Israel’s government banking-reform committee has submitted final recommendations which pave the way for creation of new banks in the country.
"After 47 years in which no new bank was started in Israel, we have paved the way to establish new banks in the country," finance minister Moshe Kahlon said.
In a bid to boost competition in the banking sector, the country’s biggest lenders – Hapoalim and Leumi – have been asked to separate the ownership of their credit card companies.
The standalone credit card units will be encouraged to become banks and will be subject to various incentives such as lower capital requirements compared to banks.
The country’s third big credit card issuer, co-owned by Israel Discount Bank and First International Bank of Israel, will be untouched for four years, when the issue will be re-examined.
Under the eased conditions, new entities can enter the Israeli banking market with initial capital of NIS50m, instead of the existing limit of NIS400m.
The committee has also recommended easing requirements on institutions looking to offer credit to the retail market from pension funds.
Prime Minister Benjamin Netanyahu said: "Competition in the banking sector will ease the credit situation for small and medium business. And separation between the major banks and credit card companies is the start of a comprehensive reform that will be good for all Israelis."