Wells Fargo & Co. (WFC), the bank with the most U.S. branches, ended free checking in six eastern states as it seeks to recover revenue lost under new financial rules.
Customers in New York, New Jersey, Connecticut, Georgia, Delaware and Pennsylvania must pay a $7 monthly fee for a basic checking account if they receive paper statements and $5 if they select electronic statements, Lisa Westermann, a Wells Fargo spokeswoman, said in a phone interview. Customers can get the fee waived if they direct deposit more than $500 in their account each month, or maintain a $1,500 balance.
“We’re rolling it out region by region,” Westermann said in an e-mail. “We plan to roll it out through all the regions eventually.”
U.S. banks are asking customers to make up lost revenue after regulators curbed overdraft fees and as a new consumer protection agency comes online. Wells Fargo and rivals Bank of America Corp. and JPMorgan Chase & Co. abandoned plans last year to levy debit-card fees after consumers protested. Massachusetts Secretary of the Commonwealth William Galvin has said banks should be barred from holding state deposits unless they offer customers free basic checking.
Wells Fargo gained 3.4 percent to $31.45 as of 3:22 p.m. in New York. The San Francisco-based company has the biggest market value among U.S. lenders at about $166 billion.
Free Checking Ends
“Free checking essentially went away in 2010,” Westermann said. “As time evolved, we have been introducing fees into other accounts, with a number of waivers for customers.” Most account holders will get the waiver, she said.
The six eastern U.S. states were part of Wachovia Corp.’s branch network and account holders in most states where Wells Fargo already had outlets have already absorbed the fee, Westermann said.
In California, Wells Fargo’s largest market, the former Wachovia checking accounts haven’t been assessed the new fees, Westermann said. Wells Fargo doesn’t offer free checking accounts in the state, she said.
Wells Fargo eliminated free checking in July 2010 for new customers and later began to include existing account holders. The bank purchased Wachovia in 2008 and spent three years merging the lenders. The final Wachovia branches were rebranded in October.
“You’re seeing all banks look at new fee structures,” said Jason Goldberg, a senior bank analyst at Barclays Capital in New York, who has an “overweight/positive” rating on Wells Fargo. “Banks provide services and they expect to be compensated.” Customers can change banks if they’re unhappy with the fees, he said.
Checking-account services cost the industry about $300 annually per person, and most depositors with less than $3,000 aren’t profitable for lenders without fees including overdraft charges, said Bart Narter, a senior banking analyst at consulting firm Celent.
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