Banks Bracing for New Legislation Limiting Fees

Bank Hapoalim has announced to Knesset Economic Affairs Committee chairman Moshe Kahlon (Likud) that it will waive banking fees for customers receiving guaranteed income allowances.

To put the bank's initiative into perspective, of the 130,000 recipients of guaranteed income allowances, only 40,000 are customers of Bank Hapoalim, who contribute only an estimated tens of millions of shekels to the bank annually.

The bank's revenues from operational fees in 2006 totaled 3.88 billion shekels.

Hapoalim's competitors were not surprised by the bank's initiative yesterday, and do not intend to follow suit.

The Knesset Economic Affairs Committee publicized a preliminary report by the special committee appointed to review banking fees on Monday. The committee is also chaired by Kahlon. The report reveals, among other things, that Israeli households pay 70 percent more banking fees than those prevailing in the rest of the world.

In addition, the report emphasized that in spite of the high fees, the Israeli banking system is marked in its low productivity, reflected in higher wage costs for employees and bad debt allocations than prevalent worldwide.

Meanwhile, the Knesset plenum yesterday approved a privately submitted bill that would increase regulation of banking fees in its first reading.

The bill is based on the proposal prepared by the Bank of Israel, but not yet submitted to the Knesset. M.K. Kahlon announced that the approved bill would be consolidated with the government bill to be submitted shortly.

Among other things, the current bill proposes to authorize the central bank governor to set a full price list for banking services, the names of chargeable fees and method of their calculation.

The bill was submitted by a group of Knesset members headed by M.K. Kahlon, Amnon Cohen (Shas) and Gilad Erdan (Likud).