The political and financial system this week greeted Bank Leumi's (TASE: LUMI) sale of the Leumi Card credit card company to Warburg Pincus with enthusiasm. One dissenter from the positive response to the deal was Dror Strum, patron of the Increasing Competition in Banking Law (the Strum Law), which mandated separation of the credit card companies from the banks. "The measure is essential and welcome, but I think the celebration is a little premature. Separation of the credit card companies without implementation of other parts of the reform will limit the benefit resulting from the separation," Strum told "Globes."
"What bothers me is that two other vertices of the triangle that should be combined with separation of the credit card companies from the large banks are missing. I'm referring to the establishment of independent data processing infrastructure and allowing price comparisons (enabling a third party to compare prices in the financial sector for a customer via access to the computer systems of the financial concerns, I.A.). If the changes are not timed so that they all take place ahead of the first quarter of 2019, we won't see an adequate result," Strum declared.
Strum, who has already warned about slow progress in implementing the reform, is still disturbed by it. "It has been 18 months since the law went into effect and there are still things left to be completed. I believe that it will all happen eventually, but it's critical for it to happen at the same time." He is not worried about the identity of the buyers of Leumi Card or by scenarios in which the fund raises prices and makes a quick profit at the expense of the company and the consumers. "This is not a short-term hedge fund; it is an investment fund that will stay for a serious period. I don't want a situation in which someone comes to grab what he can and vanishes. This fund has invested in the past in the financial sector and means of payment. It has significant synergy with Leumi Card."
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2018
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