The Bank of Israel publishes the final criteria for entities that will be able to purchase the credit card companies that will be separated from the banks, and invites potential buyers from Israel and abroad to examine the opportunity of the purchase.
Pursuant to the recommendations of the Strum
Committee, and in accordance with the Increasing Competition in Banking Law, by
January 2020, Bank Hapoalim and Bank Leumi will need to sell the credit card
companies they own or reduce their holdings to below 40 percent if the
companies are issued on the stock exchange.
The sale may be to a controlling core that will obtain a control permit
from the Bank of Israel, or through an issuance on the stock exchange and the
distribution of shares to the broad public.
The Bank of Israel has published the final document
defining the criteria for who can obtain a permit to purchase a credit card
company or establish and own a merchant acquirer. The entities that will purchase the credit
card companies will be able to derive benefit from the rich information
databases that the companies hold regarding households and small businesses,
which can help them develop and offer a variety of financial products with
value for customers; the high level of expertise and experience that the credit
card companies have accumulated in their areas of activity; their reputation;
and the high level of capital they hold.
The companies are also expected to deal with challenges in the coming
years, and the Bank of Israel will provide them with regulatory backing to
support their abilities to increase competition in the settlement and credit
market. The publication of the document,
in addition to the final decision regarding the path for reducing the
interchange fee that is expected to be published soon, increase regulatory
certainty and enable potential buyers to formulate practical plans for the
purchase and operation of the credit card companies.
In accordance with the new and expanded policy set out
by the Bank of Israel, the credit card companies may be purchased by any entity
that is not forbidden from doing so by law, with an emphasis on the
Concentration Law and the Increasing Competition Law. These include financial or nonfinancial
corporations from Israel, financial or nonfinancial corporations from abroad,
private equity firms, and so forth. The
main criteria for issuing a control permit include aspects of honesty and
integrity, financial strength, relevant business experience in the merchant
acquirer or financial institution fields, and the lack of conflicting
interests. In addition, the investment
strategies of the entities that wish to purchase the companies will be examined
to ascertain that the entities intend to play a major role as a merchant
acquirer and credit institution in the Israeli market, and to contribute to
competition in the financial industry.
In addition to the criteria document, the Bank of
Israel is publishing a presentation that contains relevant information about
the companies, a summary of the criteria for granting a control permit, and the
main regulatory aspects of which the purchasers must be aware.
Bank of Israel Governor Dr. Karnit Flug said, “The
separation of the credit card companies from the banks is a main component of
the measures to increase competition in banking, alongside other structural and
infrastructural changes that we are advancing in Israel, such as the
establishment of a central credit registry, the establishment of a joint
technology bureau, measures to ease the transition between banks, and
more. The Bank of Israel is acting in
conjunction with the relevant regulators with professionalism and responsibility
so that the financial consumer in Israel will benefit from the reform.”
Supervisor of Banks Dr. Hedva Ber said, “Today we
advance by another critical stage in the implementation of the reform to
promote competition. The credit card
companies are mature and experienced financial companies in their fields, with
good infrastructure and significant assets, such as the information databases
they possess, which can serve the purchasers in expanding the companies’
activities and growth. The meetings that
we are having with potential buyers of the credit card companies and with
investment houses clearly show their need for regulatory certainty. We will therefore make sure that the
regulatory environment is as supportive as possible so that the companies will
be bought by serious entities and can realize the aims of the reform. The banks also have the option of issuing the
companies on the stock exchange, so that their shares are held by the broad
public.”