Back To Top

Banks promise to lower service charges

Lenders respond to public criticism over high commission fees

Commercial banks bowed to pressure from the public and financial authorities, and disclosed their plan to lower or scrap over 100 services charges they impose on trivial electronic services.

A joint letter from 18 local banks was sent to the Financial Supervisory Service where they agreed to cut major service charges, including discounts of up to 50 percent for using cash machines.

The banks agreed to decrease the number of service fees by completely phasing out fees charged on a low-income basket. Woori Bank, the country’s biggest bank by assets, currently has the most complicated transaction service system with 195 types of charges, followed by Kookmin and Hana, with 135 and 116 fee categories, respectively

The move comes as a response to public fury over the industry’s record high profits and employee payroll this year on the back of declining business conditions in most other industries. Recent reports detailing how financial malpractice caused 274 billion won of losses last year made the animosity worse, exerting pressure on banks to cut service charges.

“I have ordered that we get rid of all unnecessary service charges from the over 100 types we currently impose. I believe other banks are also in the process of eliminating fees,” an executive at a local bank said.

An official at Woori Bank said the bank is nearly halving the number of fee types.

“We may be bundling fees collected through internet transactions and some of those we never actually collect will be scrapped,” he said.

Hana Bank will scrap the 600 won fee charged for wiring money outside bank hours. Shinhan will charge 800 won for withdrawing more than 100,000 won in cash from non-Shinhan ATMs, down from 1,200 won. Banks in general will waive fees for customers who frequently use cash machines.

Commercial banks are set to post record profit in the third quarter, helped by wider margins as they hiked loan rates while lowering deposit rates. A major shift of funds was made from savings banks to commercial banks in the past few months after 16 lenders from the secondary banking sector were suspended this year.

By Cynthia J. Kim. (
catch table
Korea Herald daum