Resumo de Domestic Banks Stop Providing Free Services

Chinanews, June 7 ? Once the restriction on foreign-invested banks of providing RMB business is lifted according to fully opening policy, the situation in which consumers vote with their feet will soon come up, an article in The Beijing News said today.
According to the Yangtze Evening News, domestic banks had recently begun to charge fees for cross-bank inquiries and it was criticised by the public. As a matter of fact, the charging items have jumped by 30 in two and a half years since October, 2003. Previously, the banks didn?t charge depositors for opening accounts, reporting the loss, changing cards, cross-bank transfer and other financial services.
A person related with banks said that the total charging items of commercial banks might exceed 100 and dozens of fees were still not charged according to related regulations.
The article of The Beijing News said that the era of free banking services had gone for good. It is undoubtedly a bad news for most of depositors.
Why have domestic banks, especially the Big Four state-owned banks, begun to charge depositors? The answer might be found from the rush of their overseas public listing.
The protection for domestic banks will come to an end with China fully opening up its financial industry this year. Faced with the challenge from foreign rivals which are expected to enter the Chinese market on a large-scale, domestic banks are in a disadvantageous position in terms of capital, professionals and innovation. The only way out for domestic banks is to reform, and the only solution is to go public in overseas markets.
But as a premise of overseas listing, banks are required to maintain at least 8% in their BIS Ratio according to Basel Concordat. For domestic banks with large-scale bad accounts could on the one hand require investments from the government to decrease the bad accounts, on the other hand, explore other channels to increase capital funds.
Since the banks have failed to certain degrees to innovate enough products and services launched in recent years, they have chosen the way to charge consumers for many items which were free before.
But for domestic banks, the dangerous situation of consumers ?voting with their feet? will soon come up, once the restriction on foreign-invested banks of providing RMB business is lifted.
The report said that the credit the domestic banks had gained for dozens of years would be lost and their consumers would be finally driven to the foreign banks.

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