Bank Leumi to seek pension license

Bank Leumi said Monday it would proceed with a request for a pension advisory license after it completed the sale of the last of its asset management businesses.

galia maor 248.88 (photo credit: Courtesy )
galia maor 248.88
(photo credit: Courtesy )
Bank Leumi said Monday it would proceed with a request for a pension advisory license after it completed the sale of the last of its asset management businesses. "Following the full implementation of our part of the Bachar capital market reform we will over the next few weeks submit a request for a pension advisory license and we hope to get it soon," said Galia Maor, CEO of Bank Leumi. "Our entry into the field will improve the service to the customer and encourage pension savings in Israel." Leumi and Bank Discount sold the Kahal employees supplementary training funds for a total of NIS 264 million to Migdal Provident Platinum, a unit of Migdal Insurance & Financial Holdings. Bank Leumi said it would post a capital gain of about NIS 93m. on the sale while Bank Discount, the country's third largest bank, said in a separate statement that it would post a gain of about NIS 67m. on the sale of its share. As part of the Bachar capital market reform, all banks were forced to sell their holdings in provident and mutual funds and in turn they were supposed to be allowed to start selling advice on pension savings. Bank Leumi said it has now sold all its asset-management businesses for a total of about NIS 3.1 billion, and a net capital gain of some NIS 1.75b. and was ready to request a pension advisory license from the Supervisor of Capital Markets, Insurance and Savings Yadin Antebi. Bank Leumi said it had already invested more than NIS 100m. in preparation for entering the pension market. Bank Hapoalim, the country's largest bank, told The Jerusalem Post that until it completes the closing of the sale of its asset management businesses, which is expected by the end of this year, the bank could not yet request a pension advisory license. In recent months, the two large banks have expressed fears that Antebi might refuse to grant them licenses to provide pension advice, to give the medium-sized and small banks an advantage in entering the market. Discussing the controversial issue of pension advisory services following the Bachar reforms, Antebi has said that allowing the large banks to offer pension services, would increase the concentration of power in the banking system. "We have two large banks that dominate the distribution channels for financial instruments across the country and for this reason we gave preference entry to the small- and medium-sized banks to start to offer pension advice so they have a chance to compete before we allow the large banks to enter this field. The problem of the concentration of banks in Israel remains and this is not a magic solution." This month, though, Knesset Finance Committee chairman MK Stas Miseznikov (Yisrael Beitenu) presented a bill that would allow all of Israel's banks to offer pension advisory services starting at the same time. The bill also proposed that the Finance Committee be given the authority of discretionary supervision over decisions by Antebi to approve or reject applications for pension advisory licenses. At the same time, Knesset Economics Committee chairman MK Gilad Erdan, proposed a bill under which the entry by Israel's two biggest banks to pension advisory services would be postponed by five years, to ensure fair competition between all the banks. Meanwhile, in March, the Bank of Israel advised that it was in favor of the largest two banks entering into the field of pension advice to salaried workers together with the other banks. "Delaying the entry of the large banks into this area is likely to have an adverse effect on a large section of the public bearing in mind the geographical spread of the branches of the medium banks and the resources available to them," the central bank concluded. "It is doubtful whether postponing the large banks' entry into the market for pension advice will reduce the level of concentration in the banking industry."