Dim Amor

In October 2023 (07.10), Discount Bank announced it would increase automatic credit frameworks for its customers during the war period. However, a former businessman with a 65% disability found himself entering bankruptcy proceedings after the bank canceled the overdraft and credit framework granted to him. The case, which occurred during the "Iron Swords" war, illustrates the sharp gap between the bank's declarations and their actual implementation.

The businessman closed his business with the outbreak of fighting, having already dealt with the consequences of the coronavirus pandemic and the unstable economic situation. Although the business survived the coronavirus period, the next blow – the outbreak of war – was too difficult and did not allow for its continued existence. When he approached Discount Bank requesting a temporary credit framework increase of 60-70 thousand shekels to bridge the difficult period, he was met with categorical refusal. Instead, the bank canceled the existing overdraft framework and demanded repayment of all his previous debts.

To clarify his situation, the man presented documents proving that government bodies – who were among his clients – froze their payments, and that additional clients canceled their commitments. Despite this, the bank did not take into account that the state itself delayed payments, thereby preventing him from the ability to pay his debts.

The difficult economic situation led the businessman to severe deterioration. In the absence of ability to purchase basic food, he was forced to collect food from garbage cans and rely on neighbors' donations. As a person with a disability, he also lost the ability to finance required medical examinations and medications. The situation reached the point where he could not pay for communication services, preventing him from contacting the bank.

According to legal documents, until the outbreak of war the businessman managed his account without a debt balance, paid his obligations on time, and maintained proper relations with the bank. However, when he fell into temporary distress due to exceptional circumstances beyond his control, the bank refused to extend a helping hand.

Parallel to the financial difficulties, the businessman dealt with debts that accumulated as a result of closing the business, including electricity, rent, municipal taxes, and payments to suppliers. Local authorities froze payments that were due to him, which worsened his financial situation.

Discount Bank began applying legal pressure through lawyers and eventually sued the businessman. The lawsuit was filed despite the fact that the lawyer representing the defendant in bankruptcy proceedings sent the bank a letter announcing his intention to open bankruptcy proceedings before filing the lawsuit.

In the request to the court, the businessman clarified that he does not intend to evade his debts and that within the framework of bankruptcy proceedings he would be required to deal with all his debts. He requested a default judgment and to instruct the bank to file its lawsuit within the framework of bankruptcy proceedings.

The case raises fundamental questions regarding the gap between the marketing messages the bank presents to the public and its actual policy. While Rotem Sela stars in the bank's advertisements under the slogan "Discount with You" and promises support for small businesses in times of distress, the reality experienced by the businessman was completely different.

In the absence of accurate data on the scope of similar cases, it is difficult to determine whether this is an exceptional incident or a broader phenomenon. However, the case raises fundamental issues regarding how banks deal with their customers who fall into financial distress during periods of national crisis.

The businessman reported that only thanks to his sister, who mobilized to help him and finances his legal representation, he managed to begin organized bankruptcy proceedings with the goal of rehabilitating his life and exiting the cycle of debt. The lawyer representing him in bankruptcy proceedings sent the bank notice of intention to open proceedings, but the bank chose to continue with the legal lawsuit.

In response to the claims, Discount Bank rejected the claims and continued to demand the debt. The bank is represented by lawyers from the Mazor, Hakim, Beit Lahmi & Partners law firm.

The case emphasizes the importance of examining bank policy in dealing with customers during crisis periods, especially when dealing with people with disabilities or exceptional circumstances. The arising question is whether banks fulfill their public commitments to support their customers in times of distress, or whether these are merely marketing promises.

Selected Quotes from the Court Request Filed on Behalf of the Defendant

"The defendant, out of deep respect for the judicial system and precious judicial time, brings before the honorable court his difficult story, which began with the outbreak of the 'Iron Swords' war on October 7, 2023. Until that day, his financial life proceeded without blemish – without debt balances, with regular payments, and proper relations with the plaintiff bank. But in the hour of national distress, he found himself facing a wall of banking indifference that refused to extend a helping hand.

The absurdity, according to the defendant, cries out to heaven: while Rotem Sela's image stars in prestigious campaigns under the slogan 'Discount with You,' in practice it is – 'Discount against you.' His request for a temporary credit framework, totaling only 60-70 thousand NIS, was rejected, despite the fact that this could have bridged the crisis period and returned the debt in full.

With the outbreak of war, payments due to the defendant were frozen, and simultaneously the bank refused to provide assistance. The defendant, with a 65% disability, quickly deteriorated to a state of inability to purchase food, pay for basic needs, and even reach medical examinations. His condition deteriorated to the point of collecting food from garbage cans and relying on neighbors' donations.

The defendant emphasizes that he does not intend to evade his debts, and that he has already begun organized bankruptcy proceedings. He requests that the bank's lawsuit be heard within the framework of this procedure, while maintaining the principle of equality among creditors, thereby avoiding waste of precious judicial resources.

'This is a cruel paradox,' the defendant concluded, 'where a financial institution that prides itself on slogans of assistance and standing alongside its customers is itself the one pushing them to the brink of the abyss'".

Discount Bank is represented in the lawsuit by its attorneys, lawyers Ron Hakim (license no. 37380) and others, from the Mazor, Hakim, Beit Lahmi & Partners law firm.

Discount Bank's Response

In accordance with the honorable court's decision of March 23, 2025, the bank filed its response to the case. Already at the outset it is clarified that the defendant's request does not meet the requirements of law and therefore should be rejected. Insofar as the defendant has substantive claims against the lawsuit, he must act in accordance with the law and file an organized defense statement in which he will raise his claims. We expect the defendant to respect the court and use clean and respectful language.

Beyond necessity it should be emphasized that from reading the defendant's request it emerges that not only does he not deny the existence of the debt, but he even explicitly admits to it. From checks the bank conducted in computerized systems, both at the time of filing the lawsuit and at this time, no indication was found that the defendant is in insolvency proceedings. Insofar as an order to open proceedings was given in his matter, he should have presented it to the court and delivered it to the bank. Insofar as a request was filed for granting an order to open proceedings, as long as such an order was not given – there is no stay of proceedings in his matter. It is understood that if and when an order to open proceedings is given regarding the defendant, the bank will petition with an appropriate request to stay proceedings in the case.

In light of all the above, the bank's position in this case has been fully clarified before the court.

Discount Celebrates Massive Profits – Customers Groan

Discount Bank published its financial results for the first quarter of the year, showing a net profit of 1.1 billion shekels – an increase of 6.7% compared to a profit of 1.04 billion shekels in the corresponding quarter last year. The profit reflects a return on equity of 13.6%, a decrease from 14.1% last year. However, despite the erosion in return, the bank plans generous profit distribution to shareholders: 446 million shekels as cash dividend, constituting 40% of profit, and self-purchase of shares worth 111 million shekels, an additional 10% of profit. In total, this represents distribution of half the net profit – the maximum distribution rate approved by banking supervision.

In the first half of the year, Discount's net profit totaled 2.15 billion shekels, a modest increase of only 2.7%, with return on equity of 13.3% – the lowest in the banking system for this period. Alongside this, the bank presents a significant structural change: following progress in the Cal sale process, company reports present credit card activity as "discontinued activity" for the first time, with results presented separately from bank results.

This increase in profitability occurs despite a sharp decrease in provisions for credit losses – only 60 million shekels in the quarter, compared to 191 million shekels last year. In the entire half, provisions totaled 112 million shekels, almost half the volume of provisions in the corresponding period last year. Conversely, the bank's commission income recorded a surge of 10.3%, particularly in securities commissions that grew 12.2% to 101 million shekels, and financing business commissions that nearly doubled and reached 70 million shekels.

Alongside revenues, the bank had to deal with factors that hurt the profit line: a regional court ruling in Tel Aviv required credit card companies to pay VAT on part of their foreign exchange transactions retroactively from 2012, requiring Discount to set aside 75 million shekels. Additionally, the bank paid 86 million shekels in special tax imposed on banks for 2024-2025, although other banks chose not to exclude this payment from their reports.

Another factor that hurt results is erosion in the financing margin: from 1.6% in the corresponding quarter to 1.4% now, and when neutralizing current account balances that don't bear interest – a sharp drop from 1.4% to 0.9%. Inflation, which stood at only 1.3% compared to 1.6% last year, also reduced financing income, which stood at 2.9 billion shekels – a marginal increase of only 1.9%.

In the credit sector, the bank recorded overall growth of 3.7% since the beginning of the year and reached a credit portfolio of 277 billion shekels. Credit to large businesses grew at an impressive rate of 7.4%, mortgages grew 4%, credit to small and micro businesses rose 3.5%, while household credit barely changed – a negligible increase of only 0.4%.

Simultaneously, the bank signed a new collective agreement with the workers' committee, to be in effect until 2027. The agreement includes termination of employment for 75 permanent employees, limitation of sick day accumulation, and monthly salary additions averaging 500 shekels per employee (except employees with personal contracts) – subject to their performance. According to bank management, these agreements are not expected to have a material impact on profitability.

These data illustrate the gap between public sentiment, particularly customers, and business reality where a major bank in the country succeeds in increasing profits and distributing hundreds of millions of shekels to shareholders, even when some of its customers deal with increasing cost of living, high credit costs, and commissions that continue to rise. While Discount presents nice profitability and implementation of aggressive distribution strategies, erosion in financing margins alongside modest growth in certain areas may indicate challenges that will require the bank to find additional sources to maintain the pace of profitability in coming years – without further deepening the cost burden on the general public.

Photo of Rotem Sela in Discount Bank advertisement; use of photo in accordance with section 27a of the law