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

At Spain’s Caixabank, most customers who choose to visit a branch for a service they could have performed via electronic media will be mandated to pay two euros for the privilege.

This latest fee is a dire attempt by banks within Europe that have suffered years of negative interest rates, to begin turning their tides by tasking customers who still rely on dense branch networks.

A spike in the rate of deposits during the pandemic – which banks then have to pay to park at the central bank – is causing several European lenders to start seeking out ways to monetize services they used to carry out without any charges.

“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.

Gortazar’s bank is in the process of finalizing the integration of Bankia which it recently acquired for 4.3 billion euros (US$4.92 billion). The bank has now sent a notification to its over seven million new customers explaining the intricacies of the fee policy. The policy changes also include the branch usage fee which was outlined in a client letter sighted by Reuters.

In addition, charges on a debit card for non-loyal customers are expected to rise to 36 euros from 28 euros if former Bankia clients fail to use a new credit card issued by Caixabank dubbed ‘My Card’, which brings the bank more profitable lending opportunities.

The lender has indicated that the moves are vital and needed to maintain profitability as an institution.