Bank of Israel supports separation of credit card company Visa Cal

Contrary to Bank Discount's position, the Bank of Israel supports its separation from credit card company Visa Cal.

The logo of Israel Discount Bank is reflected in mirrors outside their branch in Tel Aviv, Israel July 27, 2016 (photo credit: BAZ RATNER/REUTERS)
The logo of Israel Discount Bank is reflected in mirrors outside their branch in Tel Aviv, Israel July 27, 2016
(photo credit: BAZ RATNER/REUTERS)

Contrary to Bank Discount's position, the Bank of Israel supports its separation from credit card company Visa Cal.

The separation will take place by the beginning of 2023. This position is completely opposite that of Discount's management which believed that the existence of Visa Cal contributed to the competition between banks and prevented companies that managed competing credit cards from raising interest rates.

This is a blow to Bank Discount. The Bank of Israel supports the separation of the Visa Cal credit card company from the bank and its sale, as was done with Bank Hapoalim and Isracard, as well as Bank Leumi and Leumi Card (Max). 

The separation should be done by the beginning of 2023. At the beginning of June, the Bank of Israel established a steering committee to examine the issue of separation and give its recommendation to the governor, Amir Yaron. 

Members of the committee were Prof. Michele Stravchinsky, research division director, Yair Avidan, supervisor of banks, and Oded Slomi, director of the payments and clearing department.

 The Bank of Israel building is seen in Jerusalem June 16, 2020. Picture taken June 16, 2020.  (credit: REUTERS/RONEN ZVULUN/FILE PHOTO) The Bank of Israel building is seen in Jerusalem June 16, 2020. Picture taken June 16, 2020. (credit: REUTERS/RONEN ZVULUN/FILE PHOTO)

Why does the Bank of Israel recommend separating Discount and Visa Cal? 

As part of the work, various extensive databases were examined, various statistical economic methodologies were applied, and more. 

After considering all the findings, it was recommended that the separation procedure should be completed and the exclusion of Discount from the reform canceled. This recommendation will be forwarded to the next finance minister who will be appointed after the elections and will ultimately be the one to decide. 

It's likely that they will accept the Bank of Israel's position.

Despite Discount's opposition, they were prepared for the possibility that they needed to sell Visa Cal. In recent weeks, first talks were held with a number of institutional bodies and especially insurance companies such as Phoenix, Menorah and Harel in regards to buying Visa.

Clal Insurance signed an agreement in principle to buy Max. It's likely that at some point control of the Isracard company, which is spread over several institutional entities, will also be sold.