By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CIBC FirstCaribbean charges the lowest fees for student and retiree savings accounts, the Central Bank revealed yesterday, with Fidelity Bank (Bahamas) largely leading the field on adult facilities.

The regulator, unveiling its first ever industry-wide comparison of bank fee scales that are widely loathed by many Bahamians, ranked Scotiabank (Bahamas) as having the most expensive levies in five out of the eight categories assessed.

And, when it came to fees assessed for missed or late loan payments, the Central Bank found Fidelity Bank (Bahamas) was the most forgiving when it came to late personal loan and mortgage payments with a $22.40 charge for each. Bank of The Bahamas matched it on late credit card payments, with both institutions imposing a $33.60 fee.

Royal Bank of Canada (RBC) and its mortgage lending arm, BISX-listed Finance Corporation of the Bahamas (FINCO), imposed the heaviest penalties for late or missed loan payments, while Commonwealth Bank “above certain thresholds of principal and interest payments would have ranked highest for arrears or late penalties on personal loans”.

The Central Bank survey also confirmed that Bahamian commercial bank fees are less for digital transactions than for those conducted physically in-branch, again reflecting the industry’s desire to drive an increasing portion of its customer base to online and digital banking - a move that has only been accelerated by the COVID-19 pandemic’s devastating impact.

In developing its bank fee ‘league tables’ for deposit and savings accounts, the Central Bank created four different customer scenarios that it applied to both digital and physical banking. The first was modelled on a student account holder with less than $200 in their account and who performs just two transactions per month.

The second “customer” was a retiree receiving pension income and making two transactions per month. They were assumed to maintain an account balance of just under $250. The final two “customers” were adults with chequing and savings accounts, each with monthly balances below 1,000 and four transactions per month.

“For deposit account maintenance, given the scenarios, a profiled retail banking customer making maximum use of digital or electronic services options would, based on the June 2021 fee structure, incur average monthly charges from a low of $2.76 per month to a high of $7.60 per month. Students, followed by retirees receive the most concessions,” the Central Bank said.

The $2.76 fee applied to students, while the $7.60 was levied on adults with both chequing and savings accounts. “Conversely, profiled customers, either when preferring or constrained to accessing banking services through less efficient physical channels, inclusive of missed payments, would as of June 2021 incur, on average, charges from as low as $9.08 per month to as high as $21.23 per month,” the Central Bank said.

This means the highest digital banking fee is smaller than the lowest physical banking levy. “While each institution provides the lowest in-branch costs to customers who elected to maximise the use of digital services for deposit account transactions, the cost rankings still differed among institutions in the constructed scenarios,” the Central Bank said.

“Overall, student and retiree account operations were simulated as being the least costly at First Caribbean International Bank (Bahamas) and RBC Royal Bank (Bahamas) with similar estimates for the number of transactions under consideration, provided that customers were able to rely optimally on digital services channels.

“Cost at FirstCaribbean remained exclusively the lowest when the same customer profiles relied most heavily on physical channels for transactions. For non-preferential adult clients of banks, Fidelity alone offered the lowest cost for adults who made use of digital delivery channels,” the regulator added.

“Fidelity’s advantage was maintained for simulated chequing services when the tilt was heavily towards physical services delivery. However, FirstCaribbean offered the lowest costs for savings.”

As for the more expensive fee chargers, the Central Bank found: “On the upper end of costs, simulated customer profiles placed most account services at Scotiabank as costliest. This was the case for adults with both savings and chequing accounts that fully exploited the digital channels, and a typical customer with heavy leaning towards physical transactions.

“Meanwhile, RBC FINCO ranks at the upper end of costs for retirees and students who used digital channels, and adults operating chequing accounts were simulated at the highest end of cost for physical services options at RBC.”

As for fees charged on missed or late loan payments, the Central Bank said: “While there was less variance across lenders for delinquency costs on personal loans, Fidelity Bank was simulated as being the least costly in all three categories, matching the estimated penalty for Bank of The Bahamas (BOB) in the case of late or missed credit card payments.

“On the upper end of costs, RBC placed highest for credit card and mortgage penalties. Meanwhile, above certain thresholds of principal and interest payments, Commonwealth Bank would have ranked highest for arrears or late penalties on personal loans.”

Summing up what it all meant, the Central Bank said some Bahamians were bound by loan agreements to have deposit facilities with the same institution. “The ability of users to take advantage of digital channels to complete transactions reduces such costs in comparison to heavy reliance on physical or in-branch channels.

“Banks also consistently offered concessionary arrangements for senior citizens and underage/student customers. The comparisons further underscore that financial institutions offer variable fee schedules against both deposit account operations and, in some cases, penalties for debt servicing arrears.”