Intense criticism over planned Danske Bank fee changes

Most customers will have to pay to keep their money in the country’s largest bank once it replaces various fees with single quarterly charge

Beginning this autumn, it could cost customers as much as 480 kroner a year to have an account with Danske Bank.

Starting today the nation's largest bank will begin the process of replacing its various banking fees with a flat quartely fee that will see customers pay up to 120 kroner per quarter by the end of the year.

Tonny Thiery Andersen, the head of retail banking – the bank’s largest division – said on Friday customers would be placed in one of six groups based on the size of their accounts, and that those with the least amount of activity would pay most.

“That will increase both customer satisfaction and profitability going forward,” Andersen told media. He said 40 percent of the bank's customers had been “unprofitable” for the bank.

Customers that do business with the bank worth 750,000 kroner or more – for activities like mortgages, car loans, retirement savings or deposits paid – will not be charged. Students are also exempt from the new fees.

In recent years the country’s biggest bank has been dealing with bad debts from a burst property bubble and writedowns on loans to struggling farmers. The bank issued new stock worth 7 billion kroner and cut over 1,000 jobs as recently as last October in an effort to turn itself around.

The bank has also been trying to rebuild customer trust following the financial crisis and last year launched its ‘New Standards’ rebranding programme.

The campaign, which featured a range of imagery that included athletes with amputated limbs, children using tablet computers, solar panels being installed in Africa and protesters throwing stones at the police, drew international ire for its use of an image of a man with a dollar bill taped across his mouth with ‘#OCCUPY’ written on it.

The bank was criticised for using the image as it appeared to undermine the fact that the original #OccupyWallStreet movement was driven by outrage at the irresponsible risks taken by banks that contributed to the global financial crisis. Danske Bank has apologised to the Occupy movement and removed the image from their campaign.

Now, the new fee structure has the bank again at the centre of a PR storm.

Questions have been raised about whether it is fair for banks to charge customers for basic accounts, particularly when the state requires individuals to have a bank account.

The bank’s customers blanketed its Facebook page over the weekend, expressing their anger at the fee plan.

“So now you introduce another way to take money from small customers, no wonder they do not feel welcome with you,” wrote one poster.

“We will remember this when it is time to buy a home,” wrote another.

A third expressed outrage over the discrepancy of the charges between high and low volume accounts.

“The less money you have in the bank, the more you have to pay? So the rich don’t pay anything? Not smart.”

More than one customer threatened to change banks. Professor Finn Østrup from Copenhagen Business School said that losing some customers could actually be the best outcome for the bank.

“They are probably happy to lose the smaller customers,” Østrup told the freesheet MetroXpress. “If they are not willing to pay a fee and leave, Danske Bank will profit.”

Andersen denied that the bank is looking to get rid of marginal customers, adding that he believed flat fees were easier to understand than transaction fees. The bank, he said, was not looking to profit from the charges, only cover its basic costs to run the accounts.

“I have no doubt that some people will leave, but I hope they look closely before they do,” he told MetroXpress. “Other banks charge fees and we believe that our new model is the most transparent.”

Some industry analysts suggested other banks could follow Danske Bank’s suit, but as of today, most major banks had said they did not plan such a move.

Danske Bank’s single-digit profitability in the third quarter last year leaves it far short of Swedish and Norwegian rivals, which have all produced double-digit returns.

Andersen said that regaining the trust of customers would take time.

“We have two million customers – you don’t fix this in one week.”

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