12 thoughts on “BSP Retail Banking Fee Changes

  1. what’s the meaning of a “savings account” when BSP introduces a few for an account that is dormant? Does the bank realize that I am trying to save here? and still they charge me for depositing and withdrawing my money? goodness gracious! what happened to the economic rationale of banking?

  2. somebody tell me the logic in trying to create a savings culture in the economy of Papua New Guinea when the very financial institutions are discouraging this very culture through exorbitant fees?

  3. @solo – Dormant account fees will apply if there has been no transactions on the account at all. If it is a savings account generating interest then it should not attract a dormant fee. I therefore question what sort of an account you have and whether you are making regular deposits to it? If it is attracting interest and also attracting a dormant fee then I would question your bank and consider your options.

  4. Author Scott Waide:

    Effective as of today, Monday 1st November 2010, the Bank South Pacific has increased its retail banking fees to what can be compared to as broad daylight robbery.

    Now, let us get this into perspective. Say if I am planning on saving K100 per fortnight over the period of one year. Ideally this would see me amass a total sum of K2600 if I were to say, put it in a cash-box/safe or hide it in a hole in the ground.

    Then there is the alternative of putting that money into some form of investment in the form of a business venture. There is a good chance of making some good money out of this investment capital. This would see this figure increase dramatically given ones effort into strong marketing and good business sense. For the sake of this argument, let us throw a figure to this alternative scenario and give a range of from, say K3000 – K5000, give or take. Or even more. Of course the risk of losing that money would also be considerably increased from the “cash-box” scenario as described earlier.

    But if I decide to save this money with “our very own” Bank South Pacific, this is what I would be looking at with the current banking fees of a Kundu Saver Account.

    Working with the same K100 per fortnight scenario, after the K3 deposit fee and the fortnightly account fee of K1.50, the money that actually gets saved would be K95.50. (Cheque deposits would actually attract a fee of K2 so the amount saved would be even less at K93.50).

    At year’s end, I’d be left with K2483. Throw in the compounded 0.15% interest and we would end up with K2486.71. That’s K113.29 less than our “cash-box” theory.

    Not bad if we can simply say this is the services fee for safekeeping that money but bear in mind, this is a pay-per-use system in that an increase in the number of transactions is bound to increase the total amount in fees being paid, thus the money I end up with come the end of the year would turn out to be even less than from the math above.

    The moral of the story is that Bank South Pacific has put up its hand once again to screw over the everyday people of this country. After all, it seems everybody else from corrupt politicians to bureaucrats and multinationals want to screw over the small people so why can’t BSP get in on the act, right!

    In fact, BSP has been gradually increasing these fees for a while now as elaborately outlined by Tavurvur in his post Bank South Pacific’s Immoral & Draconian Retail ‘Service’ Fees.

    I am now left with no choice but to pull the plug on my account from BSP and seek other means of saving my hard-earned money. Even a hole in the ground holds more promise than “your bank.”

  5. Author: Graham Michael – Bank of South Pacific Raising Banking Fees no Longer a Farce.

    Although I have not lived in PNG for many years now and I obviously don’t have bank accounts there anymore, I am sick to the stomach every time I see financial institutions (whether in PNG or abroad) sticking it to their customers. In BSP’s case, there is no justification for fee increases whatsoever especially since the latest increase was just over a year ago in August 2009. When prompted by the National for an explanation, BSP simply sidestepped with this email:
    “As part of BSP’s commitment to improve and enhance the quality and quantity of banking services to the majority of Papua New Guineans and recover the true costs of providing banking services, it will increase its fees effective on Monday, Nov 1, 2010.

    With the increases in fees slapped upside the cranium of ordinary PNGeans, how can that improve quality and quantity of services in real terms. The bone fide beneficiaries of these fees, as far as I’m concerned, are shareholders and banking executives. This is major horse pucky at worst, and daylight robbery at best.

    Given BSP’s announcement of latest fee increases and introduction of new ones, remarkably in the heels of last years fee increase announcement, you would think the average PNGean has a case of amnesia. I bet it’s too close for PNGeans to forget the painful pinch in their meager finances, let alone small businesses, leading up to this point. And, what’s worse is that the Bank had the gall to declare in May this year that it had surpassed beyond their forecast a profit of over K257 million after tax (Post Courier – May 24, 10). Their net profit is up from K228.3 million in 2008. So far its assets – counting all branches and services within the South Pacific region – stands at over K9.4 billion. This is a hefty profit despite the current world-wide economic downturn and the bank’s 10 to 1 share split to boost its overall capital base.

    As far as I see it, the bank was over ambitious in its South Pacific expansion strategy. In its over-zealous ambition to buy up banks in Fiji, and contemplating others, it has found itself in a precarious position to make up for losses in capital and investment outlays in its bid to purchase banks in Vanuatu, Samoa, and others. A draconian move at the expanse of and detriment to ordinary PNGean customers and local businesses. It is “Business 101”; the bank take concurrent and future losses in areas of its banking services and try to offset them in other areas of operation.
    So, where’s the true cost of providing banking services? We don’t really know. Ian Clyne, the Bank’s Managing Director and the Board’s Chairman should come out and explain the “True costs of Providing Banking Services” to the people of PNG. It is one thing to announce the increases to customers, yet, it is another if it is meant as a cliché for over-pricing and over-taxing the public.

    I suggest the Independent Consumer and Competition Commission (ICCC) take out a court injunction forthwith to delay instituting of fee increases and introduction of new ones until an explanation is summarily obtained from the bank. The bank should convince the court and the people of PNG that it is a justifiable business raison d’être to do so. If not, then they should cease and desist any increases in the immediate future.

    Graham Michael
    Via Facebook
    West Virginia, USA.

  6. @Banker – how do you define a ‘dormant’ account? one week, one month, three months, 6 months, 1 yr? if my account is being debited every month then that’s ridiculous!

  7. When your atm machines don’t have money, I am paying for inconveniencing me? For Goodness sake! It would seem that BSP is not the My Bank it claims for all Papua New Guineans… Just making more money out of simple PNGians. What about those subsistance farmers n villagers who are trying to save?? What about them! If they deposit, they pay. They withdraw, they are penalized what sort of bullshit is this? Come on! I agree that it just discourages people supposedly saving anything! You haven’t justified the expenses covered by the customer trying to access his/her own funds. For instane a teacher or gov officer in remote PNG.travelling for days on foot or using transportation on credit. For him/her not using the card regularly there are charges, for doing bundles of shopping there are charges. N when BSPs system is inconveniently down, they must be slaped with furtherbank charges… If your not robbed in your home the bank will.at anyrate, we don’t and have not seen any atms for deposits in da country so why advertise it.and by the way, the mini reciept is being paid just because I withdrew money n it popped out?!

  8. As a former senior banker in PNG, I cringe at the constant bank bashing in Australia where I am now based. I am subjected to such criticism on a daily basis in my current role!!

    Truth be told – the cost of running a bank in PNG is exorbitant when you consider the frauds, the security issues, the inefficiencies, the comms issues etc etc and hence it is unfortunate that the customers end up having to pay for all these cost factors. Whilst the return on capital in PNG is slightly better than that in Australia, I am not sure whether I would be happy with a 15% return on capital in my business!!

    That being said. If the bank insists on increasing its fee then there must be some ostensible improvement in services or it runs the risk of copping the flak that it is now attracting.

    Then again – you always have a choice. Go elsewhere or bank it out in the back garden. I know what I would rather be doing..

    1. Hi Banker, I saw Westpac announced a $6 billion profit, yet CBA is being bashed for its interest rate hikes…so I guess the difference here must be the type of service they must be giving their customers. I can only imagine what BSP customers would do if the service at the counter is grossly misalligned to the profits they ammounce. But then maybe we put up with more here because the overall banking cost with BSP is still allot cheaper than ANZ and Westpac from what I hear.

  9. @Emmanuel. As I said in my previous posts, the banks in Australia produce Return On Equity of around the 15% mark. What that means in laymans terms is if you had money to invest and you stuck it in an Aussie bank you would get 15% as opposed to investing in say the resources sector at around 30% or say PNG property at heaven knows how much return!! People need to view bank profits in a balanced way considering all factors. Remember banks in Australia and PNG for that matter are significant employers, significant contributors to superannuation funds and subsequent returns and do help people get ahead in life (eg) property purchase.

    As for cost of doing business in PNG, you would be surprised to know that Westpac have historically run a much lower cost to income ratio than the other 2 banks in PNG – I would suggest BSP cost of operation is actually higher than the 2 foreign owned banks.

  10. I am simply disgusted over the user pay policy thing. If we go back some years, PNG BC days (now BSP) was a government runned bank. Why did such a system go defunct and privatised?

    I would rather like to see an institution that holds peoples money for their use, this institution must be subsidised by the fucking PNG Government. NO FEES whatsoever please… BSP could mean ” Big SP” Beer for the executives & shareholders!

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