In a statement responding to the Israel Competition Authority’s designation of the five largest banking groups as a concentration group and related directives on deposits, the Bank of Israel said the step is extreme and disproportionate. It argued that the move is unlikely to materially improve customer welfare because most of the accompanying measures have already been implemented by the Banking Supervision Department through existing reforms, and that the declaration could undermine regulatory certainty and deter investment in Israel. The Bank cited existing requirements for centralized and comparative publication of common deposit products under Proper Conduct of Banking Business Directive No. 447, centralized information on money market funds and MAKAM under Directive No. 447A, and the ability to open and manage a deposit without a current account and transfer funds between banks under Directive No. 417 and Section 5B2 of the Banking Service to the Customer Law. It also said that, despite formal dialogue with the Competition Authority over the past three years, no persuasive evidentiary basis was presented to show that the directives would deliver competitive benefits exceeding their costs or that systemic implications had been fully considered. The statement added that, for at least some of the directives sought, the law requires the consent of the Bank of Israel and that consent was not granted. The Bank said it will continue to promote competition through barrier removal and stronger transparency, pointing in particular to the graduated banking licence framework for small banks. It added that the use of a concentration group declaration should be reserved for exceptional cases and only after more proportionate alternatives have been examined.
Bank of Israel 2026-05-06
Bank of Israel says concentration group designation for five largest banks is disproportionate and duplicative of existing deposit measures
The Bank of Israel criticised the Israel Competition Authority’s designation of the five largest banking groups as a concentration group and related deposit directives as extreme, disproportionate and unlikely to materially improve customer welfare, noting that many measures already exist under current banking rules. It warned the move could undermine regulatory certainty, deter investment, and lacks persuasive evidence of net competitive benefits or full systemic analysis. The Bank stressed some directives require its consent, which was not granted, and said such declarations should be reserved for exceptional cases after more proportionate alternatives are examined.