Moynihan: Defections Abate After Fee Canceled
Bank of America Corp. Chief Executive Officer Brian Moynihan said customer defections in the U.S. slowed after the lender canceled plans to charge a $5-a- month fee for debit cards amid a nationwide backlash.
“We saw an elevated level of account closings in the quarter,” Moynihan said today during a conference call with analysts to discuss fourth-quarter results. “Once we pulled it back, you saw that mitigate,” he said.
Lenders including Wells Fargo & Co. (WFC) announced plans for monthly charges as the government introduced regulations that limited fees they could charge for debit purchases. Bank of America reversed its decision in November, after rivals halted their own plans. The proposed fees fueled demonstrations in Los Angeles and Boston and prompted a Washington woman to collect more than 300,000 petitions in protest. President Barack Obama criticized the moves as “not necessarily fair to consumers.”
Interest-bearing deposits at Bank of America’s U.S. offices fell to $624.8 billion as of Dec. 31 from $629.2 billion on Sept. 30, according to a financial supplement posted on the Charlotte, North Carolina-based lender’s website.
“Yes, we had some impact from the $5 debit fee,” Moynihan said. “That’s why we made the decision to reverse it. Those impacts in the scheme of things will be manageable.”
The largest banks are seeking to replace revenue lost after regulators limited fee income from debit-card usage and overdrafts. Non-interest income at the company’s deposits segment fell 20 percent in 2011 to $4.22 billion, according to the supplement.
Moynihan’s company swung to a fourth-quarter profit, as the bank sold assets and built capital, posting net income of $1.99 billion, compared with a loss of $1.24 billion a year earlier.
The lender had planned to charge debit card-using customers if they had less than $20,000 in total balances or lacked a mortgage or Merrill Lynch brokerage account. The proposal drew criticism that it would mostly hurt lower-income customers.
To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net.
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net
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