After the banks were disappointed to see the Knesset pass the Bachar capital reforms, in which the banks are divested from the mutual and provident fund sector, only the matter of distribution fees was left to resolve.
And now, apparently, acting Finance Minister Ehud Olmert has decided to set the fees, which the banks will charge the funds for selling to their customers, at far higher rates than the banks themselves dared to hope for.
Haaretz has learned Olmert will present his decision Tuesday, under which the banks would be allowed to charge fees of 0.75-0.8 percent for share-based funds, 0.35-0.4 percent for bond-based funds and 0.2-0.25 percent for shekel funds. The fees would ensure that the banks enjoy hundreds of millions of shekels in revenues each year from the funds.
In addition, Olmert is expected to agree to another of the banks' requests, that they be allowed to set the distribution fees immediately, and not, as others would have liked to see, after they have sold off their funds (a process permitted to take years under the Bachar reforms). This would mean that the banks could start charging their fund distribution fees as soon as the minister's directives come into effect - within a few weeks. Thus, the banks would be able to charge fees on funds that private brokers sell to their customers while at the same time enjoying the proceeds of their own funds, which currently dominate the sector and which was the driving force behind the reforms.
The distribution fee is charged by the bank and paid by the fund for selling to one of the bank's customers. The charge is an annual payment and calculated as a percentage of the monies the individual deposits in the fund. For example, if a customer decides to invest NIS 100,000 in a Dash share-based mutual fund for three years, then Dash will have to pay the bank NIS 800 each year, a total of NIS 2,400 for the three years.
As one slight consolation, the funds would not be charged distribution fees for funds already sold to bank customers. This is a minor consolation, as most of the deposits in such funds are highly volatile, constantly moving from fund to fund in line with market movements.
A spokesman for the Finance Ministry said, "The decision will be submitted this week to the Knesset Finance Committee. We do not respond to speculation."
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