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Further Bank Fee Increases Likely

Posted June. 27, 2004 22:29,   


Banks that have raised commissions for automated teller machines (ATM) by a large amount in June of this month will raise other commissions as well next month.

Considerable resistance from customers is expected since banks will raise commissions for internet banking and telebanking that have been cheaper previously for supply expansion purposes.

The Industrial Bank of Korea said on June 27 that it will raise its remittance charge to other banks through telebanking ARS by 20 percent, from 500 won to 600 won, starting from July 12. Also, the remittance charges through a telebanking consultant will rise from 300 won to 500 won in case of transactions between branches of Industrial Bank and from 800 won to 1,000 won when sending to other banks. Remittance charges to other banks through internet banking will rise from 500 won to 600 won.

Korea First Bank, which raised its ATM commissions by 25 percent in June, will raise its charge for publishing a cashier’s check from 50 won to 100 won. Commissions for sending less than one million won to other banks at casher’s windows will increase from 2,000 won to 3,000 won.

Woori Bank has already raised its commission for ATM cash withdrawals outside business hours from 500 won to 600 won.

Analyzing the cost for overall commissions, Kookmin Bank will extensively raise commissions from August, if not earlier. As the biggest domestic bank, if Kookmin Bank increases commissions, it is likely that other commercial banks will follow the trend.

A person interested in commercial banking said, “There are many cases in which commissions in banks are far behind the cost,” and explained, “In a difficult situation where profits are hard to gain due to low interest rates, banks have no other choice than to increase the commissions.”

However, consumers’ unions are resisting this with the idea that banks are trying to shift the profit decline caused by management fault to the customers.

Lee Eun-young, the director of the Citizens’ Alliance for Consumer Protection of Korea, criticized banks, saying, “Banks that have already pulled down the quality of their service by adopting automated machines for the purpose of decreasing labor costs are increasing their commissions more even after the introduction of automation.”

Chang-Won Kim Joong-Hyun Park changkim@donga.com sanjuck@donga.com