By Jesús Aguado and Tom Sims

MADRID/FRANKFURT – Customers who visit a Spanish Caixabank branch to access a service that they can now access online, will have to pay 2 euros. These fees represent a move by European banks to reduce the dependence on branch networks after years of low interest rates. European lenders are beginning to squeeze money from services that were previously free due to a surge in deposit volume during the pandemic. Deposit taking is a major part of our business and is now a losing activity. Caixabank’s CEO Gonzalo Gortazar said last month, “What was once part of the core business and profits are now losings.” 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.

A debit card that is not for loyal customers can have charges of 36 euros as opposed to 28 euros. This could happen if ex-Bankia clients aren’t using a Caixabank card called ‘My Card.’ The bank has more lending opportunities and the cost may rise. It is necessary to maintain profitability, according to bankers.

The Bank of Spain reports that Spanish banks struggle to generate income from lending and have seen their revenue drop by 2% over the past half of 2021, compared with the same time in 2020. BBVA now charges 2 Euros for withdrawals less than 2,000 euro at a branch. Santander (MC 🙂 can charge up to 240 € per annum to clients to open a bank accounts if they do not meet specific conditions.

All our competition are doing the same thing. A Spanish bank deputy retail head said that you can’t offer all services free of charge.

INCREASING FEES

Banks in Germany are now charging new fees.

DKB Bank has begun charging customers new fees for accounts worth more than 25,000 Euros. ING clients will be paying 99c per month starting next March. The 4.90 euro per month charge was added in 2020 for accounts.

Altroconsumo, a consumer organization in Italy stated in September that bank accounts with home-banking services have seen an increase in cost by 11-15% annually.

According to McKinsey’s global payments report 2021, released October 20, the shifts were a result of the loss of billions in revenue at European banks due to low and negative interest rates over the last decade.

The second quarter saw Spanish lender commissions rise 16% to 4.18 billion euro ($4.83 billion). Mortgage lending was up 0.54% from last year. This is below the average of 32% for European banks. It’s also below the 40% and 37% of German banks. Data from the European Banking Association (EBA), showed.

VULNERABLE CUSTOMERS

Although banks are trying to make exemptions available for senior customers, some officials warn that there is the possibility of financial exclusion.

According to the Bank of Spain’s latest annual report, “While the closing of rural branches can be justified by the pursuit of profitability and a decrease in demand,” this decline affects the people, particularly in relation to cash access, which is not covered through electronic banking.

In cities such Madrid, clients older than 50 can sometimes feel lost.

Carmen Reyes (78) said that she received an email notification regarding potential fees hikes but her computer isn’t working correctly and it was difficult to use the mobile app. She said she had been a Bankia customer since 1970.

“If they closed my branch, I would move.”

($1 = 0.8734 euros)