FirstCaribbean hikes fees on New Year's Day

FirstCaribbean International Bank Jamaica has slapped huge increases on a range of transactions effective New Year’s Day, closing some of the gap between the big- two banks for which fees and commissions are a multibillion-dollar business.

In what appears to be a Caribbean-wide mass mailing out to customers directly from its Barbados office in December, FirstCaribbean advised of the fee hike on some 16 products and services types as of January 1, a move apparently calculated to boost revenues following sizeable income declines on its international and Jamaica operations last year.

The fee hikes range up to 200 per cent in Jamaica. FirstCaribbean Jamaica made J$853.125 million in ‘non-interest income’ – which incorporates fees and commission – at yearend October 2010, representing a 19 per cent or J$204m slide from the previous year’s intake of J$1.06 billion.

Proportionately, non-interest income also fell from 24 per cent to 20 per cent of total net revenue.

For big fee collectors Scotiabank Jamaica and National Commercial Bank, the just under J$5 billion that each take in annually in fee and commission income, represents 14 per cent and 18 per cent of net revenue, respectively.

The new transaction fee increases are spread over FirstCaribbean International and its country operations’ range of services in personal and small- business banking, credit card and corporate services at all locations.

Revising its pricing

The bank’s December circular to clients advised that it would be revising its pricing on products and services including in-branch/over-the-counter withdrawals, debits and cheques; ABM withdrawals and deposits; printing of ABM mini-statements; replacement of lost ABM cards; incoming wires transfers; drafts; cheque books; stop payments; charge backs; non-sufficient funds; night depository wallets and services; and standing orders. Also attracting higher rates are in-branch bill payments; transfers between accounts; duplicate statements; early account closure; dormancy protection; safekeeping and securities; and confirmation letters.

The website of the bank’s local operations, Jamaica’s fourth-largest commercial bank, also details the latest fee hike, but gives no reason for the increases.

The fee for replacing a lost ABM card has gone up 201 per cent, from J$205.75 to J$620.

Price changes to personal banking services include a 112 per cent increase to J$150 for over-the-counter withdrawal on regular saving, up from J$70.60.

There is also a more than 52 per cent rise in the cost of local currency standing orders which, following a previous move from J$156 to J$262.24 at the time of the release of the Consumer Affairs Commission’s banking fee survey in July, has now risen to J$400.

Withdrawals at FirstCaribbean ABMs now attract a J$20 fee per transaction while the charge for withdrawals at the machines of other banks has risen to J$40.

Bill payment via the branch counter will also now attract a cost of J$200. Charges to corporate accounts have also been adjusted, with the minimum monthly fee on business current account moving to J$450 from J$403.43.

Interest rates and fees payable on credit cards will also move upward, but those changes are to take effect in February.

The issue of banks hiking fees to counteract revenues declines, particularly from the Jamaica Debt Exchange (JDX), has been a contentious matter.

Dialogue is now ongoing with sector players and regulators following the publication of the findings of a survey done by the CAC, which confirmed that banks had in fact hiked rates since the Government’s debt reduction scheme.

In that 2010 study, FirstCaribbean Jamaica was among the banks which had imposed the smallest transaction fee increases, with most changes to bank charges reflecting a one per cent move.

Other bank charges at FirstCaribbean, the survey found, had actually gone down.

Since the JDX, fees and commission income has gained importance as a major revenue source for many financial firms, representing the second-largest income stream for banks, the largest being net interest income.