Competition in the Banking Sector Requires the Opening of New Banks rather than the Expansion of Existing Banks. The Sale of Union Bank and its Transformation into a Social Bank should be scrutinized.
"We were surprised to learn from the media about the advanced stage of the sale of Union Bank of Israel to one of the four major banks operating today. We were surprised because we believe that the sale needs to be carried out from a new competitive, creative and original perspective. The fact that Union Bank has a computerized clearing system can quickly turn it into a truly competitive entity in the banking market, functioning in the spirit of the Israeli government’s recent vision -- especially regarding the development of `social’ and `cooperative’ banks or `credit unions,’” wrote Deputy Director General of YEDID, Ran Melamed to Dr. Hedva Ber, Supervisor of Banks, and Antitrust Authority Commissioner Michal Halperin.
In a letter to the two regulators, copies of which were sent to Finance Minister Moshe Kahlon as well as the Chairman of the Knesset Finance Committee, MK Eitan Cabel, Melamed notes: “Recently, YEDID has been involved in extensive legislation regarding banking, credit and finance. And learning about the progress towards the purchase of Union Bank by one of the four largest banks in Israel, we appeal to you as the people responsible, each in her own field, to announce right away that you will not approve the sale of the bank to another banking corporation.
"I have heard that the Supervisor of Banks is positively considering, if she has not already done so, the approval of the sale of the bank to Mizrahi Tefahot Bank or to another bank. I would appreciate your response as to whether this information is correct.
"Over the past few years, we have worked hard to enable the development of new, small and efficient banks. We have agreed, with a heavy heart, to accept the fact that it is possible to make the large banks more efficient, among other things by reducing the number of employees, which made it necessary to reduce the number of branches open to the general public. We also assisted in the formulation of the Credit Data Law, the Fair Credit Law and the Credit-Card Companies Separation Law. All this, with the understanding that these are important steps towards competition, as is the move to establish "social banks" and various credit associations.
“I appeal to you on behalf of tens of hundreds of thousands of Israelis who are looking for a new banking alternative. I call upon you to immediately announce in public that you will not approve the sale of Union Bank to another banking corporation or to a controlling shareholder of a banking corporation. And, at the same time that you will talk to the owners of Union Bank so that they will issue an announcement stating that it is to be sold to a buyer or a group of buyers who will commit to operate it in an efficient and competitive manner in the spirit of the reform of the credit and banking market which has begun to develop in Israel in the past two years.
"Alternatively, I suggest that if there is indeed an intention to approve the sale of Union Bank to a banking corporation, you will announce that after the sale, the bank will be operated only according to the criteria and direction of a `social bank' as defined by the Bank of Israel in the past and as approved by the Knesset Finance Committee.