by Emil Vainshel and Nitzan Zeir Harim, which is so far operating mostly in collective insurance, but which is likely to expand its activity soon.

This an especially busy period for Ber with respect to approvals, because in addition to the new bank that she approved, she recently had to examine and approve the appointments of two new bank CEOs: Uri Levin at Israel Discount Bank and Dov Kotler at Bank Hapoalim. She is also moving ahead with the process of approving the appointment of Hanan Friedman as CEO of Bank Leumi.

Full disclosure: Marius Nacht is the former partner of Anat Agmon, a controlling shareholder in "Globes."

Published by Globes, Israel business news - - on September 25, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Marius Nacht, photo: Tamar Matsafi
Marius Nacht, photo: Tamar Matsafi
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