(Updates with Citigroup in the eighth paragraph.)
Oct. 31 (Bloomberg) -- SunTrust Banks Inc., the eighth- largest U.S. bank by deposits, will eliminate a monthly check- card fee as more customers rebel against efforts by lenders to recoup revenue lost to new regulations.
The card fee on the Everyday Checking account will be discontinued as of Nov. 2 and charges incurred before that date will be refunded, Atlanta-based SunTrust said today in a statement. Refunds will automatically take place during the next 30 days, according to the statement.
The rollback may add to pressure on competitors such as Bank of America Corp. and Regions Financial Corp. to rescind similar fees. Banks are looking for new sources of revenue after the Federal Reserve capped fees they charge to merchants on debit cards at 21 cents per transaction, about half the previous average. Wells Fargo & Co. canceled plans last week to charge depositors $3 a month for debit cards after a five-state test.
“We’ve listened to our clients’ feedback and will provide the convenience and security of check cards at no additional charge as part of all of our checking accounts,” Brad Dinsmore, consumer banking and private wealth management executive, said in the statement.
Bank of America, which is striving to meet new international capital rules, plans to rely on internally generated profits plus asset sales to bolster its balance sheet. The Charlotte, North Carolina-based company triggered a nationwide backlash when it announced plans to charge some customers a $5 monthly fee while exempting those who do more business with the bank.
Bank of America dropped 4.6 percent to $7.01 at 11:55 a.m. in New York trading, compared with a 2 percent decline for the 24-company KBW Bank Index. The lender ranks second by deposits among U.S. banks behind JPMorgan Chase & Co. SunTrust fell 2.1 percent to $20.19, Regions slid 4.2 percent to $4.09, and JPMorgan lost 3.5 percent to $35.40.
Anne Pace, a spokeswoman for Bank of America, didn’t immediately return a call for comment. The company is considering adding ways for customers to avoid paying a $5 monthly fee for debit-card use, a person with direct knowledge of the bank’s plans said last week.
Evelyn Mitchell, a spokeswoman for Birmingham, Alabama- based Regions, declined to comment. New York-based JPMorgan decided against charging the fees, the Wall Street Journal reported. Citigroup Inc. will charge checking customers a $10 monthly fee unless they maintain a $1,500 average monthly minimum balance or make one online bill payment and one direct deposit per month, according to a statement from the New York- based bank in September. The company doesn’t charge a debit-card fee.
SunTrust will be eliminating the $5 monthly fee for unlimited debit-card purchases in its Everyday Checking account, said Michael McCoy, a company spokesman. The bank will still charge a $7 monthly maintenance fee for the checking accounts, he said. McCoy declined to say how revenue will be affected.
The federal cap on fees was mandated by the so-called Durbin Amendment, part of the Dodd-Frank Act’s overhaul of the financial industry. Debit-card transaction fees paid by merchants are limited to 21 cents, plus 5 basis points of the total, and a conditional 1 cent for fraud prevention, replacing a formula that averaged 1.14 percent of the purchase price, or about 44 cents. The limits may reduce annual revenue at the biggest U.S. banks by $8 billion, data compiled by Bloomberg Government show.
--With assistance from Dakin Campbell in San Francisco and Hugh Son in New York. Editors: Rick Green, Dan Kraut
To contact the reporter on this story: Laura Marcinek in New York at email@example.com
To contact the editor responsible for this story: David Scheer at firstname.lastname@example.org