Public gets no change out of banks on service fees

LEADING banks in Namibia on Tuesday remained largely mum on public concerns about high bank charges.Efforts by The Namibian to seek clarity from the banking industry proved fruitless despite assertions by leading banking institutions that their charges are in line with the cost of service delivery.

A public relations officer at First National Bank (FNB) Namibia declined to comment on the issue. “I cannot say anything on that,” she said.FNB’s Automated Teller Machines (ATMs) yesterday displayed messages reading: “If you are concerned about our bank charges, please contact our head office for more information.”Standard Bank’s public relations manager referred this newspaper to the managing director, who was out of the office.Marlize Horn, head of corporate communications at Bank Windhoek, said her bank was taking note of the public outcry.She said bank charges were an industry issue, and there needed to be a holistic approach.”Certainly we take note of the matter.In fact, ever since the Finance Minister made the revelations in her Budget statement, we have taken the issue seriously,” said Horn.When she presented the Budget in May, Minister Saara Kuugongelwa-Amadhila said: “I must also express my concern with the high fees levied by our banks for services rendered.These have crippling effects on the banking customers and especially small and medium enterprises, and the sector is called upon to ensure that their fees structures are fair and are supportive of business expansion.”PUBLIC CONCERN Members of the public remain worried about the cost of banking.They feel that the charges are not in line with services delivered.One member of the public, writing to The Namibian’s letters pages last week, protested bank service charges and urged the authorities to act decisively.According to the Namibian Economic Policy and Research Unit (Nepru), the fact that Namibia’s banking industry is dominated by a few large banks is cause for concern.Namibia has five commercial banks, namely Standard Bank, First National Bank (FNB) Namibia, Bank Windhoek, Nedbank and the Agricultural Bank of Namibia (Agribank).Nepru said the monopolistic environment was largely responsible for increased social costs which manifested themselves in the form of low deposit rates and high service charges.Leading economist Martin Mwinga on Tuesday declined to comment on the issue.However, in an earlier interview, Mwinga said he believed service charges were in line with the cost associated with maintaining bank accounts.He compared it to the cost of telephone services associated with electronic services.Mwinga said on one hand it was relatively expensive to pay companies handling cash; on the other hand, depositors needed to be aware of the number of electronic transactions effected in a given time.But according to Nepru’s analysis of the local banking industry, more could be done in relation to service delivery.As a way of saving depositors and aiding the development of the banking sector, Nepru urged Government to intervene directly by seeking application of administratively determined bank interest rates.That implied the central authority would chip in and dictate the rates.However, economic analysts shot down the argument, saying the move would lead to a breakdown in the open-market mechanism.Government intervention was seen as interference with an open-market system, which could dent Namibia’s image as a capital-friendly environment.It was also feared that the move could have negative implications on foreign investment and economic growth.However on another level, Government could encourage cross-market mergers from banks outside the region as opposed to the within-market and cross-border mergers that have occurred so far.The central authority, said Nepru, could promote the use of alternative savings vehicles such as unit trusts, stocks and bonds, which would help to stimulate financial market development.Nepru further urged Government to revive the Namibia Stock Exchange’s formal bond exchange and thus encourage the use of alternative borrowing vehicles.”I cannot say anything on that,” she said.FNB’s Automated Teller Machines (ATMs) yesterday displayed messages reading: “If you are concerned about our bank charges, please contact our head office for more information.”Standard Bank’s public relations manager referred this newspaper to the managing director, who was out of the office.Marlize Horn, head of corporate communications at Bank Windhoek, said her bank was taking note of the public outcry.She said bank charges were an industry issue, and there needed to be a holistic approach.”Certainly we take note of the matter.In fact, ever since the Finance Minister made the revelations in her Budget statement, we have taken the issue seriously,” said Horn. When she presented the Budget in May, Minister Saara Kuugongelwa-Amadhila said: “I must also express my concern with the high fees levied by our banks for services rendered.These have crippling effects on the banking customers and especially small and medium enterprises, and the sector is called upon to ensure that their fees structures are fair and are supportive of business expansion.”PUBLIC CONCERN Members of the public remain worried about the cost of banking.They feel that the charges are not in line with services delivered.One member of the public, writing to The Namibian’s letters pages last week, protested bank service charges and urged the authorities to act decisively.According to the Namibian Economic Policy and Research Unit (Nepru), the fact that Namibia’s banking industry is dominated by a few large banks is cause for concern.Namibia has five commercial banks, namely Standard Bank, First National Bank (FNB) Namibia, Bank Windhoek, Nedbank and the Agricultural Bank of Namibia (Agribank).Nepru said the monopolistic environment was largely responsible for increased social costs which manifested themselves in the form of low deposit rates and high service charges.Leading economist Martin Mwinga on Tuesday declined to comment on the issue.However, in an earlier interview, Mwinga said he believed service charges were in line with the cost associated with maintaining bank accounts.He compared it to the cost of telephone services associated with electronic services.Mwinga said on one hand it was relatively expensive to pay companies handling cash; on the other hand, depositors needed to be aware of the number of electronic transactions effected in a given time.But according to Nepru’s analysis of the local banking industry, more could be done in relation to service delivery.As a way of saving depositors and aiding the development of the banking sector, Nepru urged Government to intervene directly by seeking application of administratively determined bank interest rates.That implied the central authority would chip in and dictate the rates. However, economic analysts shot down the argument, saying the move would lead to a breakdown in the open-market mechanism.Government intervention was seen as interference with an open-market system, which could dent Namibia’s image as a capital-friendly environment.It was also feared that the move could have negative implications on foreign investment and economic growth.However on another level, Government could encourage cross-market mergers from banks outside the region as opposed to the within-market and cross-border mergers that have occurred so far.The central authority, said Nepru, could promote the use of alternative savings vehicles such as unit trusts, stocks and bonds, which would help to stimulate financial market development. Nepru further urged Government to revive the Namibia Stock Exchange’s formal bond exchange and thus encourage the use of alternative borrowing vehicles.