The Bottom Line / Here's an Ofer you'll love
The expected developments regarding banks' item charges may make Zvi Ziv, Hapoalim's CEO, regret what he started. A few weeks ago, he declared that Hapoalim will raise charges for each item on a bank statement.
The expected developments regarding banks' item charges may make Zvi Ziv, Hapoalim's CEO, regret what he started. A few weeks ago, he declared that Hapoalim will raise charges for each item on a bank statement - that is a charge for recording the transaction in addition to a charge for the transaction itself - from NIS 1.21 to NIS 1.28. The move caused an uproar.
Hapoalim's hike in item charges came at just the right time for the parliamentarians. There is nothing that goes down better with the public than taking pot shots at the banks, and along comes Ziv pouring fuel on the flames before their very eyes. The result was a public flogging. Condemnation poured in from every quarter, the antitrust commissioner started looking into regulating the charges, and a committee was set up to investigate the whole affair.
The panel will report back next week, and its conclusions will be to cancel the item charge completely. Motti Fine, deputy banking supervisor at the Bank of Israel who heads the committee, thinks so, and Yoav Lehman, his boss, concurs. Central bank governor David Klein will be forced to fall in line, despite his misgivings over intervening in a purely commercial matter for the banks.
But the die has already been cast. The item charge, which exists nowhere else in the world, will be canceled. The Fine committee will also note a few extra charges that need "monitoring." Hapoalim will promptly lose NIS 250 million a year, while the whole banking sector will be NIS 760 million worse off. And so it should be. The banks could compensate themselves through raising other charges that are not regulated, which would earn them hundreds of millions, but it's not that simple.
So it's hard to understand why Israel Discount Bank CEO, Giora Ofer, suddenly became the darling of the media when he announced this week that he was considering canceling the item charge. The journalists were delighted. They have not stopped reporting how wonderful Ofer is, including flattering photos of the hero of the day.
Ofer read the reports and cried with laughter. He is aware, as we all are, of how the Fine committee will conclude. So he decided to take his medicine in one fell swoop and reap the PR reward. The only little snag, which was almost removed from the program, was that while canceling the charges, the bank will raise account management fees to NIS 20 a month, which - surprise, surprise - is exactly the average monthly payment of the bank's customers for item charges. In other words, Discount won't be losing one agora, and may even make some extra money if its customers decide to conduct more transactions as a result. Small customers will lose out, since they do little with the bank.
Ofer's exercise is in direct contrast to the public campaign and the committee's plan to annul the item charge and compensate the banks by NIS 4-5 a month by raising other regulated charges that are currently free, such as withdrawing cash. This means that banks will see a sharp fall in income. But Ofer wants to dodge the decree and not lose a single penny - and for that, he wins the media's applause. Apparently, some journalists were indeed born yesterday.
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