Competition authority declares five largest banks an oligopoly

The Israel Competition Authority declares the country’s five largest banks an oligopoly for their dominant position in the field of retail banking services for households and small businesses.

The declaration grants Israel Competition Commissioner Michal Cohen the authority to impose instructions or restrictions.

The decision follows a lengthy investigation opened in 2023 into competition in the retail banking sector, with a focus on deposits.

Israel’s concentrated banking system is controlled by the country’s five largest banks – Bank Hapoalim, Bank Leumi, Israel Discount Bank, Mizrahi Tefahot Bank and First International Bank of Israel – which has allowed them to rake in record profits in recent years and charge excessive fees with little fear of blowback.

The banks have been accused of enjoying big profits from higher interest rates on loans, while not adequately sharing the benefits with customers.

“The declaration of the banks as a concentration group is an important step in transferring bargaining power to the public,” says Israel Competition Authority director general Michal Cohen. “The directives that will be imposed are intended to stop the behavior of banks that make it difficult to compare prices of banking services and switch to competing banks and financial institutions.”