Viewpoint / He's no Robin Hood
The two big banks are a duopoly that essentially controls the marketplace, so treating them prejudicially is justifiable, Eli Yones argues.
You can't accuse Eli Yones, the chief executive of United Mizrahi Bank, of not knowing how to play the press. Yones, a superstar in bank management, styles himself as intrepid, a man swimming against the current, a man going boldly where no banker has gone before. Now he's done it again, positioning himself as a man with the audacity to combat openly the two big banks, Hapoalim and Leumi, even at the price of an open rift among the banks over the Bachar reform.
Last week, speaking on behalf of Mizrahi, Union Bank (Bank Igud) and First International Bank of Israel, Yones called for a twist to the Bachar reform of the capital market and banks. He thinks only Hapoalim and Leumi should be forced to relinquish their holdings in provident and mutual fund management companies, while the rest of the pack should be allowed to keep theirs.
And why? Because the two big banks are a duopoly that essentially controls the marketplace, so treating them prejudicially is justifiable, he argues.
"Mizrahi will not be mere scenery in the play the big banks are staging against the Bachar report," Yones wrote to the Association of Banks in Israel, in a letter that rebranded the medium-sized banks as "emerging" ones, a hint at his ambitions when they finish emerging.
His Quixotic daring may have earned him front-page mention in the business sections, but it doesn't make him a Robin Hood. Yones is taking on giants, but not at all on behalf of some unfortunate minnow. Yones is no reformer: If he's using his media clout to wave the flag of capital market reform, it's all for show. Yones is the CEO of a bank, and the reform interests him as much as the snowfall in Tibet.
If the banks manage to derail the Bachar reform, Yones would be the last to shed tears. He'd just as soon there were no reform, but if there's going to be one, then at least let it help him compete with the big banks. It's Mizrahi's narrow interest he has at heart, not that of the banking sector or the customers.
None of which means he is not right: The two big banks totally control the banking sector, and they've just become more powerful over the years.
You can see it in the ads. A year ago, the smaller banks, mainly Union and Mizrahi, launched a barrage of special deals to attract households; they offered interest on checking accounts (until now the banks charged interest on overdrafts, but didn't offer creditory interest in return). But the ads have disappeared, because they failed. Even though they offered very attractive terms, they did not gain a significant rate of recruitment. The public is physically or mentally captive at the two big banks and refused to move, whatever the smaller banks offered.
The Bachar reformers can try to stop the growth of the two big banks, through benefits exclusive to the smaller ones for instance. The panel did think of it, but decided not to go there. It opted to treat all the banks equally, but that actually deepened the harm to the small banks, which are far more vulnerable to anything impairing their strength than Hapoalim and Leumi.
The panel not only can't shackle the power of the two big banks, it may make the situation worse.
Some of the Bachar panelists understand that and are mulling changes to the regulations being proposed, changes that would help the little banks. One example might be letting the little banks market policies that the big banks can't, or giving them a longer period of exclusivity to market insurance policies. Perhaps the insurance companies might be allowed to buy the small banks - something they are not allowed to do at present. But none of that is likely to help the small banks break the power of the duopoly.