Isracard-Esh deal collapse raises questions over Israel’s banking competition push

The cancellation of Isracard's acquisition of the digital bank Esh is a setback for efforts to increase competition in Israel's banking sector. While Esh is still expected to launch independently, the deal would have provided Isracard a shortcut to a banking license and Esh with crucial financial backing. The collapse raises questions about the effectiveness of the Bank of Israel's new "lean banking" reform, which aims to allow financial entities to obtain banking licenses under a lighter regulatory framework. Some financial players have expressed disappointment with the final regulations, arguing that certain requirements, particularly liquidity obligations, still impose significant costs. The Bank of Israel had hoped the Isracard-Esh deal, alongside the expected entry of Revolut, would demonstrate the reform's success and encourage other credit card companies to enter the banking market. Isracard is likely to continue pursuing a banking license, but the path has become more complex.