BoI prods Israeli banks to streamline

Most of Israeli banks are far less efficient than the banks in Western Europe and the OECD.

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Supervisor of Banks Dr. Hedva Ber has published guidelines calling on the banks to submit a multiyear plan for increasing operational efficiency to the Banking Supervision Department, and will relax capital adequacy requirements for the banks that present the most aggressive streamlining goals.

The guidelines encourage the banks to carry out significant processes to increase efficiency by defining regulatory easings. This, against the background of the low level of efficiency that characterizes most banks in Israel’s banking system, compared with the rest of the world.

Dr. Hedva Ber, the Supervisor of Banks, said, “The goal is for the banks to carry out significant processes to increase efficiency. The steps to increase efficiency will enable the banks to lower the costs of banking services, particularly for households and small businesses. The increased efficiency, alongside a range of steps taken to increase competition, will ensure a more stable and competitive banking system, for the benefit of customers.” The Supervisor added, “We are aware of the difficulties inherent in increasing efficiency in the system and therefore defined new guidelines that will make it easier to carry out voluntary retirement and cost reduction programs, which will lead to the required significant increase in efficiency.”

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