BoI, Treasury push for more retail banking competition

Bezalel Smotrich and Amir Yaron credit: Knesset Spokesperson and Tali Bogdanovsky
Bezalel Smotrich and Amir Yaron credit: Knesset Spokesperson and Tali Bogdanovsky

The Bank of Israel and Ministry of Finance have set up an inter-ministerial team, which will focus on strengthening competition in the deposits and credit sector for small businesses and households.

Minister of Finance Bezalel Smotrich and Bank of Israel Governor Prof. Amir Yaron have announced a new measure in their struggle against concentration in the banking sector. They have set up an inter-ministerial team, which will focus on strengthening competition in the banking and credit sector for small businesses and households.

The team, which will be headed by the Supervisor of Banks and the Ministry of Finance Budget Commissioner, aims to "Remove obstacles preventing the entrance of new players into the market and bring about the development of additional activities by existing players."

The new team will need to work quickly. The Ministry of Finance and Bank of Israel have instructed that the team’s report on recommendations must be submitted by April 2025.

One of the main aims set for the team is to design a framework for tiered banking licenses, which would allow non-bank entities to offer deposits and provide credit. The Ministry of Finance and the Bank of Israel believe the move "Will bring about a fundamental change in the financial market, expand consumer choice and lower financing costs for households and small businesses."

"A defining moment"

The establishment of the team comes after the Bank of Israel Governor's harsh criticism of the financial system last week. Yaron said, "The banking system is characterized by insufficient competition. The high profitability of banks in Israel relies largely on the huge current account balances that the public holds in their accounts, which constitute a cheap source of funding for the banks." According to him, the banks, for their part, do not provide a decent return to customers.

Smotrich said that the establishment of the team is "a defining moment in the struggle to lower the cost of living. Opening the deposit market will inevitably lead to competition for credit and will be a historic step that will improve the wellbeing of Israeli citizens. We are determined to create a diverse, competitive and accessible credit market, which will save Israeli citizens thousands of shekels and strengthen the entire economy."

Yaron added, "The best way to promote competition is to remove barriers that prevent new players from entering the financial system and the development of new activities."

Published by Globes, Israel business news - en.globes.co.il - on December 2, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Bezalel Smotrich and Amir Yaron credit: Knesset Spokesperson and Tali Bogdanovsky
Bezalel Smotrich and Amir Yaron credit: Knesset Spokesperson and Tali Bogdanovsky
Unframe founders credit: Yossi Yarom Israeli AI enterprise platform co Unframe raises $50m

Unframe’s turnkey AI solutions enable companies to solve any enterprise AI use case at scale with fully functional, customized AI solutions for businesses in a matter of hours, rather than months.

Combatica credit: Combatica Combatica launches next-gen VR AI training platform

The Israeli company's virtual reality platform includes 50 AI generated scenarios, seven maps and even situations for operating night vision.

Shekel credit: Shutterstock Vladirina 32 Shekel volatility after US tariffs announcement

The shekel is weakening sharply against the euro, which is gaining following the unveiling of Donald Trump's tariffs plan.

Minister of Finance Bezalel Smotrich credit: Noam Moskovitz Knesset Spokesperson Treasury assesses potential damage to Israel's US exports

Israel will be charged a higher tariff on its exports to the US - its biggest export customer - than Turkey and the UAE.

Iranian flag credit: Shutterstock Why inflation haunts Iran

With a month-on-month increase of 3.3% and an annual rate of 37.1%, inflation reflects the struggles of millions of Iranians.

APM merges with lawyers from Doron, Tikotzky Kantor, Gutman credit: Eyal Merilos APM merges with 12 lawyers from Doron, Tikotzky Kantor, Gutman

With the addition of these 12 lawyers, Amit Pollak Matalon & Co. will now have 135 lawyers.

US President Donald Trump credit: Reuters Sipa USA Israel on list as Trump unveils tariffs

Relatively low reciprocal tariffs will be imposed on Israeli goods sold in the US.

Deflated unicorn credit: Shutterstock Big Tech 50 reports more huge falls in startup valuations

Israeli R&D partnership Big Tech 50 reports that an investment of $2 million in Orcam made in 2021, shrank to just $31,000 at the end of 2024.

NextFerm technologies based on yeast credit: NextFerm Food-tech co NextFerm suspends operations

The company, which produces food ingredients in yeast without genetic engineering, cannot pay its debts and is seeking a buyer.

Minister of Finance Bezalel Smotrich credit: Shlomi Yosef OECD sees recovery in growth but high inflation

The OECD Israel Economic Survey 2025 recommends that the Israeli government take several restraining measures, in order to exit the economic storm created by the war.

Dano Ben-Hur credit: Dror Sithakol Statisticians contradict BoI on impact of housing finance deals

The Central Bureau of Statistics insists the impact of 20/80 buy now pay later financing deals on the real estate market and housing prices is minimal.

Governor of the Bank of Israel Amir Yaron  credit: Government Press Office Debt fears top Bank of Israel's concerns

Most unusually, Governor of the Bank of Israel Amir Yaron's press conference last week did not focus on inflation and the impending interest rate decision.

US President Donald Trump  credit: Reuters/Leah Millis Israel moves to avoid Trump's tariffs axe

Minister of Finance Bezalel Smotrich has signed an order canceling all tariffs on imports from the US. The impact will mostly be on agricultural produce.

Forbes Rich List credit: Shutterstock Maslowski Marcin Wiz founders ranked in Forbes 2025 Rich List

There are a few dozen Israelis listed in the 2025 Forbes Real-Time Billionaires List including Wiz founders Assaf Rappaport, Yinon Costica, Roy Reznik and Ami Luttwak.

SatixFy CEO Nir Barkan credit: Ariel Barkan Canada's MDA Space to buy Israeli satcom co SatixFy

MDA Space will pay $269 million for the Israeli company, including taking on a $76 million debt and a 75% premium on SatixFy's closing price on Nasdaq yesterday.

Raising dollars credit: Shutterstock Israeli startups raised over $1b in March

Israeli privately-held tech companies have raised $2.1 billion in the first three months of 2025, according to IVC-LeumiTech, up 24% from the corresponding quarter of 2024.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018