This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bank 'Rep-Pricing' Has Mixed Results: Report

But the other issue that might hinder revenue is that banks are placing fees mainly on accounts related to "low-quality" customers - those who have low incomes, low balances in deposit accounts and few other banking products, like loans, on which lenders can earn income.

As a result, some of those customers may leave a bank because it isn't worth paying $10 or $12 a month for a checking account that contains just a few hundred dollars or less. In other cases, customers with several accounts at different banks may consolidate all the funds at just one to avoid penalties. The fees are therefore likely to push low-income customers out of the traditional banking sphere and give industry leaders more market share in areas where they are already dominant.

The analysts came to their conclusions using estimates from a Bank of America presentation last year that indicated about half of its depositors were "low-quality" and assuming that roughly 15% would leave the franchise because of new fees. That left 13.7 million low-quality accounts with Bank of America that were fee assessable out of a total 48 million accounts. Using the same assumptions for JPMorgan, that would mean 13.6 million of its relationships were "low-quality." With over 8 million accounts already converted, it's more than halfway done with the process.

"While there are many moving parts to this equation, we anticipate the level of revenue these incremental fees may generate to be substantial," says the Nomura team. "For example, we estimate 30-45% of universal bank customer accounts may be eligible for bank re-pricing. However, the timing differences of increased fees offsetting revenue and cost pressures is an issue as banks are already facing these hits while ramping up fee generation has just begun and will likely be a slower burning issue for 2011."

-- Written by Lauren Tara LaCapra in New York.

>To contact the writer of this article, click here: Lauren Tara LaCapra.

>To follow the writer on Twitter, go to http://twitter.com/laurenlacapra.

>To submit a news tip, send an email to: tips@thestreet.com.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BAC $16.34 0.00%
JPM $64.10 0.00%
USB $42.35 0.00%
AAPL $112.76 0.00%
FB $89.43 0.00%

Markets

Chart of I:DJI
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASDAQ 4,776.5080 -51.8170 -1.07%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs