Jamaican banks had most ‘low fees’ among regional counterparts

BY STEVEN JACKSON Business reporter

Wednesday, March 19, 2014    

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MOST banks in Jamaica offer the lowest regional charges on current and saving accounts but higher fees for many other things, according to the final report on bank fee published by the Bank of Jamaica (BOJ) this week.

The document entitled 'Report on Survey, Fees and Charges of Deposit-Taking Institutions' analysed some 56 transactions among five regional banks within select territories.

The greatest number of low charges were found in Trinidad and Tobago while Canada offers the highest.

"Compared to regional and international affiliates, fees and charges of Jamaican banks range higher and lower than their counterparts," said BOJ in its finalised report released on Monday. "In most instances, highest overall fees are in jurisdictions outside of Jamaica.

"RBC Jamaica, FirstCaribbean International Bank Jamaica (FCIBJ) and National Commercial Bank (NCB) had a higher incidence of 'lowest' fees compared with their regional/international counterparts. Instances of higher fee income to total revenue were also seen in a number of other jurisdictions."

The report's tables indicate that compared with regional counterparts, FCIBJ offers the lowest charges on its current, saving and credit cards; Bank of Nova Scotia (BNS) Jamaica offers the lowest current account charges; RBC Jamaica offers lowest charges on its saving, current and electronic banking; and NCB offers the lowest charges on its saving account (compared with its regional branch in Cayman Islands).

The BOJ compiled the survey as requested by Parliament. It's part of a review to determine whether banks are charging to compensate for fall in profits.

"In terms of fee income, of the four banks submitting data on regional affiliates and/or international parent companies (Bank Nova Scotia (BNS), Citibank (CBNA), FCIBJ and NCB), two Jamaican banks reported the highest comparative ratios of total fee income to total revenue relative to their affiliates (FCIBJ - 19 per cent and NCB 25.3 per cent). None of the local banks had the highest return on average assets relative to their respective counterparts," stated the final report.

In January, the BOJ released its Interim Survey on Fees and Charges of Deposit-Taking Institutions.

The BOJ sought to achieve a common basis for regional comparison of fees by factoring an exchange rate conversion as well as distinguishing the impact of various rates of consumption taxes and or value-added taxes which may be included in charges.

The interim report showed that roughly 23 cents from every dollar earned by local commercial banks were earned from fees, which totalled an estimated $18.5 billion in 2013, according to the survey. It added that these fees increased 12.6 per cent year on year amid profits dipping by one-third at these institutions.

The Jamaica Banking Association said on its website that fees are necessary to recover some of the operational costs associated with providing their services, which include staff, location, security, technology, and back-office processing.

"In terms of cost recovery, over the five calendar years up to 2013, commercial banks' Fee Income (excluding fees for loans processing) in relation to overhead expenses has fluctuated between 26.5 per cent in 2009 and 28.5 per cent in 2013 (which compares to a ratio of 28.4 per cent in 2008), suggesting a relatively stable rate of overhead cost recovery by that sector over the five-year review period," stated the final report.

In November, the Economy Production Committee of Parliament, expressed concern on bank fees, which ultimately led to the reports.

The BOJ conducts an annual bank fee survey which started some three years earlier following a similar uproar over bank fees. However, previous reports remain difficult to find on the BOJ website.

The final report stated that BNS data was provided for Canada and Trinidad and Tobago. Canada reflected the highest fees on 23 items and Trinidad and Tobago the lowest fees on 22 items. CBNA data was provided for New York and five regional jurisdictions.

The BOJ indicated that Haiti had the highest CBNA fees for six items whilst the Bahamas had the lowest fees for 15 items.

FCIB data was provided for Canada and three regional jurisdictions (FCIB Bahamas, Barbados and Cayman Islands). Canada had the highest fees for 16 items, and Jamaica the lowest fees for 27 service items, stated the BOJ.

NCB only has Cayman regional operation, which tended to offer higher fees where comparable, said BOJ.

RBCJ submitted data for two regional affiliates including Bahamas and Barbados. Bahamas had the highest fees for 12 items and Jamaica the lowest fees for 23 items.

"The four banks with international parent banks/head offices all reported challenges in obtaining both fee and fee income data. Notably, the Bank of Jamaica was advised by the banks that fees are "bundled" in Canada. As such, disaggregation into discrete fees for specific services were a challenge. Additionally, the fee income breakdowns requested were not readily available in some instances," stated the BOJ final report.





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