Israel's Competition Chief Battles Banks Over ₪20 Billion Customer Savings
Translated & summarized from Ice by baba
Israel's Commissioner of Competition, Michal Cohen, criticized banks for allegedly exploiting customers, highlighting a potential 20 billion shekel gap in household savings interest. She has imposed new transparency rules on major banks, effective May 2027, but the Bank of Israel opposes the measures as "extreme and disproportionate." Banks are challenging the decision in court, while the regulatory dispute continues.
The story in 5 lines · by baba
- Competition Commissioner Michal Cohen accused Israeli banks of exploiting customers, potentially costing them ₪20 billion.
- Cohen's new regulations aim to increase transparency and improve deposit rates for households.
- The Bank of Israel called the new regulations "extreme and disproportionate" and opposes them.
- Banks are legally challenging the Competition Authority's decision, which takes effect in May 2027.
- The dispute highlights a significant gap between conditions for large businesses and the general public.
Israel's Commissioner of Competition, Michal Cohen, has launched a strong critique against the country's banks, accusing them of maintaining their dominance at the expense of customers. Speaking at the annual conference of the Association of Investment Houses, Cohen stated that banks prefer "dormant and uninvolved customers" and make it difficult for the public to understand costs and compare offers.
This criticism is underscored by a significant figure: 20 billion shekels. According to the Competition Authority's calculations, if household deposit interest rates had mirrored those offered to large businesses following recent interest rate hikes, banks' profits from households between 2022 and 2024 would have been approximately 20 billion shekels lower. While this represents a hypothetical scenario and not a sum banks must repay, it highlights the disparity in conditions between large corporate clients and the general public.
In May, Cohen designated the five largest banking groups as a concentration group, imposing new regulations on deposits. These rules mandate increased transparency, proactive customer outreach before deposit expiration, and the presentation of alternative investment options, including money market funds. Cohen emphasized the goal is for savers to receive "the true price, not just those who know how to call and negotiate."
However, the battle over public savings involves another key player: the Bank of Israel. The central bank has opposed Cohen's decision, labeling the concentration group declaration as "extreme and disproportionate." The Bank of Israel argues that many of the new directives are already covered by existing reforms and that the move could harm regulatory certainty and deter investors. It also stated that some of the new rules require its consent, which has not been granted.
The Competition Authority's new regulations are set to take effect on May 6, 2027. Nevertheless, the banks are pursuing legal challenges against the decision. At the conference, Cohen expressed confidence in the Authority's ability to defend the regulations in the Competition Tribunal. The dispute between the regulators continues, leaving open the question of whether these new measures will ultimately improve the savings conditions for Israeli households.