חוק להגברת התחרות ולצמצום הריכוזיות בשוק הבנקאות בישראל (תיקוני חקיקה), התשע"ז-2017Law for Increasing Competition and Reducing Concentration in the Banking Market in Israel (legislative amendments) 2017 · automatic translation · suggest a correction

Official summary of the law (Knesset)

The Law for Increasing Competition and Reducing Concentration in the Banking Market in Israel (Legislative Amendments), 2017 (hereinafter – the Law), was passed in second and third reading on 23 January 2017. The Law anchors the main recommendations of the Committee for Increasing Competition in Common Banking and Financial Services. The Law provides that a bank with a broad scope of activity, as defined therein, shall not engage in, control, or hold means of control in a corporation engaged in the operation of issuance of payment cards and clearing of payment card transactions (hereinafter – the separation obligation). A bank with a broad scope of activity shall be required to sell its holdings as stated within three years from the effective date, unless during that period the bank's holding rate in the credit card company decreases to 40% or less, and at least 25% of the means of control have been issued to the public – in which case the separation obligation shall apply at the end of four years from the effective date. Provisions were also established on this matter regarding restrictions on the acquisition of means of control in a payment card company, applicable to a bank and a large institutional entity as defined in the Law. The Law further establishes provisions relating to changing the ownership structure of the joint services company, which operates the interface for approving payment card transactions between an issuer and automated bank services (Shva), and reducing the banks' holding rates in the joint services company, such that a person shall not control or hold means of control exceeding 10% of a certain type of means of control in a corporation engaged in the operation of issuance of payment cards or clearing of payment card transactions. In addition, provisions and protective measures were established for the gradual implementation of the separation obligation. These include provisions whereby, during the transition period, a bank issuing payment cards that, prior to the effective date, controlled or held means of control in a payment card company, shall be required to carry out issuance operations through an operating company rather than itself. Additionally, such a bank shall not carry out, through a single operating company, the issuance operations of more than 52% of the total new credit cards it issues to its customers. Furthermore, engagement for the purpose of carrying out issuance operations as stated shall be done after conducting a process that provides every operating company a proper and fair opportunity to offer its services. Provisions were also established regarding the division of revenues arising from issuance operations and from customer activity with payment cards, as well as a prohibition on contacting a customer regarding credit card renewal except within 45 working days before the card's expiration date, unless under conditions specified in the Law. Furthermore, provisions were established regarding refusal of engagement between an operating company and a bank or a license holder under the Supervision of Financial Services Law (Regulated Financial Services), 2017. In addition, for the period specified in the Law, it was determined that the total credit card credit frameworks of customers of a bank with a broad scope of activity, in any given year, shall not exceed 50% of the total credit frameworks of the bank's customers as they stood in 2015, calculated as specified. However, a customer's credit framework shall not be reduced to an amount lower than NIS 5,000. The Law also established the Committee for Examining Competition in the Credit Market, whose role, among other things, is to monitor the implementation of the Law's provisions and recommend measures for improving and increasing competition in the credit market, as well as to make recommendations regarding the exercise of the Minister of Finance's authority to expand the definition of "bank with a broad scope of activity" so that it would also apply to a bank whose asset value is lower than 20% of the total asset value of all banks in Israel, provided that the value does not fall below 10%. A further provision was established prohibiting a banking corporation from unreasonably refusing a borrower's request to pledge an asset under an additional lien in favor of another creditor who is not the banking corporation. The Law also establishes provisions regarding the establishment of computing infrastructure and the obligation to sell computing services and their operation, as well as the leasing of real estate used for computing services and their operation that primarily serve the bank. Furthermore, provisions were established whereby a clearer shall be required to enable the clearing of a hosted clearer through it, according to rules to be established by the Governor with the consent of the Minister of Finance, as well as provisions regarding a hosted clearer and an affiliated clearer. In addition, provisions were established regarding a service for comparing financial costs.

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