The Bank of Israel approves the establishment of a new bank
Bank of Israel Governor Prof. Amir Yaron, and Supervisor of Banks Dr. Hedva Ber, notified entrepreneurs Mr. Marius Nacht and Prof. Amnon Shashua, that the Banking Supervision Department has completed the examination process, and that the Governor is prepared to grant a license to the bank and a permit to control it. The process was carried out in consultation with the Licensing Committee.
The notification was delivered after a comprehensive process carried out by a Banking Supervision Department team during the past year to examine and challenge the business plan presented to the Department. The process included a Fit & Proper test relating to the honesty, integrity, and financial strength of the two entrepreneurs, and guidance in the required regulatory preparations.
According to the business plan that the entrepreneurs presented to the Banking Supervision Department, they intend to establish a digital bank, without branches, and to focus on providing banking services to households, including providing credit, receipt of deposits, management of bank account, and providing securities purchasing and sales services.
The establishment of a new bank is possible due to a broad process in which the Banking Supervision Department removed barriers and the Bank of Israel and Ministry of Finance led joint initiatives, in accordance with the recommendations of the joint committee established to increase competition in banking and financial services, which were supported by the government and the Knesset. The process included a change in the process of granting a bank license that will create a mechanism to ensure regulatory certainty for the entrepreneurs prior to the completion of full operational preparations; close guidance of the entrepreneurs by a designated team established by the Supervisor of banks to support the establishment of new banks; lowering the initial capital requirements for establishing a bank and the capital ratios (according to a risk-based approach); revising the Banking Supervision Department's Proper Conduct of Banking Business directive to enable the digital provision of all banking services; a government decision to provide a government grant to an entity that establishes a computer services center as automated infrastructure for new and existing banks and deposit and credit unions; and the establishment of a credit data system to respond to information restrictions and allow for the provision of credit under competitive conditions by banks and new players.
The receipt of the control permit and bank license will enable the entrepreneurs to move forward and complete the IT system, operational, and regulatory preparations required to launch the bank's operations, including signing an agreement with the technological system supplier that won the State tender, TCS from the TATA Group, complete the hiring of the managerial staff and the appointment of a Board of Directors, and more.
The new bank will be supervised by the Banking Supervision Department at the Bank of Israel in order to ensure its stability and to protect the money deposited with it, similar to the supervision over the other banks in Israel. Like any other bank in Israel, the new bank will have access to all of the Bank of Israel's liquidity tools (monetary loans and monetary deposits). In addition, the new bank will be able to manage an account at the Bank of Israel and connect to the various payment systems, and will thereby have the ability to provide all of the retail services that banks provide to their customers. Customers of the new bank will be able to make various payment transactions, including via debit card, transfers, real-time transfers (Zahav), cash withdrawals at ATMs, and so forth.
Bank of Israel Governor Prof. Amir Yaron said, "Changing technology enables the establishment of banks based on new models. The digital banks model has started operating in various countries in recent years, and is now being implemented in Israel. I attribute great importance to new banks entering the system, which is made possible thanks to the significant steps by the Bank of Israel and the Ministry of Finance to remove entry barriers. The banks are vital to the Israeli economy, and the Bank of Israel will accordingly continue to support the stability of the banking system. I wish the entrepreneurs success in establishing the new bank, which I hope will lead to increased competition and the advancement of innovation in banking in Israel."
Supervisor of Banks Dr. Hedva Ber said, "A new bank is being launched, after about 40 years in which no new bank was established in Israel. The fact that two leading entrepreneurs—Mr. Marius Nacht and Prof. Amnon Shashua, who were one of the founders of Checkpoint and Mobileye respectively—are groundbreaking innovators in large industries, have chosen to invest their capital and their enthusiasm in establishing a new bank, is good news that indicates change. The Banking Supervision Department provided close guidance to the entrepreneurs and the team setting up the bank during the past year, and will continue to do so, all the while guiding other entrepreneurs who are interested in establishing a bank.
"Granting a license to a new bank is one step among the variety of steps we have taken together with the Ministry of Finance in recent years to increase competition in banking, such as separating two credit card companies from the banks, and supporting them as they become independent competitive entities; establishing a credit data system that enables nonbank entities to compete in providing credit; increasing the efficiency of the banking system; and projects currently underway, led by a project to enable customers to switch from one bank to another with the click of a button."
p said, "We are proud to be the first group in about 40 years to receive a license from the State to establish a new bank in Israel, and we obviously thank the Bank of Israel and the Ministry of Finance for the vision and the courage to lead a process to encourage innovation and competition in the banking industry. It is worth noting that we are in the initial establishment stages, and there remains a long path before us."