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By Tova Cohen
TEL AVIV, Sept 24 (Reuters) - Two tech entrepreneurs are set to establish Israel’s first new bank in 40 years after the central bank said on Tuesday it approved the plan as part of efforts to spur competition in the sector.
The new digital bank is being set up by Marius Nacht, co-founder and chairman of cybersecurity provider Check Point Software Technologies, and Amnon Shashua, whose self-driving car technology firm Mobileye was acquired by Intel for $15 billion.
Central bank Governor Amir Yaron and banking regulator Hedva Ber said they had notified the two entrepreneurs that they have examined their plans and are prepared to issue a banking license.
Israel’s banking sector is dominated by two large banks, Hapoalim and Leumi, with around 55% of the market. Four smaller banks also operate. Leumi has it own online banking unit called Pepper.
Ber said the regulators, who have been in touch with Nacht and Shashua for more than a year, expect the new bank will boost competition.
“This is an important day,” Ber told reporters by phone. “We think they can make a breakthrough in banking.”
Competitive pressures are expected to prompt Israel’s banks to reduce fees even before the bank begins operations, which is expected in about a year and a half, Ber said.
The digital bank should have lower operating costs than the existing banks as it will not have branches and will focus on retail services including extending credit to households and accepting deposits.
A source close to Nacht and Shashua said that together they will invest $60 million in the bank and expect to bring in more investors who will inject at least another $60 million.
Former accountant-general Shuki Oren will chair the bank.
Ber said the central bank has taken measures to ease the process of establishing a new bank, including reducing the requirement for starting capital to 50 million shekels ($14 million) from 400 million.
Finance Minister Moshe Kahlon on Tuesday urged the central bank to accelerate the process of issuing new licenses, adding that a number of groups are awaiting approval, but gave no details.
Other measures taken to boost competition in Israel’s banking industry included requiring Hapoalim and Leumi to divest their credit card units. ($1 = 3.5107 shekels) (Reporting by Tova Cohen Editing by Steven Scheer and Susan Fenton)