This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank 'Rep-Pricing' Has Mixed Results: Report

Stocks in this article: JPM BAC USB

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs