Publications

| Banking & Finance
February 22nd, 2018

Elite Elkon (Partner) and Aviad Rabinowitz (Associate), in a client update: Gearing Up Engines for the Sale of Israeli Credit Card Companies Leumi Card and Isracard.

Elite Elkon (Partner) and Aviad Rabinowitz (Associate), in a client update regarding the expected sale of leading Israeli credit card companies Leumi Card and Isracard.

 

For further reading.

November 4th, 2017

Elite Elkon (Partner), Dubi Gross (Partner) and Nir Keidar (Associate) published a client update on Israeli Lending Licensing Requirements for non-institutional lenders - a step towards certainty for international lenders. For further reading: 

Elite Elkon (Partner), Dubi Gross (Partner) and Nir Keidar (Associate) published a client update on Israeli Lending Licensing Requirements for non-institutional lenders - a step towards certainty for international lenders. For further reading: 

February 6th, 2017

In 2016, our Tier 1 Banking & Finance practice took a lead role in some of Israel’s major transactions. We are pleased to share with you our Banking & Finance highlights of 2016

August 10th, 2016

Dubi Gross (Partner) together with Latham & Watkins review how foreign private equity sponsors and their lenders are finding solutions to local law structuring issues.

December 1st, 2015

Partners Elite Elkon covered the new Israeli regulator of banking activities and the new steps taken to enhance competition in the credit card business 

November 17th, 2014

In their article in the 2014/2015 Global Banking & Financial Policy Review, Elite Elkon May-Tal and Eli Elya give an overview of recent developments in Israeli banking, including actions taken to ensure the country's financial stability, the promotion of competition, non-bank financial institutions as major players in the market, collaboration with FATCA, and more.

February 12th, 2018

Pinhas Rubin, the firm's chairman was interviewed for an article in "Globes" about the Insolvency and Economic Rehabilitation Law approved this week in a second and third reading.

"The law announces that bankruptcy is not a social-legal stigma but a rehabilitation process".

 

Pinhas Rubin, the firm's chairman was interviewed for an article in "Globes" about the Insolvency and Economic Rehabilitation Law approved this week in a second and third reading, and referred to the underlying purposes and the social-moral message contemplated by the law.


For further reading (in Hebrew).

October 26th, 2017

A Client Update on Israeli Lending Licensing Requirements– a Step Towards Certainty for International Lenders. 

February 2nd, 2017

Israel’s two largest banks, Bank Leumi and Bank Hapoalim, are now officially compelled to divest their credit card businesses - Leumi Card and Isracard – and the engines are warming up on these sales

Israel’s two largest banks, Bank Leumi and Bank Hapoalim, are now officially compelled to divest their credit card businesses - Leumi Card and Isracard – and the engines are warming up on these sales.

 

Last week, on January 23rd 2017, the Israeli parliament passed the “Strum Law”1, obligating Israel’s two largest banks, Bank Leumi and Bank Hapoalim, to divest their credit card businesses, namely Leumi Card (80% held by Leumi) and Isracard (99.5% held by Hapoalim). These two payment card companies are the largest players in the Israeli payment card market and dominate approx. 76% of the payment card market in Israel (Isracard circa 50% and Leumi Card circa 26%).

 

According to the Strum Law, in order to enhance competition, large Israeli financial and non-financial institutions and corporations are prohibited from purchasing these payment card companies, which in turn promotes and encourages the entrance of foreign players such as PE funds and foreign financial participants (until now prohibited from doing so) to compete for the acquisition of such businesses.


Bank Leumi and Bank Hapoalim are each required to divest their credit card companies within three years. An additional year is granted if at the end of three years, the credit card company is taken public with a free float of 25% in public hands, and no more than 40% remains held by the bank.
Following the sale, Leumi and Hapoalim will be prohibited from engaging in merchant acquiring (clearing) transactions and from providing credit cards issuance processing (but will be allowed to offer and issue credit cards to their clients, set the rate of card issuance and usage fees and provide credit card holders with credit).The banks will be entitled to acquire clearing and issuance processing services from the credit card companies and will not be allowed to engage exclusively with one credit card company.

 

Credit card companies will be entitled to offer the banks’ clients their own credit cards and the banks will only be allowed to offer the issue of new credit cards to existing clients within 45 days prior to the expiration date of a card (subject to certain exceptions).
Bank Leumi and Bank Hapoalim are required to reduce, within the period of four years, the amount of credit provided through credit cards to 50% of the amount provided by them in 2015 (such limitation will be removed at the end of 2023).

 

The regulator of the credit card companies will be the central bank (Bank of Israel), which has announced significant reliefs to credit card companies and their controlling shareholders, as opposed to the regulatory regime applicable to banks and their controlling shareholders.

 

A key element in these sales that will require close attention on the part of the selling banks will be the commercial arrangements to be put in place with the credit card companies going forward. It is expected that a primary objective of the selling banks will be to secure a long term cooperation agreement with respect to an entire host of issues, including clearing and card issuance processing services to the banks, provision of credit by the banks to the credit card companies, use of information and distribution of cards by the banks. This, no doubt, will add a layer of complexity to the transactions and highlight not only the price but the full package of terms.

 

1 The enhancement of competition and limitation of centralization in the Israeli banking market (Legislative Amendments) Law, 2017

 

Download as PDF

 

For more details please contact:
Elite Elkon, Partner
elkon@gornitzky.com
office: +972-3-7109545
Mobile: +972-54-4751168


This client update is designed to provide general information only, is not a full or complete analysis of the matters presented, and may not be relied upon as legal advice.

 

February 16th, 2016

Elite Elkon (Partner) surveys the major changes anticipated to take place in the Israeli Credit Market in a featured article in the prominent UK legal magazine - "The Lawyer"

Elite Elkon (Partner) surveys the major changes anticipated to take place in the Israeli Credit Market, mainly aimed to reduce concentration and to increase and diversify the sources of credit for retail and SMEs, in a featured article in the prominent UK legal magazine - "The Lawyer". In her article, regarding financial law in Israel, Mrs. Elkon sheds light on the changes and new contemplated opportunities arising, including, among others, The Shtrum committees' recommendations to sell the major Israeli credit card companies held by the country's leading banks and easing the regulatory regime on payment card companies.  

 

Read full article

March 29th, 2015

In their article published by Chambers Global, Gur Y. Savir and Yoav Meer give an overview of recent developments in the Israeli economy, including major legislative amendments enacted by the government, such as those to the Companies Law and the “Anti-Concentration Law”, as well as other regulatory developments.

March 17th, 2014

In his article published by Chambers Global, Dubi Gross gives an overview of recent developments in the Israeli economy, as well as amendments enacted by the government, including those to the Companies Law and the Israeli Tax Ordinance.