Enraged at banks, chairman terminates Knesset panel debate on bank fees
Banks don't answer their customers in day to day life, and aren't answering us either, fumes Moshe Kahlon
The chairman of the Knesset inquiry on bank fees abruptly terminated the session today, accusing the banks of evasive tactics.
Moshe Kahlon, chairman of the Knesset's official inquiry into bank fees, terminated the discussion in a rage, saying the bank representatives had not provided adequate answers to questions that the panel had raised.
Ahead of the meeting today, Kahlon had forwarded several questions that the Knesset panel had received from bank clients, to the banks.
However, at the meeting, Kahlon realized, to his anger, that the banks had not provided full answers to all the questions.
Erupting in fury during the meeting, Kahlon told the bank representatives, "I understand that you don't want to cooperate. You want to determine what the answers will be." He then abruptly terminated the inquiry session.
"The discussion today was perhaps the most important of all the discussions, because we were trying to confront the banks with their clients," Kahlon explained. However, "Just as the customers don't get answers from the banks in day to day life, neither did the committee, despite repeated efforts to obtain them."
Explosion of fees
Before the committee began its work, Kahlon asked Prof. Shmuel Hauser, an adviser to the inquiry, to work with the Bank of Israel and with the banks in creating a list of fees that the banks charge households and small businesses. The list was to be appended to the conclusions of the parliamentary inquiry.
Hauser was also asked to work with the Bank of Israel on shaping proposed rules to make it easier for clients to move from one bank to another. At present, it is technically daunting for a client to abandon one bank in favor of another.
Between 1993 to 2007, Kahlon says, the number of fees that the banks demand from households rose by 126%. In 1993 there were only 30 fees: today there are 89, he said.
Kahlon also said that the prices of unregulated bank fees rose by more than the consumer price index between 2001 and 2007.
Before closing the meeting, Kahlon ordered the representatives of the banks to prove any claims or arguments they present, with written documentation.
One claim was presented by Gideon Shor, speaking for Bank Leumi (TASE: LUMI) . He said that the "package deal" that the banks struck with the Knesset Finance Committee, which froze some bank fees and lowered others, had caused Bank Leumi to lose NIS 100 million in revenues.
For the year 2006 Bank Leumi reported netting NIS 3.5 billion, an increase of 65% compared with the year 2005. It was the highest profit Bank Leumi, the second biggest bank in Israel, had ever achieved.
Its return on equity surged to 22.1%, compared with 14.3% in 2005.
To be fair, NIS 2 billion of that gigantic net profit resulted from selling holdings in Africa Israel (TASE: AFIL) and Migdal Insurance (TASE: MGDL) , which it had to do because the law forbids banks to own major stakes in more than one conglomerate. Bank Leumi elected to keep its shares in The Israel Corporation (TASE: ILD) .
The committee has several weeks before it has to present its final recommendations.