Article By Amos Shvueli

[Comments are welcome at our Dialogue Corner]

Israeli Citizens' Bank

The undersigned is calling the attention of the readers and asking for any assistance leading to its fulfillment (needed: a sponsor or sponsors):

Establishing A Bank Owned By Israeli Citizens (ICB)

Basic assumptions:

1. The Israeli financial market is controlled by a duopoly, or a triopoly, of mutually synchronized banks, even though it is against the law, and definitely detrimental to our interest (in getting high service quality for reasonable cost).

2. The strong hold of the banks on the market is sustained by economical oligarchy, whose interest is, naturally, in maintaining that control. That oligarchy is so intertwined with the political oligarchy as to make them identical twins.

3. The basic principle operating within those oligarchies is simple - greed. Call it MONEY if you wish.

4. Who pays? We are, Israeli citizens. Who gains? The bank management, the top economical echelons.

5. A great believer in the above assumptions is no less than Mr. Netanyahu, who not long ago declared, "The banks choke the Israeli market". What prompted his declaration? The abnormal profits of those banks even though the Israeli market as a whole was down for over 3 worst consecutive years in its history.

So, instead of keeping our usual strategy of complaining (and paying the banks all the while) I wish to suggest establishing our own bank, the Israel Citizens' Bank (ICB), based on the following main principles:

•     The ICB will be established in accordance with the Israeli banking laws.

•     Its purpose would be maximizing profits and long term growth for the benefit of its shareholders.

•     Shareholders can be any Israeli citizen who has deposited at least one thousand NIS in ICB, and only as long as such amount is kept in the bank.

•     Opening a bank account on that amount will grant a single controlling share to the account owner. The share is not sellable, but is inheritable.

•     An Israeli citizen can hold one share only, regardless of his other accounts and deposits in ICB.

•     An Israeli organization (commercial, public, non-profit, governmental etc.) can hold one share only, regardless of its other financial operations with the bank.

•     Financial or any investor who would assist in establishing ICB, will be able to purchase up to 24% of ICB's controlling shares. In any case, 76% of the total shares will be held by Israeli citizens, one share per account owner citizen.

•     The chairman of the board will be a retired judge of the Supreme Court, for a salary of one NIS per year.

•     The ICB general manager will be a professional, to be chosen by the board of directors, whose total salary will not exceed 12 times the average Israeli market's salary. His severance total cost will not exceed three times his annual cost.

•     Salaries of ICB's management will comply with Civil Service Commission regulations and standards.

•     The personal salaries and remuneration of ICB's management and employees will be transparent to the shareholders.

•     Separate articles of association will govern the periodical gathering of the share holders, which will also regulate the choosing of the board of directors, revising the quarterly and annual budgets etc.

•     Debit and credit interest rates will be identical, or slightly differ in accordance with actual bank operations costs' coverage demands.

•     ICB's profits will be obtained via interest on commercial loans, financial deals and yielding investments, as in any other bank.

•     Once a year, 70% of ICB's net profits will be distributed as dividends to its shareholders: a basic equal amount to each shareholder plus an extra amount proportional to his / her financial deals and deposits in ICB.

•     The other 30% will be utilized to enhance the banks' services and profits.

•     ICB's branches will be established in supermarkets, gas stations, post offices, railway stations, 24 hours restaurants etc. ICB's management will keep its main office outside any major city, choosing an inexpensive location at the periphery.

•     As much as possible, the Internet will be utilized to minimize operational costs.

•     Israeli banking laws will be updated, in order to allow ICB to defreeze 3% of the current frozen amount required by the Bank of Israel, for the purpose of granting very low interest small loans to the needy.

So, dear readers, what say you? "Wow, wonderful, but… it will never happen here. The rich guys and their friends will never allow it to happen!"

My answer:

I) The drastic reduction in the cost of international long distance phone calls proves to all of us what happens when real competition arrives.

II) In far away Brazil, my above-described proposal was take seriously (without my knowledge or consent…): about a year ago, a series of new laws have created a deluge of small banks, private banks, who concentrate on millions of poor people, who so far could not even open a bank account due to banks requirements. (To the interested, please look in European edition, page 40, of Business Week 24/01/2005).

III) Without huge relentless public pressure, the tagging products law (attaching the price on each and every product) would never have been enacted. But enacted it did, right here.

IV) Binyamin Zeev Herzl had something to say too… "If you really wish, it is not a legend". Can you imagine the day Israeli banks will truly begin fighting to have us as their clients?

Amos Shvueli, 3/March/2005

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