Minister of Finance Moshe Kahlon and Governor of the Bank of Israel Dr. Karnit Flug have appointed a committee for increasing competition in frequently used banking and financial services. Former Antitrust Authority director general Dror Strum will head the new committee.
The committee members include former Minister of Finance director general and Hebrew University of Jerusalem Prof. Avi Ben Bassat as the public's representative, Minister of Finance budget director Amir Levy, Antitrust Authority director general Prof. David Gilo, Bank of Israel Deputy Governor Dr. Nadine Baudot-Trajtenberg, Deputy Attorney General Avi Licht, and Bank of Israel Research Department director Prof. Nathan Sussman.
The committee was appointed because of the structure of the market, which features a degree of concentration and market power, particularly vis-a-vis households and small and medium-sized businesses. Measures are therefore being demanded to bolster competition and reduce overconcentration in the sector.
Kahlon and Flug are asking the committee to recommend ways of introducing new players into the competition to provide common financial services, among other things by forcing the banks to give up ownership of the credit card companies.
During the government's first 100 days, the committee will summon relevant parties for the purpose of formulating recommendations, and will also hear relevant regulatory authorities, as well as the public's opinions.
Kahlon commented, "Our goal, and that of the committee, is to bring about real competition in one of the most over-concentrated sectors of the Israeli economy - the banking system. We're talking about a NIS 50 billion concentrated system, in which households and small businesses don't benefit from competition.
"A situation in which three banks control 70% of the industry is illogical. If we have learned anything, it is that over-concentration costs each household between hundreds and thousands of unnecessary shekels every year. Competition is the consumer's best friend. It's good for the companies and good for the people, and that's why we want to promote in every sector."
Flug added, "In recent years, the Supervisor of Banks has taken significant steps to increase competition in the banking system, and the Bank of Israel is a partner in the efforts to achieve continued improvement in this area. The committee will be responsible for recommending further measures for strengthening competition and extending fairness in the financial system, while ensuring suitable regulation and safeguarding the depositors and savers' money and stability in the financial system."
Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2015
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