Israel Discount Bank was ordered to withdraw from the credit card business

JERUSALEM, Jan 19 (Reuters) – Israel Discount Bank (DSCT.TA) should sell its CAL credit card business under draft rules aimed at fostering competition in the country’s banking and credit sectors.

Israel’s Finance Minister, Bezalel Smotrich, said he has changed regulations to force Israel Discount Bank to sell the business and create a new player in the credit market that is more focused on the family and small business success.

“This step, along with additional steps that we will bring in the near future, will lead to a credit market and contribute to economic growth,” said Smotrich.

According to him, the Governor of the Bank of Israel Amir Yaron has approved the draft regulations, which require the approval of the finance committee of the parliament.

A committee, including representatives from the Bank of Israel, regulators and the ministry of finance, recommended changing the legal definition of what constitutes a bank, a move that requires Discount to sell the CAL.

Discount, Israel’s fourth-largest bank, has protested the decision.

“The decision to separate CAL from Discount … is wrong, and certainly will not increase competition in the banking system,” the response said.

“However, it will continue to create significant value for its shareholders regardless of this decision.”

In 2015, the central bank strengthened Leumi (LUMI.TA) and Hapoalim (POLY. TA)Israel’s two largest banks, which dominate the credit market, are selling their credit card companies to compete.

Smotrich also said that he plans to study the issue of managing “large organizations” in credit card companies.

Report by Steven Scheer. Edited by Jane Merriman

Our Terms: The Thomson Reuters Trust Principles.