Before the global downturn, it was a popular gripe in Israel to bitch about the profits of Israel’s banks. Generous bonuses were not a problem, as the private banking sector in particular “willingly” agreed to pay high charges for services rendered.

As the figures for 2Q09 showed, after a downturn for 9 months, normal progress is being resumed. The bankers of Tel Aviv are having fun again.

Outrageous? Far be it for me to recall that Israel has one of the greatest discrepancies in the OECD between the highest and lowest income earners. That is until I read what Mervyn King, Governor of the Bank of England, who stated in Scotland on Tuesday. “Never in the field of financial endeavour has so much money been owed by so few to so many”.

King noted that the worldwide damage caused by the international bankers has resulted in 2.5 million lost jobs in the UK alone. And as in Israel, the bonuses are creeping back in.

True, Israel’s banking system has not been a party to many of the fiascos exposed by the credit crunch. The rules have been tightened since the 1990s. Yet, the recommendations of King still demand serious reflection in an economy where a small handful of financial institutions are dominant.  

King has called for serious reform. And while it is possible to argue that safety nets in Israel are higher, King’s comments about the lack of competition are very comparable. As noted above, Israeli banks play around with high commission fees, despite theoretical supervision from the Bank of Israel.

On Wednesday, the Dail Mail newspaper issued an update on their campaign for fairer bank charges. It appears that UK banks could be forced to repay up to US$35 million to customers, following unfair overdraft charges since 2001. Now there is campaign for some enterprising Israelis to take up.