Taiwan banks reluctant to charge ‘account keeping fee’ – The China Post

Most Taiwan banks have no plan to levy a “deposits account keeping fee” from customers who have only a small sum of outstanding deposits in their accounts, although some foreign banks have already taken such a move.Some foreign banks, including Standard Chartered Bank and HSBC (Hong Kong and Shanghai Banking), have started charging a monthly fee from clients with less than NT$10,000 of deposits in their accounts.

Taiwan banks reluctant to charge ‘account keeping fee’ – The China Post – this article is typical of the usual double-speak that English newspapers in Taiwan are guilty of. The story is quite simple: with limited sources of income available, banks are now resorting to charging fees on low deposits. Typically this behavior is being seen in foreign-owned banks, who have already had account minimums for quite some time (another fact that ‘escaped’ the author of this story). The real news in this story is hidden away at the end: “The move of collecting the fee needs to be discussed and approved by the bankers association, he said. The talk about the possibility that Taiwan banks may charge a “deposits account keeping fee” from customers has caused concern from legislators.”

Bank ad by doctor_media Photograph of Shanghai Commercial and Savings Bank, in Taipei.

In real speak, this means legislators and banking organizations are already considering where and how banks charge regular amounts for bank accounts with less than a minimum amount in them. With interest rates as low as they are, it’s unrealistic to expect banks to shoulder these costs in the long term. However, looking after people’s money like this will attract a lot of criticism: why? Because banks are expected to use this money to make more money, it seems unreasonable that they should then make money on ‘free money’ and charge for the privilege of looking after it.

citibank - DSC01282 by yuankuei

A customer who’s charged such a fee will likely terminate their business with any bank that attempts to charge them such a fee. Worse, it may make it more difficult to market to these customers in the future when things get better, and everyone has more money. Customers will remember who tried to short-change them and who treated them with respect.

There’s one local bank I had to open an account with that I hated from the first day I dealt with them. They were unknowledgeable, unhelpful, unprofessional and discriminatory in their treatment of local foreigners. Oddly, enough, the credit card that I have with them through their credit arm has been the perfect opposite of that! Anyway, competition is heating up in the local banking market with local bank consolidating, and foreign players eager to get into the China market. Truly, Taiwan represents one of the few relatively untapped banking markets in Chinese Asia at the moment, still.

I’ve been consolidating and reorganizing both our personal accounts and business accounts for some time, as a result of the credit crisis. While I haven’t got that much money to move around really, I’ve tried to make sure that risk is more diversified between bank accounts. In other words, I wouldn’t want to be locked out of a supply of money due to bank run or temporary closure.

For personal finances, I’ve divided my money between one local and one international bank. For business finances, one month’s emergency cash was deposited in another branch of another local bank. The only weakness in the chain is that personal and business finances overlap in one local bank. I should really do something about that by moving some money to another local bank. Unfortunately, there aren’t many banks in our area at all: and none of the big Taipei city banks have branches here at all.

4 thoughts on “Taiwan banks reluctant to charge ‘account keeping fee’ – The China Post

  1. cfimages

    If banks start charging fees for regular accounts, a lot more people will start getting paid in cash which will lower tax revenues for the govt. Not a good idea.

  2. InvestorBlogger Post author

    While the banks obviously do not like to give customers a free ride, I tend to agree with you, the banks have a responsibility in modern society to see the bigger picture. Fortunately, the govt. found an interesting way to get them to toe the line. They said we've extended a 100% full guarantee for all banks until the end of 2009 for all deposits, so how can you screw your customers over like this, by charging so much for so little deposits. In other words, society has decided to stand by you and provide you with the guarantees you need to survive these demanding times. But if you screw every last cent from your customers, then the government will remove the 100% CDIC insurance that you currently enjoy.

    In these uncertain times, that would be enough to cause a bank run, and bust several of the local banks as well as one or two shaky international banks. Those banks would not recover. The banks tried to put a brave face on it, by saying they're 'postponing' or 'rescinding' such policies. But they would suffer a real loss of face in the market doing this, and there would be a run on the bank as smaller and larger depositors shifted funds to other banks. With money fleeing out the door, and the removal of 100% CDIC insurance, the banks would be at serious risk.

    End result: a huge hoo-ha about nothing. The banks can't get what they want now, the FSC has them over a barrel at the moment. Stupid banks. When things are good, introduce supplementary charges, people won't really notice. Don't wait until there's a crisis like this!

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