Bank charges hike sparks outcry

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A decision by Cyprus’ two largest lenders, Bank of Cyprus and Hellenic, to impose new charges has sparked a customer backlash, as it is the second time in two years, they made significant increases.

Bank of Cyprus has decided to double the charge for a current account from €6 every three months to €12 every three months, as of February 2022.

This follows an increase from €3 every three months to €6 in January of 2020.

Hellenic Bank clients will see the cost for a current account go from €2 per month to €2.90.

For savings accounts, an annual cost of €5 will increase to €5 every three months, with clients paying €20 annually.

The Bank of Cyprus will also be charging €20 per year for savings accounts, with no previously imposed charge on such accounts.

The Association for the Protection of Borrowers has fired against banks, calling their latest decisions “unacceptable and provocative”.

The association has also called for the prompt intervention of the Central Bank.

The Cyprus Consumers Association has also called on the Governor of the Central Bank and the Finance Minister to intervene as “the only officials who can do anything about the new charges”.

Head of trade union federation SEK, Andreas Matsas, said: “There are things that could have been avoided”, noting that simple transactions, such as proof of payment, could cost customers €5.

Central Bank governor Constantinos Herodotou has asked for an investigation into the matter.

Herodotou recalled that in February 2020, the CBC had conducted a study on the subject submitted to the Finance Ministry.

The study included several measures proposed regarding charges imposed by banking institutions on payment accounts with basic features.

In the context of this study, the Ministry of Finance issued a decree in August 2020, which established a maximum charge (ceiling) of €36 for each calendar year and the imposition of zero charges for cash withdrawals via ATMs.

Hellenic Bank argued that the changes announced were “based on the decree by the Ministry of Finance and in no case do they contravene it”.

Its basic account costs €1.50 per month to maintain and includes issuing a debit card.

A source said the new changes aimed at “simplifying and packaging banking services” and advised customers only to keep as many accounts as needed.

They further advised customers to either open a new account and/or convert one (or more) of existing savings account into a basic account at a Hellenic Bank branch or through Web Banking.

The Finance Ministry clarified that protection measures are only applicable to payment accounts with basic features, which differ from current or savings accounts that are not subject to the same level of protection in terms of ‘reasonable fees’.

Apart from basic accounts, the other charges lay within each credit institution’s policy, and the Minister of Finance has no right to intervene in their determination.

“Therefore, consumers wishing to be covered by the protection of reasonable fees may request the opening of a ‘payments account with basic features’ or request the conversion of their existing current and/or savings accounts into a basic one,” Herodotou tweeted.