Standard Chartered has become the third major bank in Hong Kong to announce the abolishment of minimum balance fees. The bank announced that it will be removing its minimum-balance fees on its various accounts starting in August. The move comes at the heels of the same announcements from the city's top note-issuing banks HSBC and Bank of China Hong Kong.
Major banks in one of Asia's biggest financial hubs have recently implemented the move in an attempt to remain competitive as the markets are now getting flooded with new virtual banks. The strategy is mainly targeting smaller depositors, which typically pay a fixed fee when their account goes below a specific value.
Standard Chartered is one of Hong Kong oldest financial establishments. The bank, which was founded in 1859, announced that it would be removing its fee of $46 per quarter for its premium bank clients. The fee is typically charged to customer accounts when their transaction volumes fall below $25,623.
The bank's smaller depositors or those with "Easy Banking" accounts will no longer have to pay the bank's $12.80 minimum balance penalty if their transaction volumes fall below $1,280 per quarter.
Standard Chartered mentioned in a statement that the removal of the fees is a clear demonstration of the bank's commitment to fulfilling the basic banking needs of its customers.
In response to Standard Chartered's announcement, Hong Kong's Monetary Authority said that it was pleasing to see the city's three largest note-issuing banks abolishing their minimum balance fees and other account fees.
Virtual banks generally don't have any minimum balance requirements, which mean that some smaller depositors may eventually be tempted to shift to the new establishments for their banking needs. HSBC previously announced that its abolishment of minimum deposit fees will affect over 3 million of its depositors. HSBC's subsidiary, Hang Seng Bank, also expressed its interest in canceling minimum balance fees.
Market analysts predict that other major banks are eventually going to follow in HSBC's footsteps. As Hong Kong welcomes more digital banks, brick-and-mortar establishments would have to find a way to prevent their existing customers from transferring their accounts.
Virtual banks in Hong Kong are restricted to operating purely online. These banks do not have any physical branches, which mean that their operational costs are significantly lower.
Hong Kong's Monetary Authority has been granting digital bank licenses since March of this year. So far, the regulatory agency has granted eight licenses to newly established virtual banks.
More a dozen new digital banks, backed by large Asian conglomerates, are reportedly still waiting to be granted licenses.
