Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Europe's banks turn to fees to kick customers' branch habit

Europe's banks turn to fees to kick customers' branch habit

At Spain's Caixabank (CABK.MC) most customers visiting a branch for a service they could access online will now have to pay two euros for the privilege.

The fees are part of a shift by European banks, suffering from years of negative interest rates, to start turning the screws on customers who still rely on dense branch networks.

A surge in deposits during the pandemic - which banks then have to pay to park at the central bank - is spurring many European lenders to start squeezing money out of services they used to perform for free.

"A main part of our business, taking deposits, is becoming a loss-making activity. What was once part of our core business and profits is now making losses," said Caixabank's CEO Gonzalo Gortazar last month.

With Gortazar's bank about to complete the integration of Bankia following its 4.3 billion euro ($4.92 billion) acquisition, it is sending its more than seven million new customers the details of the fee policy – including the branch usage fee which was detailed in a client letter seen by Reuters.

Charges on a debit card for non-loyal customers could rise to 36 euros from 28 euros if former Bankia clients do not use a new credit card issued by Caixabank dubbed 'My Card', which brings the bank more profitable lending opportunities.

Bankers say it is a necessary move to sustain profitability.

Spanish banks are struggling to earn money from lending, and their revenues declined 2% in the first half of 2021 compared to the same period in 2020, according to the Bank of Spain.

BBVA (BBVA.MC) now charges 2 euros for withdrawing less than 2,000 euros at a branch, while Santander will charge some clients up to 240 euros a year just to maintain a bank account if they don't meet certain conditions.

"All our competitors are doing similar things. You just can't give away all services for free," a deputy retail head of a big Spanish lender said on condition of anonymity.

RISING FEES


In Germany, banks are also introducing new fees.

From Nov. 10 DKB bank has started charging new customers fees on accounts with more than 25,000 euros, while ING clients will start paying 99 cents a month from next March for debit cards, on top of a 4.90 euro charge a month for accounts that was introduced in 2020.

In Italy, consumer association Altroconsumo said in September that the cost of bank accounts with home banking services had increased by an average of 11-15% in 2021.

The 2021 McKinsey global payments report released in October said the shifts are a response to the billions of dollars of revenue lost in net interest income at European banks during the past decade of low or negative rates.

Commissions at Spanish lenders rose 16% in the second quarter to 4.18 billion euros ($4.83 billion) from a year ago, while mortgage lending grew just 0.54% in the same time.

As of end-June, the ratio of Spanish banks' net fee and commission income to their total net operating income was around 25%, below the 32% average for European banks and well below the almost 40% for Italian banks and 37% for German banks, data from the European Banking Association (EBA) showed.

VULNERABLE CUSTOMERS


Some officials are warning of risks of growing financial exclusion caused by the changes, despite banks' efforts to provide exemptions for elderly customers.

"Although the closure of branches in rural areas can be justified by the search for profitability and a decline in demand, this reduction affects the population, especially in relation to access to cash, which cannot be covered, like other banking services, through electronic banking," the Bank of Spain said in its latest annual report.

Even in cities like Madrid, older clients can feel left behind.

"I received an electronic notification about potential hikes in fees but my PC is not working properly and I struggle to use the app on my mobile," said 78-year-old Carmen Reyes, who said she has been a Bankia customer for 70 years.

"If they close my branch I would leave."

($1 = 0.8734 euros)

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
×