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[SYDNEY] Australia's four largest banks are scrapping cash withdrawal charges for all domestic users as they try to salvage their reputations amid rising political pressure for tougher laws after a series of scandals.
Commonwealth Bank of Australia, the nation's biggest lender, said Sunday it would immediately remove the A$2 (S$2.14) fee for all users of its 3,400 branded automated teller machines across the country. Westpac Banking Corp and National Australia Bank Ltd followed hours later, while Australia & New Zealand Banking Group Ltd said it would halt the charge from early October.
Australian consumers have long complained about being charged to access their own money, so the decision to scrap fees offers a rare piece of positive publicity for the industry, which has been battered by a series of scandals.
Commonwealth Bank, the nation's biggest lender, is embroiled in allegations it repeatedly breached anti-money laundering laws and is facing a civil court case and two regulatory probes.
The rest of the industry is also under pressure and has been trying to head off calls by opposition lawmakers for a wide-ranging inquiry into the sector, and fight back against the government's decision to hit them with a A$6.2 billion levy over the next four years. The government is also pressing ahead with legislation to hold bank executives to "heightened standards of behaviour" and require senior executives to defer a proportion of their pay.
"The Commonwealth Bank has taken the march on that issue," Treasurer Scott Morrison told reporters on Sunday, referring to the elimination of cash-withdrawal charges. "But it's important that we continue to take action now right across the full suite of issues that are needed to ensure that our banking is fair, it is stronger, is more accountable and is more competitive."
A$500 MILLION SAVING
Australians made 259 million withdrawals from ATMs of banks other than their own last year, according to Reserve Bank of Australia data. At A$2 a withdrawal, that equates to about A$520 million in fees charged to customers. The fee is also a declining source of revenue, with cash withdrawals declining as Australians move to electronic forms of payment. Australians are the world's biggest users of contactless payment technology, according to data from Visa Inc.
"The earnings impact is likely to be immaterial," Morgan Stanley banking analyst Richard Wiles said in a note to clients, estimating the hit to each of the big four banks at about A$50 million in pre-tax earnings. However, the decision is "another example of how increased political, regulatory and community scrutiny is likely to weigh on profitability," he said.
Opposition lawmakers aren't backing down on calls for a so-called Royal Commission into the banking industry, with some urging a breakup of the nation's biggest lenders amid claims that a lack of competition allows borrowing costs to be kept too high.
"There is no way that CommBank ever would have made this move without the public pressure on them over multiple scandals and the threat of an impending Royal Commission or parliamentary commission of inquiry," said Greens Party's treasury spokesman Peter Whish-Wilson.