After many hardships, an agreement was signed last week for the purchase of the MAX credit card company by Clal Insurance. The campaign was not easy, but it was decided, at least by Clal Insurance’s officials just last week. A transaction of this magnitude requires the approval of all possible regulators: the supervisor of the banks, the supervisor of the capital and insurance market, the competition authority and so on. All of these have not yet revealed their opinion on the feasibility of the transaction, but the one who did reveal his opinion was Rami Belinkov, the Director General of the Treasury.
It is not clear what Blinkov’s status is in this deal (he has no status), but he is stirring and how he is stirring. Belinkov is not a bad person and people around him say that the agitation stems from the economic trauma that Israel went through in 2005.
In a nutshell it is said that Linkov opposes the Clal-MAX deal. Or at least resisted it until recently. Blinkov’s opposition stems, as mentioned, from a trauma that occurred in 2005, when it was the director general of the Treasury, the late Yossi Bacher, who led a move to separate the provident funds and trust funds from the banks. The banks’ ownership of the pension savings channels caused a severe centralization of the system and in fact stifled both the competition in the worlds of credit and in the worlds of money management when between these there were constantly conflicts between the various interests when the consumer’s/customer’s interest was not always at the center (in truth the customer was never at the center ).
The late Yossi Bacher led this separation. But what did we get? The provident funds and mutual funds moved from the regulated world of the banks to the jungle of the insurance companies where, as we know, there is a less tough regulator – traditionally – so that a big mess was created that only in recent years is starting to get sorted out. But It took time, far too much time and far too much money was lost here.
Belinkov is well aware of what happened to the Israeli economy in those years and people around him say that he fears a situation in which the credit card market, which was supposed to generate competition in the field of consumer credit (and perhaps not only consumer credit), will be suffocated. That is, MAX will be owned by Clal Insurance, whose interests are not clear until the end (we will make a spoiler – to make money), either it will be under the control of Discount Bank or it will take advantage of the MAX precedent and be sold to another insurance company. The large Vishrakart issued will be the only player that does not have a dominant controlling shareholder.
A situation in which only Isracard will remain independent is not an acceptable situation and also the management avenue in General Insurance and MAX, which is a rather impressive avenue, will not remain forever, so balances must be found. In the absence of such, Linkov prefers that there be no deal.
Since an “all or nothing” game is also impossible, Linkov could have taken action, and tried to generalize this event and establish rules and arrangements for the purchase of MAX that would set a precedent for the entire industry. In Blinkov’s environment, we are told that the political instability does not allow for too large arrangements to be made (it simply will not pass the Legal Advisor to the Government) and therefore he prefers to prevent the transaction. In the absence of Blinkov’s status, all that is left is to wait for the supervisor of the banks and the commissioner of competition and the supervision of the insurance to regulate the competition in such a way that it does not hinder the transactions from taking place and at the same time does not stifle competition. This is certainly possible with the supervision of the banks and maybe also with the competition authority, the supervision of the insurance is another story.
Banks, credit and everything in between
Much has been written about the banks’ reports published this week (and much more will be written). Most of the posts revolved around the high profits and so on. Behind the scenes was a different and no less interesting story. Consumer credit almost did not increase in the second quarter of the year and this does not mean that people did not take consumer credit but they simply did not take it from the banks.
When we tried to find out why the banks didn’t take part in the assault on the National Bank of Israel in the second quarter, they also didn’t take part in the assault on the malls. The answers passed like a common thread between everyone – all the captains of the system. The explanation was simple: the risk in consumer credit is too great. That’s right, the margins in consumer credit are high, but the risk is also high. And if we take into account the working assumption that is common to all banks (they did not coordinate it but they all analyzed the market and came to more or less the same conclusion) that next year and the one after that we will start to see consumer credit failures and they are already too exposed to failures The goddess and therefore someone else will take on this pleasure.
Behind the scenes in the banking system another small (or large, depending on where you look) drama is unfolding and that is the credit to the contractors. In this area, the entire system is almost frozen. The banks simply could not provide credit to the contractors, so they turned to non-banking companies, insurance companies and so on. In the last two months, the contractors attacked the banks again, and this time they were more ready for this attack and entered into transactions only this time, unlike at the beginning of the year, they started to open margins. In other words, the interest rate on banking support for real estate projects just got more expensive and when we asked senior officials in the system where the margins go? They answered simply: to get more expensive. Good luck to everyone.
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