Steps to competitive credit card market

Reports from Israel show that the Ministry of Finance is considering the separation of credit card companies on the ground that institutions, such as insurance companies, that acquire credit card companies will be able to compete with the banks for consumer credit from the banks while the Bank of Israel is objecting the remove of ownership in the credit card companies from the banking sector.

Rony Hizkiyahu, the Bank of Israel Supervisor of Banks is going to release a position paper to assert that credit card companies should not be taken out of the banking system.

Meantime senior Ministry of Finance officials believe the separation of credit card companies from the banks should be considered seriously.

As for the central bank it obviously has the following reasons to oppose the separation. The frist one is the need of stability in the banking system on account of numerous reforms made in past several years. and the second is that the bank thinks other ways can be found to make the credit card market more competitive without bereaving the banks of the control of the credit card companies.

As of today Bank Hapoalim controls Isracard Ltd, Bank Leumi controls Leumi Card Ltd., and Israel Discount Bank and First International Bank of Israel jointly own Israel Credit Cards-Cal Ltd.