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Last week the Association of Banks in Israel published portions of the opinion it received from American experts it hired to write an opinion opposing the recommendations of the Bachar Committee.

Apparently the association did not publish part of the report that paints the two largest banks in an unflattering light, calling Bank Hapoalim and Bank Leumi a "duopoly."

The experts even say Hapoalim and Leumi will increase their market share as a result of the Bachar banking reform recommendations to separate the provident and mutual funds from the banks.

"The reform planned by the Bachar Committee will not reduce the market dominance in Israel's banking sector and will even increase it. The transfer of a substantial portion of revenues from fund management fees out of the banking sector will weaken the banks financially and cause volatility in their cash flow," the consultants declare.

"These problems could be more serious for smaller banks than for Hapoalim and Leumi, so the 'duopoly' (Hapoalim and Leumi's) market share will increase." Promontory Financial partners Alfred Moses, Elizabeth McCaul and Alan Blinder were paid $500,000 for the report.

At this point it is unclear if the conclusions reached by the American experts will cause a turnaround in the bank's associations battle against the reform. The smaller banks, unlike the major players, see some advantages in the recommendations. These include the possibility of rapidly entering the insurance market and weakening of the major banks that account for most of the provident and mutual fund sectors.