In the budget it passed for next year, Greece will implement caps on certain banking fees to help mitigate the cost-of-living pressures faced by consumers.
Although Greek financial institutions had already moved to reduce some of the fees they charge customers, the country’s Prime Minister, Kyriakos Mitsotakis, said these measures didn’t go far enough. As part of the new policy, money transfer fees will be capped at €0.50 ($0.52) on transactions up to €5,000.
After years of financial struggles that required billions in government aid, Greece’s banks have now become profitable to they point where they have begun distributing dividends to shareholders. This renewed profitability is one of the reasons Mitsotakis felt it was time for banks to diminish their fees.
There are a multitude of additional initiatives underway to ease the burden on consumers, including a plan to eliminate fees on transactions with state agencies and utility companies. Banks will also contribute €100 million toward the construction or refurbishment of schools, and financial institutions will be required to pay double property taxes on homes they own but are not in use—an effort aimed at increasing the housing supply.
Spoonful of Soup
It’s estimated that Greek financial institutions generate annual revenue of €200 million from fees charged to consumers, and capping these fees could significantly hit the banks’ bottom lines. Still, Mitsotakis believes that relieving the strain on consumers is more important than protecting bank profits.
This sentiment is reflected in recent actions by the U.S. Consumer Financial Protection Bureau, which announced new rules to limit the overdraft fees banks and credit unions can charge to $5 in an initiative it believes will save consumers billions. However, there has been pushback from U.S banks, who believe that the rules may lead them to eliminate the overdraft protection so many consumers rely on.
In Greece, the new measures were criticized by some groups who felt the efforts didn’t go far enough to impact consumers. One opposition group likened the efforts to “giving pensioners a spoonful of the soup of super profits.”
