Bank Leumi and Bank Hapoalim will be allowed to start selling pension advisory services in the country's outlying areas, possibly as early as the first quarter of 2008, following an agreement reached Monday between Knesset Finance Committee Chairman Stas Meseznikov and Yadin Antebi, the Finance Ministry's commissioner for capital markets, insurance and savings.
"Bank Hapoalim welcomes the agreement reached between MK Meseznikov and Yadin Antebi enabling us to offer pension services to our customers," a statement from the bank said. "Over the past year we have been working hard to prepare for this and hired hundreds of new workers and invested millions of shekels in the infrastructure needed to offer these services."
Leumi, meanwhile, said it has invested over NIS 100 million and hired more than 500 workers in preparation for pension advisory services.
Under terms of the agreement, Hapoalim and Leumi can start selling pension advisory services in the peripheral areas of the country in 2008, as opposed to the originally planned 2010 start date.
In January of this year, Antebi put a hold on the banks' entry into the pension sector to allow the medium and smaller banks to establish themselves in the market before Hapoalim and Leumi were unleashed, a move that was met with criticism from the Bank of Israel, which said that not only would the Finance Ministry's proposal delay the development of the market for pension planning, but the overall availability of general financial information and service offered to customers would be adversely affected.
Additionally, the central bank doubted whether the postponement of the "big banks" entrance into the field of pension advice would lead to a reduction in their dominance or an increase in competition in the banking system, as Hapoalim and Leumi would develop alternative products to offer their customers and when they finally did enter the pension market, many of their old customers would return.
Moreover, the central bank expressed concern about the preparedness of the small- and mid-sized institutions to offer pension advice to a large number of customers, especially in the outlying areas of the country.
Leumi estimates that it has 60 branches in "outlying areas," while Hapoalim said in a statement that the bank will be able to start offering the pension services at "dozens" of branches.
Before being allowed to offer pension consultancy services across the country, however, Hapoalim and Leumi must complete the sales of their asset-management businesses.
Also included in the agreement between Meseznikov and Antebi was a stipulation allowing the two big banks to begin selling life insurance policies in April 2009. The country's small- and mid-sized banks will be permitted to begin offering life insurance policies in January 2009.
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