Bank’s 1%fee hike worries gas retailer
A banking fee introduction of 1 percent on cash deposits in excess of$10,000 made over-the-counter has at least one gas station retailer crying foul and calling for government intervention.
Effective January 1, 2011, RBC Royal Bank of Canada(Bahamas)Ltd. implemented the fee hike. Other fee hikes include a charge of 1 percent for the exchange of coins over$100 in value(for non-RBC customers), and a charge of$1 for deposits per transaction for over-the-counter withdrawals and debits on savings accounts. The gas station retailer, who wished to remain anonymous, toldGuardian Businessthat the fee hike would impact many local gas station businesses as well as small businesses.
“If they have just 15 businesses depositing$15,000 cash daily over the counter, they’re making three-quarters of a million dollars off of that a year,”the retailer said.”That is criminal, and personally I think the government really needs to step in on this.”
Manager of Public Relations and Communications for RBC Jan Knowles toldGuardian Businessthat the over-the-counter large deposit fee was becoming an industry standard. She said the fee was already in place for U.S. currency over$10,000 deposited into the bank, and has now been extended to cover Bahamian dollar deposits above the same amount. She also said that to the best of her knowledge the comparable practice was being observed by RBC Canada.
The move will impact businesses differently, depending on their cash volume and liquidity demands.
“The small businessmen are the ones who are going to really hurt in this situation,”said the gas retailer.
He listed several prominent businesses that he believed were RBC customers and said that he was certain they would not have to pay the fee at all.
When asked if larger commercial customers holding substantial balances would be able to negotiate the fee or avoid the charges altogether, Knowles toldGuardian Business”yes, there is room to negotiate this fee for larger commercial customers.”
Addressing the issue of security, Knowles suggested the use of the night/day deposit facility along with a proper security escort for such deposits.
According to Knowles, clients using RBC’s night depository services are assured that their accounts will be credited within 48 hours, though this is typically done within 24 hours. She did not provide specifics regarding overdraft rates, but did indicate that they are competitive with the industry and pricing is based on the bank’s credit risk assessment of the client.
The gas station retailer, however, expressed different thoughts about the depository system, tellingGuardian Businessthat night deposits took two to four days to be posted on his account. According to him, fuel is purchased on a cash basis, which means either having the funds on account or going into overdraft, for which he said RBC charged 17 percent. He added that in his business, despite high dollar volumes profits were comparatively low and margins very tight.
Khaalis Rolle, president of the Bahamas Chamber of Commerce(BCC)toldGuardian Businessthat he was familiar with the retail gas business, and the”razor thin”margins and other constraints operators must contend with.
“That’s why you see high dealer turnover in the petroleum industry, it’s a difficult industry, and anything that’s going to drive up its cost must be carefully considered,”Rolle Said.
“One of the things[the Chamber]hopes to accomplish over the next couple of months is to have a discussion with banks and try to come up with a more amicable, a more reasonable and a more mutually beneficial relationship with the small business community,”Rolle said. He added that cursory discussions have already occurred.