Israeli Banks Lose Majority Control of National Payment Clearing Center Board
A regulatory initiative aimed at reducing the dominance of Israel's largest banks over the Bank Clearing Center (Masav) has advanced significantly. On Saturday, a new board of directors took effect, marking a shift in control of the company that manages the national payment infrastructure through which salaries, standing orders, and money transfers of Israeli citizens are processed. As part of this change, Mizrahi Tefahot and Bank Leumi, two of the five largest banks, lost their board seats. They were replaced by representatives from Max credit card company and the digital bank Esh.
The outgoing directors were Micha Argaman, head of banking operations at Mizrahi Tefahot and a board member since 2018, and Amir Shmuel Rozen, head of AI at Bank Leumi, appointed in late 2024. Their replacements are Guy Sabatai from Max and Roy Freiberg from Bank Esh. This move is part of a broader, ongoing effort led by the Israeli Competition Authority under Michal Cohen and the Payment Systems Supervision Department at the Bank of Israel. It follows a court-approved phased plan to prevent the five major banks, which own Masav, from using board control to hinder competition, block fintech entrants, or create barriers for new players.
The changes stem from the Competition Authority and court decision to revoke the historic exemption that allowed the founding banks to operate Masav as a restrictive arrangement. For decades, Masav functioned under this exemption, but recent rulings emphasized that bank ownership of national clearing infrastructure creates inherent conflicts of interest that harm competition and market entry. The temporary license conditions include a gradual reduction of bank control over corporate governance, culminating in the current board replacements. However, the ownership structure itself remains under review, with the Competition Authority and Bank of Israel still considering long-term shareholding arrangements. The temporary license for bank holdings in Masav was extended until February 1, 2027.
The current board expansion from eight to eleven members, effective September 2025 under chairman Amir Shapira (Bank Hapoalim representative), leaves the five major banks with only three representatives from Bank Hapoalim, Discount Bank, and Bank Mizrahi-Tefahot. The other eight directors represent non-major banks, independent directors, and new financial participants including Max, Bank Esh, Bank Jerusalem, and Bank Yahav. Voting rules were also updated to require a majority of eight out of eleven votes to prevent blocking by the major banks and ensure decisions can be made independently.
Masav is a critical financial artery for Israel, processing about 5 trillion shekels in credits annually, including salaries and supplier payments, and about 1.76 trillion shekels in debits such as standing orders. Although 72.5% of Masav’s revenue still comes from the five largest banks, policy setting, tariff determination, and payment infrastructure development, including instant payments and API interfaces, will now be managed by a board majority of non-bank and independent members. Dozens of financial entities are connected to Masav, with 11 new participants joining recently, including new banks, credit card companies, and fintech firms, with more expected this year. This governance shift coincides with the completion of operational and technological separation between Masav and the Shva company.
