Free banking services likely to end in Germany: association

The Association of German Banks has warned that bank customers may need to prepare themselves for the introduction of fees for the use of financial services institutions, local media reported on Friday.

"The age of a culture of free [banking] is probably already over," said the chief executive of the association, Michael Kemmer, in Berlin.

German banks, he said, need to improve their competitiveness and are no longer able to rely on free banking services being subsidized by net interest income.

Low interest rates and the narrow difference between credit and credit interest have reduced banks' ability to subsidize free services such as ATM transactions, credit transfers or credit cards.

Banks, such as HypoVereinsbank and Postbank, have already stopped offering free checking accounts.

Kemmer said that it is not "reprehensible" that customers should be responsible for the costs incurred by their use of these services.

President of the Association of German Banks Hans-Walter Peters said that banks are being "challenged" by new and digital business models, new revenue channels and "further cost reductions".

Peters drew attention to the easing of financial regulation and stressed the importance of maintaining a level playing field. "We cannot be worse than the international houses in settlement," he said.

Kemmer, however, does not expect a comprehensive financial deregulation but pointed instead to a review of the current Dodd-Frank Act regulation in the United States.

He told the German Banking Congress in Berlin that he is hoping for a swift conclusion to the European Central Bank's current expansionary monetary policy. Endit