Banks Supervisor Dudu Zaken has begun implementing the recommendation of the Bank of Israel committee charged with increasing competition in the sector, even before the panel has released its final proposals.
Yesterday, Zaken published a draft directive on bank fees based on the committee's interim proposals. He said he planned to eliminate a series of fees and re-price others all of which do not require any Knesset approval and can be done administratively.
The most important of these is the management fee charges to small businesses, which range from NIS 8.50 as month at Bank Yahav to NIS 140 at Mercantile Discount Bank. The savings for small business would amount to as much as NIS 1,680 a year, Zaken said.
Another fee slated for the dustbin is one charged for handling loans and collateral issues, which at some of the banks reaches NIS 1,250. Until now, those taking loans of less than NIS 50,000 were exempt from the charge; under the new rules, that figure will be raised to NIS 100,000.
Eliminating this fee will enable borrowers to shop around for the best loan more easily, Zaken said. Under current conditions, fees are high enough that they significantly affect the total cost of borrowing and force borrowers to calculate the rate of interest as well as the fee.
The banks will have a chance to appeal the draft at a meeting in September. After that the supervisor will make any amendments and go to his boss, Bank of Israel Governor Stanley Fischer, for final approval. Other fees that are slated to be cancelled include the fee for holding treasury bills (Makamim ) and money funds. Zaken said eliminating the fee would make such investments more attractive relative to deposits, thereby forcing the banks to raise deposit interest rates.
Regarding securities investment accounts, the draft directive requires the banks to price trading and other operations done by clients on their own over the Internet or other direct methods less than if they are done through a clerk or adviser. Minimum management fees for securities accounts will be eliminated.
Other smaller fees due to be done away with include the charge for having a magnetic swipe card restricted to getting account information and withdrawing cash from automated teller machines.
One charge drew much criticism from the bank concentration committee was the fee for announcements sent by banks to clients by mail, a charge that can run up to NIS 90 at Mizrahi-Tefahot Bank. Zaken did not address that issue yesterday in his directive.
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