Healthy Money Healthy Planet - library.uniteddiversity.coop

20
Problem numbertwo — fees going up
The second way banks make up for the costs of automatic services is to structure their fees
to discourage over the counter transactions. These hefty fees are making banks highly
unpopular. Banks clearly focus their service attention on large account holders and bigger
businesses. Said a Dominion editorial:
‘With small individual accounts, the banks seem more interested in profitable lending
than in servicing people
And banks don
Westpac Trust announced in August 1999 that it would charge its customers 85 cents if
they used a rival bank. The words are written carefully so as not to claim the small
businesses have been recipients of loans.
After the 1987 sharemarket crash, banks retreated to more secure home loans and were
more wary about lending money to small business. Around the same time they also
responded to the introduction ofnew international rules on bank capital, which had the
same effect. After 1987 it became quite common for a bank to ask a small business
customer to pledge his or her own house as security for a business loan.
Since costs are higher, small business loans are not as lucrative for banks as loans to the
big corporates. The reluctance to lend to small business is partly because of the need to
employ skilled staff and partly because of comparatively higher risk of losses.
Small businesses don.