HSBC’s scrapping of minimum balance fee for Hong Kong clients may prompt rivals to follow as they brace for competition with virtual banks
- Other major banks are likely to follow suit, say analysts, as they get ready to fend off competition from eight virtual banks due to launch this year
- Monthly charge of HK$50 for small depositors with balance below HK$5,000 (US$640), has long been viewed as penalty on some of bank’s most loyal customers
HSBC is to scrap the minimum balance fee that applies to 3 million customers in Hong Kong in a move likely to be followed by other big lenders as they brace for fierce competition from a wave of virtual banks due to come online later in the year.
The monthly charge of HK$50 for small depositors with a passbook savings account and other basic accounts with a balance below HK$5,000 (US$640), has long been viewed as a penalty on some of the bank’s most loyal customers. It was introduced 18 years ago.
HSBC said on Wednesday that from August 1, it will be the first bank in Hong Kong to go back to providing free basic banking services to roughly 3 million retail customers who hold its passbook accounts, statement accounts, personal and advance integrated accounts, and super ease accounts. It will also get rid of associated charges faced by small depositors, like counter transaction fees.
“More than 3 million retail banking customers will benefit from the removal of our below-balance fees, counter transaction fees and annual fees for most our personal savings accounts,” said Greg Hingston, HSBC’s head of retail banking and wealth management in Hong Kong. “This is a key step in reinforcing HSBC’s commitment, as Hong Kong’s leading bank, to promoting financial inclusion and making banking easy for customers from all backgrounds.”
The fee abolition will also apply to the popular HSBC Advance accounts, which currently charge HK$120 a month if the total deposit and trading volume falls below HK$200,000 (US$25,550).