09 August 2006

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Business Today

Study compares bank charges on current and savings accounts

Karl Stagno Navarra

As the country gears up towards the Euro changeover, many of us would consider it prudent to visit banks and ask about the various products they offer, namely the conversion or transfer from Maltese Lira or any other foreign currency to a brand new Euro savings or current account.
However, don’t worry about shopping around as a recent comparative study conducted by MFSA, paints a clear and unprejudiced picture of what tariffs and charges are incurred in savings and current bank accounts.
The study just published a week ago, covers the savings and current accounts in Maltese and foreign currency, and spans over five local banks, namely APS Bank Limited, Bank of Valletta p.l.c, HSBC Bank Malta p.l.c, Lombard Bank Malta p.l.c. and for the first time also, Volksbank Malta Limited. New to previous studies on other products, MFSA has this time asked the banks to supply their comments in a bid to justify the charges where applicable.
As to ledger/administration fees on a savings or current account in any foreign currency, it is only HSBC that would charge Lm4 per quarter. The bank comments that this charge is incumbent “if the average of the combined balances of an account holder’s savings and current accounts does not exceed Lm75 during the previous quarter”.
Deposits/credit by way of Maltese Lira notes and coins, Lm cheques drawn on same bank, Lm cheque drawn on any other local bank, see all five local banks in concurrent competition with each other. No extra charge, save the conversion at the banks note selling rate.
Differences are noted though as one considers depositing into such accounts with a Maltese Lira cheque drawn on any foreign bank.
As BOV would apply only the conversion charge at the banks cheque selling rate, APS Bank would charge a normal tariff of 0.25%, plus conversion at bank’s cheque selling rate. This charge is applicable to a minimum of Lm10, whilst any foreign bank charges deducted from proceeds, plus courier charge are also applicable. HSBC would charge 0.5%, plus conversion at bank’s cheque selling rate. Here, HSBC explained that the tariff is broken down to a minimum of Lm1 on pension and dividend cheques; a minimum of 50c if cheque is deposited in a term deposit (minimum 3 months). The maximum charge is Lm10.
Lombard Bank charge a minimum 0.25% (Lm5 per collection). It explains that such items are sent for collection to the drawee bank, and may involve additional foreign bank charges. Volksbank charge no tariff, though explain that the conversion is at bank’s cheque selling rate, and any foreign bank charges are deducted from proceeds, plus courier charges are also applicable.

Interesting are the findings relating to charges for bank transfers from any other local and foreign banks respectively. As to the local transfer, APS Bank charge a 0.25% charge with a minimum of 50c to a maximum of Lm10. BOV breakdown their charges as follows: Lm1 for sums under Lm100, Lm1.50 for under Lm2,000, Lm6 for under Lm4,000, Lm10 for under Lm10,000, and Lm12.50 for Lm10,000 and over.
HSBC charge the standard 0.125%, however they establish a minimum Lm1 and a maximum Lm15. Lombard Bank apply a 0.125% charge with a minimum Lm2 and Lm10 maximum. For sums exceeding Lm200.01 the charge is Lm15.
No tariff is applied on bank transfers from local banks by Volksbank.
Transfers from any foreign bank are almost similar in base rate standing at 0.125%. BOV retain the same structure of charges as local transfer, as do Lombard Bank. HSBC though a flat charge of Lm25 is applied if the currency of the account and amount transferred are the same. (This change is applied if the payment originates from a foreign bank through another local bank).
Withdrawals by way of foreign currency notes and coins incur a 50c minimum charge by APS, 0.50% at BOV, Lm1.50 minimum at HSBC, Lm1 minimum at Lombard and 1.00% at Volksbank. Almost all banks only dispense notes.
Should you require a bank draft in foreign currency, the charges differ from a minimum 75c to Lm10 maximum at APS, Lm1 minimum and Lm12.50 maximum at BOV, Lm1 minimum and Lm15 maximum at HSBC, Lm1 minimum and Lm10 maximum at Lombard, whilst Volksbank charge a minimum of Lm2.15 and Lm8.59 maximum.

Lm accounts
The study includes a detailed overview of what charges and tariffs are imposed by all five local banks for savings and current accounts in Maltese Lira.
All banks, except for HSBC Bank, apply a charge for Ledger/Administration for savings. Whilst all are charge free, HSBC charge Lm4 per quarter, if the average of the combined balances of an account holder’s savings and current accounts does not exceed Lm75 during the previous quarter.
Over current accounts, BOV charge Lm2 as a semi-annually fee if amount is overdrawn. HSBC impose a Lm4 charge per quarter if combined accounts don’t exceed Lm75 during the previous quarter.
Bank transfers in Maltese Lira from any other local bank see clear differences in charges. APS with a minimum 50c to a maximum of Lm10, however the charge is nil should the currency transfer be the same as that of the account. BOV charge 5c to the user per electronic credit transfer; Lm1 under Lm100, Lm1.50 under Lm2,000 ; Lm6 under Lm4,000; Lm10 under Lm10,000. Lm12.50 for Lm10,000 and over.
HSBC apply a standard 0.125% charge, with a minimum Lm1 and Lm15 Maximum. Lombard Bank apply Lm3 in charges for up to Lm2,000, and Lm10 for over Lm2,000. There are no charges applied by Volksbank.
As to overdrawn savings accounts due to ATM or POS transactions, its only BOV that charges Lm5. Should you be overdrawn in your current account due to ATM or POS transactions, BOV too will charge Lm2 semi-annually.
However, should you choose to transfer from savings to current to make up for being overdrawn, then Volksbank would charge you 85c, whilst the rest are charge free.

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