Thai FM Korn Faces David vs Goliath Battle Over Banks' Fees

[webfact]

Korn faces Davis vs Goliath battle

By The Nation

Published on September 9, 2010

Finance Minister Korn Chatikavanij's vow to scrutinise banks' fees imposed on customers making financial transactions, mostly through ATMs, won considerable backing on social media yesterday.

But despite getting banks' customers on his side, he will surely have a tough time trying to sway bankers on what is fast becoming their bread and butter.

Before he meets leading bankers today in what promises to be quite a showdown, here are some of the initial reactions gathered from tweets to The Nation as well as messages posted on his Facebook page on the banking issue.

@DD4Wheels: 150? for international withdrawal thru ATM is ridiculously high. Downright robbery

@sathornstreet: Banks are not charities but they shld not be robbers either.

@Pakornw: wholeheartedly agree with Khun Korn, bank fees should not create friction in business.

@AmSarosha: The banks pay us petty interest for our savings money. We don't owe them anymore money. Scrap the fees, I say.

@JorisGeeven: I hope it includes cancelling the hefty Bt150 fee for withdrawals using foreign cards, which is scandalous and unfair.

@kanatporn: not protect bank business, but compare to fees ppl pay for Thai post office is higher than bank fees, poor ppl use this service.

@rebel_bay: well, I just don't feel robbed by bank fees and I use ATMs extensively. Maybe there are more urgent issues to consider?

@LisaMajesty: Haven't seen anyone claim responsibility for the fee. Just institutions pointing at other institutions saying 'not our fault'

@karavikar: Is Easy Pass "insurance fee" relevant here? Cuz I filled application and had money out, but when they said Bt1,000 fee, I left.

@oldskooldi: When you have a lot, Bt25 mite not mean much, but when budget is tight every satang counts

The following is feedback on Korn's Facebook page:

Chamsai Menasveta: finally... some justice to the poor downtrodden hardworking people who are always getting robbed. please don't let them win this one!

Pintira Singhalaka: This will be a glorious victory of David over Goliath!!! You are in our prayers.

Phaisit Phianphithak: Talking from perspective of an ex-banker, fee-based income is what already keeps the interest spread down. One way or another, profit has to come from somewhere. To effectively tackle both u need to simultaneously fix the spread and fee-based without reducing competitiveness of the Thai banking system.

Ke Ket: (translation) Help me please. Bank profits are my blood.

Dee Leesakul: (translation) May God bless you.

Nipoj Jakkrawankul: (translation) Can you really do it??????

Mangkorn Sornkam: (translation) My support. But it's no piece of cake what you're dealing with here.

Taweeyos Nakosiri: (translation) When banks suffer losses, tax money is used to shore them up. And they won't make any change to benefit customers.

Kajonsak Suwattanakorn: (translation) A bit late. But better late than doing nothing.

Pick Pickkie: (translation). Banks are saving their time, space and manpower on services. The transactions cost them very little, so they should cost customers nothing or be very cheap.

-- The Nation 2010-09-09

[cougar52]

While I agree that the banking business needs profits just like other business to survive,

however, don't you think, this is a bit over board. Commercial banks in Thailand are expected to report more than 90 billion baht in profits this year

How much do they need in a year to be profitable????

[RKASA]

Banks normally charge a higher transaction fee for an overseas withdraw plus the exchange rate and conversion fees and then they share these transaction fees with the Thai bank via the third party card handlers ( cirus MC ect) . No one was ever using their ATM's for free and they make the same money as other banks world wide via this completely automated system.

In Thailand they get that deal and the 150baht fee which is added to your withdraw in order to hide it from the foreign bank so they don't have to contractually share it with them - this is making them about 250bt per transaction or twice as much as the other banks world wide. If it was a contractual fee it would be itemized in your account just like other fees are and its the main reason itemizing fees is required.

A CPU does all the work without any person needed. i.e automatic account skimming.

So all the banks get together and start an outrageously high (automatic account skimming scam) in addition to the fee they already get a share of from every transaction and they don't charge them with a crime.

Why even discuss it with them - just charge them for wrong doing.

The other solution would be to ban Thai banks from the ATM system overseas as a way of preventing organized criminal behavior.

[webfact]

BOT pushing for cuts In banks' service charges

By The Nation

Central bank might use its powers to revamp fee structure if commercial banks don't cooperate

Following the Bank of Thailand's meeting with banks today to seek their cooperation in cutting or eliminating service fees, relief is round the corner.

"It was just a session to communicate what we expect. A few days later, official letters will be sent to sound out their opinions. Then, we will screen good ones for further consideration. If things go smoothly, we can call for a meeting for an official conclusion late this month," Chim Tantiyaswasdikul, assistant governor for information technology, said yesterday.

The central bank will use the opportunity to relay the government's policy on recalculating fees, particularly for money transfers. All commercial banks will then be asked to submit their comments within 10 days.

The process would be transparent and open to the public through the central bank's website, he said.

Earlier, Chim said the fee structure would be revamped, with the possibility that fees for inter-provincial deposits, withdrawals and transfers would be waived in the second quarter of next year. Banks may then be allowed to charge higher fees on other services like chequebooks.

The overhaul would better reflect the current cost and banking environment. Earlier, inter-provincial transactions were costly, as banks had to transfer cash to provincial branches on their own. The central bank now accommodates the cash transfers.

Although the central bank would first ask the banks for their collaboration, eventually it might use its powers under the Financial Institutions Business Act to set fees, he added.

Finance Minister Korn Chatikavanij said on his Facebook page that last week he had a discussion on the excessive fees with retiring Bank of Thailand Governor Tarisa Watanagase and her successor Prasarn Trairatvorakul. His graph on the cyber spot showed the rising trend in fees of the banking system, he said.

"The growth rate in Thai banks' fees is among the top in Asia," he said. "At Kasikornbank, fee-based income accounted for 28 per cent of total revenue, but it is expected to rise to 49 per cent this year. Simply put, even if few loans are extended, the bank could post huge profits. This year, the combined earnings of the top four banks - Bangkok Bank, KBank, Krung Thai Bank and Bank of Ayudhya - will increase 25 per cent, from Bt60 billion to about Bt75 billion."

Korn ended his message by saying that today's meeting would ask if the fees were fair. "I have the answer in mind."

Kannikar Chalitaporn, president of Siam Commercial Bank, said on Tuesday that fee waivers or reductions could sting commercial banks financially. Income from inter-provincial transaction fees in large banks is estimated at more than Bt10 billion annually, she said.

A brokerage showed in its research that non-interest income now accounts for 30 per cent of Thai banks' total income, compared to 10 per cent before 1997. Since the financial crisis, banks have tried to raise the non-interest income ratio to cushion economic vulnerabilities. Foreign banks' non-interest income can go as high as 50 per cent, but most of it is from advisory services, while Thai banks' mostly get income from inter-provincial transfers.

Consumers have cried foul over the fees, particularly on inter-provincial remittances. Niroth Charoenprakob, secretary-general of the Consumer Protection Board, said he backs an amendment to transaction fees. He noted that the office has received complaints which have been forwarded to the Bank of Thailand and the Finance Ministry.

According to the Bank of Thailand, commercial banks impose five categories of fees:

- Customers are charged Bt40-Bt100 a year to maintain a savings account.

- For cross-area deposits, withdrawals and transfers, they are charged Bt10 for every Bt10,000 and Bt1-Bt10 for every increment, plus special add-ons at some banks.

- If banks fail to clear a cheque because of insufficient funds, the account holder will be charged 0.20-0.30 of the nominal cheque value.

- When securing a loan with collateral, they are charged an appraisal fee ranging from Bt2,000 to Bt25,000 for a mortgage loan. Appraisal fees for personal loans, mostly to owners of SMEs, could top Bt25,000.

- Then there are application and renewal fees for credit cards.

-- The Nation 2010-09-09

[jonclark]

The Interprovincial fees are blantent theft. How it can be justified is beyond me. Worst iy affects those who are poorest, whilst I am lucky enough to not feel a 25B transaction fee, some of the less well off may not be so lucky and that 25 baht represents an hours work, or thereabouts. Stick a couple of them together and it costs a days work just to get hold of your money.

[12DrinkMore]

To be honest I am surprised that the banks are making such a massive profit from ATM fees, because a withdrawal in the local area from the same bank is free. So with a tiny but of planning it should be possible to pay very little in fees. I generally make withdrawals a month of 5,000 a shot, and pay hardly any fees.

However, if the typical customer is taking out small amounts in the hundreds of Baht range and can't be bothered to find his/hre own bank's ATM machine, then yep, can easily end up paying 5 to 10% fees.

Maybe the issue to be addressed is educating the Thais how to reduce the fee, plan in advance and not be too idle to walk 30 metres further to an "own bank" ATM.

My big gripe with the banks is the piss-poor interest they pay on deposits.

[Thai at Heart]

They are an oligopoly and need to be regulated. Pure and simple.

The inter-provincial charges are indeed ridiculous.

[bkkjames]

I could be wrong but when I pay my phone bill at the bank, there is no extra charge but at a convenience store there is.?

Why don't they charge a small ten baht fee to do this and lower atm fees?

It costs 35 baht to transfer money from one bank to another when it costs nothing to walk into a bank and deposit the cash manually_using additional human resources in the process.

Edited September 9, 2010 by bkkjames

[hammered]

Korn is one fo the few current polticians in the whole mess who seems to actually care people and have ideas. Add this to th tax the nuts off the rich labdholders who just leave land unused and also inheritance tax. In a country with terrible distribution of wealth ideas like these latter two are needed. This bank one may seem like a small issue but is not for many people.

Kudos to Korn. One of the better polticians around

[EODghost]

To be honest I am surprised that the banks are making such a massive profit from ATM fees, because a withdrawal in the local area from the same bank is free. So with a tiny but of planning it should be possible to pay very little in fees. I generally make withdrawals a month of 5,000 a shot, and pay hardly any fees.

However, if the typical customer is taking out small amounts in the hundreds of Baht range and can't be bothered to find his/hre own bank's ATM machine, then yep, can easily end up paying 5 to 10% fees.

Maybe the issue to be addressed is educating the Thais how to reduce the fee, plan in advance and not be too idle to walk 30 metres further to an "own bank" ATM.

My big gripe with the banks is the piss-poor interest they pay on deposits.

Yep, I have a Thai bank account and because the name on the account is not Thai, I get something like .05% interest.

What a racist crock of S@#t. Thanks for nothing Thailand, again.

Edited September 9, 2010 by EODghost

[afarang]

To be honest I am surprised that the banks are making such a massive profit from ATM fees, because a withdrawal in the local area from the same bank is free. So with a tiny but of planning it should be possible to pay very little in fees. I generally make withdrawals a month of 5,000 a shot, and pay hardly any fees.

However, if the typical customer is taking out small amounts in the hundreds of Baht range and can't be bothered to find his/hre own bank's ATM machine, then yep, can easily end up paying 5 to 10% fees.

Maybe the issue to be addressed is educating the Thais how to reduce the fee, plan in advance and not be too idle to walk 30 metres further to an "own bank" ATM.

My big gripe with the banks is the piss-poor interest they pay on deposits.

All well and good, unless you happen to bank with Bangkok Bank, Ban Kruat, where you can wait in a queue for up to an hour to front the teller,Got that amount of time to waste?

[afarang]

Banks normally charge a higher transaction fee for an overseas withdraw plus the exchange rate and conversion fees and then they share these transaction fees with the Thai bank via the third party card handlers ( cirus MC ect) . No one was ever using their ATM's for free and they make the same money as other banks world wide via this completely automated system.

In Thailand they get that deal and the 150baht fee which is added to your withdraw in order to hide it from the foreign bank so they don't have to contractually share it with them - this is making them about 250bt per transaction or twice as much as the other banks world wide. If it was a contractual fee it would be itemized in your account just like other fees are and its the main reason itemizing fees is required.

A CPU does all the work without any person needed. i.e automatic account skimming.

So all the banks get together and start an outrageously high (automatic account skimming scam) in addition to the fee they already get a share of from every transaction and they don't charge them with a crime.

Why even discuss it with them - just charge them for wrong doing.

The other solution would be to ban Thai banks from the ATM system overseas as a way of preventing organized criminal behavior.

Just another sublime example of how clever Thailand is in shooting itself in the foot.They think farang tourists don't talk to there friends when they get back home

[Lindern]

I could be wrong but when I pay my phone bill at the bank, there is no extra charge but at a convenience store there is.?

Why don't they charge a small ten baht fee to do this and lower atm fees?

It costs 35 baht to transfer money from one bank to another when it costs nothing to walk into a bank and deposit the cash manually_using additional human resources in the process.

Not always true. I was in Ubon Ratchathani. I need to pay a business in Bangkok. I went to my bank (Krueng Thai) and withdrew the cash. Walked "across the street" to Kasikorn Thai and had to pay x baht /1,000 to deposit into the companies account.

The problem is that Banks have become big business just like other globalized companies and they are interested in short term profits over long term. If they were truly protecting themselves from downturns in the market, they would be "saving the money for a rainy day" rather than paying it out in profits. It's all greed, pure and simple.

[SamritT]

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

[licentiapoetica]

I may be wrong, but I think the big earner for Thai banks is the difference between the rate on loans the banks give out and the rate the banks pay to borrow money themselves. Yes, the banks make money on fees, too - but it is not their main earner.

I have a joint house mortgage with my Thai wife in a Thai bank and we pay 7% interest a year. The rate the Bank of Thailand charges Thai banks is how much? Less than 2%? 1%? And how much interest do customers get on savings accounts? Maybe 2%? That is a 5 or 6 point difference! In the West banks get about a 1 point difference...

I am not an expert on finance. This is just something I have observed whilst living in Thailand.

Edited September 9, 2010 by licentiapoetica

[Thai at Heart]

This is all part of the cost of having banks that didn't get involved in all the subprime mess and concentrate on fee gouging to make their money.

Good on ya, Korn, break this strangle hold that the local banks have on their money printing industry.

[warfie]

I just got whacked 400 Baht just to be able to use my account for another year!

They pay f-all interest.

They even charge just to issue a <deleted> ATM card!

Don't even get me started on the 150 Baht foreign card thievery!

AND when I was the victim of card skimming a few years ago, they wouldn't cover the loss (don't tell me they aren't insured). Yes, I switched banks after that, but feel no more secure.

All of this while using depositors money to make themselves huge profits! (loans, investments, etc.).

[fxe1200]

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

Even if they (the farangs) may be able to afford it, but there is no voucher for this fee. You will receive 20.000 THB but are charged 20.150 THB. And without a voucher one has no chance to enter this fee into the accounting. I have to pay the fee always privately out of my pocket with no refund from the NGO I work for.

[eltelboy]

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

Even if they (the farangs) may be able to afford it, but there is no voucher for this fee. You will receive 20.000 THB but are charged 20.150 THB. And without a voucher one has no chance to enter this fee into the accounting. I have to pay the fee always privately out of my pocket with no refund from the NGO I work for.

Don't rise to it...you always get a troll when it comes to bank charge forums. They sit in a lonely room somewhere trying to get foreigners to all to start arguing about how unfair everything is and they always say 'Farang can afford it'...dead giveaway of a troll.

[Xircal]

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

Why do you think that way? This is another example of the misconception Thais have that all farang are stinking rich. Some are it's true, but the vast majority are quite the opposite and have to work hard all year round for the chance to take a couple of weeks off in your charming country. You reward them by ripping them off for all they're worth.

You and most other Thais fail to take into account the cost of living in Western countries. In Thailand, you can go to a local restaurant and practically gorge yourself to death for a couple of hundred Baht. The same meal in a Europe will set you back at least 40 Euros which is about 1,600 Baht. It's the same with the cost of housing, energy and water bills, local council taxes, clothing etc., etc.

I note with regard to the foreign withdrawal fees now that the banks have also reduced the amount you can withdraw each time. Bangkok bank used to allow you to withdraw 25,000 Baht in one go, but that's now been cutback to 20,000 B. Other banks won't let you withdraw more than 15,000 Baht, and there's one ATM outside Phuket airport that only allows you to withdraw a maximum 5,000 Baht. Charging 150 B to withdraw that miniscule amount is abhorrent to say the least.

[fxe1200]

I just got whacked 400 Baht just to be able to use my account for another year!

They pay f-all interest.

They even charge just to issue a <deleted> ATM card!

Don't even get me started on the 150 Baht foreign card thievery!

AND when I was the victim of card skimming a few years ago, they wouldn't cover the loss (don't tell me they aren't insured). Yes, I switched banks after that, but feel no more secure.

All of this while using depositors money to make themselves huge profits! (loans, investments, etc.).

I refused to take an ATM card (Kasikorn charges 100 THB p.a.)and explained that to the employee: "By not using the card I help saving jobs at Thai banks."

We should all insists on not using local ATM cards, and rather walk into the bank, draw the "lucky number" and enjoy service performed by human beings.

[JetsetBkk]

Don't rise to it...you always get a troll when it comes to bank charge forums. They sit in a lonely room somewhere trying to get foreigners to all to start arguing about how unfair everything is and they always say 'Farang can afford it'...dead giveaway of a troll.

I think this particular troll has got as close to Thailand as logging in to another Thai forum.

[romano]

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

Wait a minute; ' farang can afford the 150 bath transaction fee?'.This is pure stupidity.So the fee should be related to the fact you can/cannot afford it!!!!!!So why not introduce a 2.000 ATM fee for the Bangkok elite?They can afford it, for sure....It s the typical thai way of thinking, pure in terms of having/not having money and not in terms of economics.

[Cats4ever]

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

Wait a minute; ' farang can afford the 150 bath transaction fee?'.This is pure stupidity.So the fee should be related to the fact you can/cannot afford it!!!!!!So why not introduce a 2.000 ATM fee for the Bangkok elite?They can afford it, for sure....It s the typical thai way of thinking, pure in terms of having/not having money and not in terms of economics.

[Cats4ever]

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

Wait a minute; ' farang can afford the 150 bath transaction fee?'.This is pure stupidity.So the fee should be related to the fact you can/cannot afford it!!!!!!So why not introduce a 2.000 ATM fee for the Bangkok elite?They can afford it, for sure....It s the typical thai way of thinking, pure in terms of having/not having money and not in terms of economics.

[Cats4ever]

Banks normally charge a higher transaction fee for an overseas withdraw plus the exchange rate and conversion fees and then they share these transaction fees with the Thai bank via the third party card handlers ( cirus MC ect) . No one was ever using their ATM's for free and they make the same money as other banks world wide via this completely automated system.

NOT TRUE - ATMs had no fees for many years early on. You still paid currency conversion fees but no transaction fee. This was probably because the banks sold ATMs tp the public by promising cost reductions. As bonusitis took off, they saw fees as a great way to pay the execs.

[bkkjames]

As usual its small picture when it come to people like Samrit. Double pricing here, hefty atm charges there and on and on and on.

People like him probably wish the internet genie was kept in a bottle-unfortuneately the world is on to all these little extras and no matter how rosy a picture tat tries to paint, you only get one +one chance to ruin your reputation.

What's that u say, "no like go home?".

The answer is "no like no coming to fall for it any more."

Actions speak louder than words.

[rotary]

These bank presidents should do 150 years in jail for the crooked 150 baht intl fee. Also folks the exchnage rate ATM vs cash in hand is ATM between 50 stang to 80 stang less than cash plus the 150 baht. can you spell CROOKS??? ha ha

Farang can afford the 150 baht transaction fee. However it is almost 1 day work for Thai people.

Wait a minute; ' farang can afford the 150 bath transaction fee?'.This is pure stupidity.So the fee should be related to the fact you can/cannot afford it!!!!!!So why not introduce a 2.000 ATM fee for the Bangkok elite?They can afford it, for sure....It s the typical thai way of thinking, pure in terms of having/not having money and not in terms of economics.

[asiawatcher]

They are an oligopoly and need to be regulated. Pure and simple.

The inter-provincial charges are indeed ridiculous.

Yes the provincial charges are insane but sadly the majority of the punters in this blog would not understand the word 'oligopoly'. Very appropriate and well defined.

[rubl]

They are an oligopoly and need to be regulated. Pure and simple.

The inter-provincial charges are indeed ridiculous.

Yes the provincial charges are insane but sadly the majority of the punters in this blog would not understand the word 'oligopoly'. Very appropriate and well defined.

For those who have no dictionary:

Oligopoly - a state of limited competition between a small number of producers or sellers (Concise Oxford dictionary, 8th edition)