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Banks bracing for new legislation limiting fees
13.6.07 | 02:15 By Ram Dagan and Zvi Zrahiya
Bank Hapoalim has announced to Knesset Economic Affairs Committee chairman Moshe Kahlon (Likud) that it will waive banking fees for customers receiving guaranteed income allowances.

To put the bank's initiative into perspective, of the 130,000 recipients of guaranteed income allowances, only 40,000 are customers of Bank Hapoalim, who contribute only an estimated tens of millions of shekels to the bank annually.

The bank's revenues from operational fees in 2006 totaled 3.88 billion shekels.

Hapoalim's competitors were not surprised by the bank's initiative yesterday, and do not intend to follow suit.

The Knesset Economic Affairs Committee publicized a preliminary report by the special committee appointed to review banking fees on Monday. The committee is also chaired by Kahlon. The report reveals, among other things, that Israeli households pay 70 percent more banking fees than those prevailing in the rest of the world.

In addition, the report emphasized that in spite of the high fees, the Israeli banking system is marked in its low productivity, reflected in higher wage costs for employees and bad debt allocations than prevalent worldwide.

Meanwhile, the Knesset plenum yesterday approved a privately submitted bill that would increase regulation of banking fees in its first reading.

The bill is based on the proposal prepared by the Bank of Israel, but not yet submitted to the Knesset. M.K. Kahlon announced that the approved bill would be consolidated with the government bill to be submitted shortly.

Among other things, the current bill proposes to authorize the central bank governor to set a full price list for banking services, the names of chargeable fees and method of their calculation.

The bill was submitted by a group of Knesset members headed by M.K. Kahlon, Amnon Cohen (Shas) and Gilad Erdan (Likud).

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ira

In the U.S. there is much more competition in the banking industry. Just to have an account costs money in Israel. The banks should make their money by lending and not by charging for every transaction they do for their customers. I was shocked once when I wanted to deposit 13000 shekels in Bank Hapoalim. To put money in the bank there was a fee. I was told that any cash deposit over 10000 shekels there is a fee. The crazy part of the banking system is all the banks work together with their fees and they don't compete.

Livni

a. fees for private sector accounts are way too high
and way too much fees for every little action (350 in israel, 50-70 in other countries)
b. they did it to cover up bankloan money that billionaires and funds waisted in the hightech boom (lost money)
c. no competition between them on private sector
d. they push out any foreign banks
e. they bribe knesset and ministers by primaries funding and easy loans to them and to parties

ira

Banks’ revenue from fees continues to rise
First International was the only bank to announce a one-year freeze in fees, when other banks hiked them in November 2006.
Eran Peer 14 Jun 07 15:32
Banks’ revenue from fees continues to rise even as the Parliamentary Inquiry Committee into Bank Fees has published recommendations to cut them and legislation empowering supervision of bank fees is in the offing.
The banks’ aggregate revenue from fees totaled NIS 3 billion for the first quarter of 2007, which is 7%, or NIS 194 million, higher compared with the corresponding quarter of 2006. Fees account for 80% of the banks’ operating revenue and 31% of their combined operating and financing revenue. The banks’ aggregate revenue from fees totaled NIS 11 billion in 2006.


An analysis of banks’ financial reports for the first quarter indicate two main reasons for the increase in revenue from fees. One factor was the booming capital market, which increased the banks’ revenue from securities transactions by 14.5%. The other factor was an increase in credit card fees.

Bank Hapoalim (LSE: BKHD; TASE: POLI) made NIS 993 million from fees in the first quarter, the largest amount of all Israeli banks. Israel Discount Bank (TASE: DSCT) had the largest increase compared with the corresponding quarter - 12.7%. It is the only bank to charge customers fees for the purchase and sale of mutual funds and for membership in its credit card (NIS 10 per month).

Bank Leumi’s (TASE: LUMI) revenue from fees rose 11.2% compared with the corresponding quarter. Mizrahi Tefahot Bank’s (TASE:MZTF) revenue from fees rose 2.4%, but First International Bank of Israel’s (TASE: FTIN1;FTIN5) fell 2.5%. First International was the only bank to announce that it would freeze fees for one year, after all the other banks hiked their fees in November 2006.

Published by Globes [online], Israel business news - www.globes.co.il - on June 14, 2007

© Copyright of Globes Publisher Itonut (1983) Ltd. 2007

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Economics C’tee approves bank fee law unanimously
MK Moshe Kahlon: This is a defining moment in the history of the Knesset.
Lilach Weisman 25 Jun 07 17:04
The Knesset Economics Committee has unanimously approved the bank fee regulation law. The law, which will apply to both private and business customers of the banks, gives the Bank of Israel Banking Supervision Department sweeping authority over bank fees. The new law mandates that the number of bank fees to be reduced, but does not mention a figure. The law also stipulates that banks may not collect two fees for the same service.
Economics Committee chairman MK Moshe Kahlon (Likud) said at the end of today’s meeting, “The Economics Committee made history today. This is a defining moment in the history of the Knesset. This is the first time that we’ve given the regulator tools to prevent harm to consumers.”


The bank fee regulation law resembles the original proposal by the Bank of Israel, which gives the Banking Supervision Department full authority to supervise and establish the list of bank fees. The law will come into effect within a year, although the Banking Supervision Department’s authority to supervise fees will be immediate.

The Economics Committee decided that the Banking Supervision Department will be authorized to set the list of bank fees within three months, but can ask for a postponement of up to another three months. After the Banking Supervision Department sets the list of bank fees, the banks will have six months to consolidate fees and set new tariffs.

The Economics Committee also set a fine of NIS 1.5 million for banks that violate the new law.

The Knesset plenum will hold the second and third readings of the bank fee regulation law tomorrow.

Published by Globes [online], Israel business news - www.globes.co.il - on June 25, 2007