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New policy will permit share buybacks for Israeli banks due early July

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New policy will permit share buybacks for Israeli banks due early July

Israel's banking regulator will implement new rules in early July enabling local lenders to repurchase their shares in addition to paying dividends, Reuters reported.

"I believe that most banks with capital buffers will use the buyback option once we publish it," Hedva Ber, supervisor of banks at Bank of Israel, told journalists. She added that the new policy will outline the requirements for banks to buy shares back.

The move potentially raises the attractiveness of bank stocks as the sector braces for more competition from financial technology firms in the coming years, according to the report.

Russell Echlov, portfolio manager at Mendon Capital, welcomed the development as a "good" initial step, saying that it "will be accretive to earnings and book [value] in most cases." Hedge funds expect more Israeli banks to announce buyback programs once the new policy is in place, the newswire added.

Ber also said local and foreign institutions and private equity funds have expressed a keen interest in acquiring credit card firms from Israel's biggest banks, which are required by law to sell their credit card units or reduce their holdings to below 40% by January 2020.