Four Major Israeli Banks Appeal Competition Authority's Concentration Group Ruling

Four of Israel's five largest banks have filed an appeal against the Competition Authority's decision to classify them as an extreme concentration group. The ruling, issued just over three months ago by Competition Commissioner Michal Cohen, designated Bank Hapoalim, Mizrahi-Tefahot, Discount Bank, Bank Leumi, and the International Bank as a concentrated group in retail banking services, imposing restrictions on their deposit activities. The appeal deadline was likely today, though the exact details of the appeals have not yet been made public. A banking source confirmed to Globes that the appellants are Bank Hapoalim, Mizrahi-Tefahot, Discount Bank, and the International Bank, while Bank Leumi's position remains unclear.

The May decision followed a Competition Authority investigation into banking concentration since 2023, triggered by rising deposit interest rates and widening interest margins. The investigation found limited competition in retail banking services, citing high switching barriers between banks. A senior banking official told Globes the appeal argues the authority acted beyond its powers and contradicted the Bank of Israel, the banking system's direct regulator. The banks contend that competition exists both within the banking sector and from non-bank entities, warning that the authority's intervention could harm existing competition and ultimately damage customers.

The dispute highlights tensions between Israel's banking sector and regulators over market concentration and competition. The Competition Authority's restrictions aim to curb the banks' market dominance, but the banks maintain that these measures are unnecessary and counterproductive. The outcome of the appeals will be closely watched for its impact on Israel's banking landscape and consumer banking services.