"I think it is important for public discourse to be professional and based on facts, not emotions. The US regulator told me that he was very surprised at the fiery public statements against the banks in Israel, because the banks in Israel came through the great 2008 crisis very well, without causing protracted unemployment, as in Europe," Bank of Israel Supervisor of Banks Dr. Hedva Ber told BDO Ziv Haft managing partner Erez Soffer, CPA, at the "Globes" Capital Market Conference.
Commenting on the NIS 2.5 million ceiling on executive salarie todays in the financial sector in the new law, Ber said, "I fear that because uncertainty has been created about past rights, we are liable to find ourselves in a situation in which management executives and officers on the next highest level leave en masse. This is a far from optimal situation, and is liable to spark a management upheaval. This concerns me, and I hope a solution is found. We have to prevent a large number of executives from leaving simultaneously. I sent a letter saying that a distinction should be made between the past and the present, to which the law will apply. I hope that the High Court of Justice reaches a quick decision in the matter."
Ber added, "The salary limit in the law is reasonable, and good people can be brought into the banking system. At the same time, the gap between the banks and other sectors created by the salary restriction is liable to drive good managers into other sectors. When reforms are made, their consequences must be considered. If it appears that there are negative consequences, corrections must be made. I was afraid that the executive salary law would disrupt the streamlining plans, but after checking with the banks, I saw that no harm was expected in this aspect, and I anticipate substantial cost-cutting at the banks."
"A price rise is possible in the short term"
Asked about separating credit card companies from the banks, Ber said, "My support for separation is for the purpose of finding a way to add new players and reduce over-concentration in the banking system. I believe that credit card companies that are serious companies with good practices and a solid banking base can be significant and important independent players in the banking system."
Ber addressed the concern that prices would rise following separation, saying, "In the short term, we are liable to have higher prices, but the question is how the separation is done - whether we will allow them to raise capital on the stock exchange and deposits from the public. Will we lower more entry barriers? Credit card companies can also be the next digital bank. In this reform, there is a risk that prices will not fall in the initial stage. It depends on how the reform is conducted."
Ber went on to say, "I wouldn't rule out private equity funds buying the credit card companies, but I will add conditions, so that they will not come expecting a quick profit. Private equity funds own financial companies in other places around the world. It is an existing model; it just has to be done right."
Published by Globes [online], Israel business news - www.globes-online.com - on June 7, 2016
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