AGCM

PRESS RELEASE

BANKS: THE ANTITRUST AUTHORITY, THERE IS ROOM FOR REDUCTION IN CURRENT ACCOUNT COSTS. POSSIBLE SAVINGS UP TO 180 EUROS, BUT CITIZENS NEED TO RECEIVE MORE INFORMATION.

Despite a competitive development of the sector, mobility from one bank to another is still low, as well as the implementation of more favourable conditions within the same bank. Regulatory interventions so as to enhance savers’ knowledge are necessary. The highest prices applied in banks in which 70% of current accounts are concentrated. Moderateness of on-line accounts is confirmed: a greater decrease in relevant costs compared to counter accounts

The Autorità Garante della Concorrenza e del Mercato has reported that there are still hindrances in the bank sector impeding full competition and the reduction in prices for the advantage of the final consumer and an increase of mobility of the demand. In fact, it is possible to save up to 180 Euros in current account costs.

According to the Antitrust Authority in the last years there have been changes in the policies adopted by the operators and, from a certain viewpoint, an even more competitive development of the sector. In fact, there have been modifications of the market structure and of the competitive context (a number of mergers which involved different banks). Moreover, the reforms of the secondary regulation have produced results as regards transparency and information on bank services. However, as regards the amount of saving obtainable, passing from one account to another, there is still room to reduce current account costs. Savers cannot exploit this room, though, because they lack the necessary information which instead should be made available by banks, even introducing regulation and regulatory restrictions. According to the Antitrust Authority it is also necessary to intervene on the slowness in the closing of an account to open a new one: despite the time necessary to carry out said procedure has been reduced, it is sufficient to have a credit card or Viacard to see said timeframe last even up to 37 days. Finally, it is important to separate the links between current accounts and other products.

From the investigation launched in March 2011 so as to verify the evolution of current account costs compared to 2007 (the year of the previous investigation in the sector), a decrease in prices emerges only for certain kind of typologies of account holders and for certain periods. The investigation was carried out on 52 banks and more than 14,500 counters, with a representativeness equal to 44% in terms of counters. Costs were measured on the basis of six different profiles of account holders through the annual percentage rate of change, informative tool which makes it easy and immediate for consumers to carry out price comparisons for the holding of different accounts.

DECREASE IN COUNTER PRICES ONLY FOR YOUNG PEOPLE

A substantial reduction in average costs, as regards counter accounts, took place exclusively for the youth (-19%) while a less important decrease was registered for families and retired people with a lower operativeness – respectively -2,8% and -3,6% -  even if considering the absolute value of APR, said decreases do not result to be of particular relevance. Also for the remaining typologies of consumers the average costs result to be unvaried; in fact the variations compared to 2007 are inferior to 1%.

On the contrary, the costs rise, especially for certain profiles, in larger banks, in which 70% of current accounts are concentrated. The prices for the holding and operativeness of a current account are comprised, depending on its use (therefore in function of the account holder’s profile) between a minimum of 53 Euros to a maximum of 111 Euros.

ON-LINE ACCOUNTS ARE MORE CONVENIENT

The investigation confirmed the moderateness (-30%) of the on-line accounts compared to the traditional ones in absolute terms with peaks that go over 40% for the youth, and families and retired people with a higher bank operativeness.

MOBILITY IS STILL LOW

The rate of mobility of account holders, which represents the incidence of the accounts opened and closed on the total, results comprised between 10% and 12%, in line with the results available at European level, and substantially stable throughout the years. What derives is a high level of dispersion of prices: for counter accounts the difference between the maximum and the minimum price is at least equal to 100 Euros but it can also go over 150 Euros, up to 180 Euros, depending on the account holder’s profile.

Despite these differentiations, the level of customer retention remains very high, while the tendency to renegotiate the conditions even within the same bank is very low.

THE BASIC ACCOUNT DOES NOT TAKE OFF

The results of the investigation evidence that the diffusion of the Basic Account, established by an initiative of the Government in 2011 so as to favour fight against cash and financial inclusion, is totally negligible: greatly inferior to 1% on the total of the current holders of every bank, with banks lacking account holders with this basic service. It is likely that what weighs on the fact that it did not take off is the opacity of the conditions of the offer and the structure of the cost not immediately calculable. For 34% of the banks in the sample, there is at least one account for young people and families with high operativeness with a lower or equal price to that of the Basic Account offered to the generality of the consumers.

THE NECESSARY INTERVENTIONS

According to the Antitrust Authority, in order to intensify the competitive virtuous dynamics aimed at the reduction of prices and the increase in consumers’ wellbeing it is important to follow three paths.

1) To improve the level of transparency of the information. In particular, it is necessary to reconsider the forms of communication of APR, annual percentage rate of change. Only in this way, the indicator introduced by Banca d’Italia in 2010, and proposed by the Antitrust Authority in 2007, can represent a useful tool to strengthen the various offers on the market. For this reason the investigation proposes to use cash dispensers where the client should find the best offers proposed by the bank. The same information should be found at the cash dispensers of competing banks with the aim to make the research of the best conditions simple and quick. Moreover, banks should be obliged to communicate to their clients, at least yearly and with the adequate graphic evidence, the new accounts available informing the clients about the existence of offers at better conditions. Lastly, one or more research engines should be developed independent from the banks which enable the comparison among different accounts.

2) To eliminate the links between current accounts and other banking services. In particular, according to the Antitrust Authority, it is necessary to guarantee the elimination of all unnecessary restrictions, contractual or effective, between bank accounts and other services, such as mortgages, administrated savings and insurance policies. On the informative leaflets and on the periodical communications, banks shall clarify that in order to have ancillary banking services it is not mandatory to have an account open with the bank.

3) To reduce the lapse of time for closing accounts.

The Antitrust Authority makes mandatory the closing of accounts within 15 days, in line with what provided for by the Community directive currently under discussion. In order to ease the closing of accounts also in presence of tools which entail debts (credit cards and Viacard), the new bank could substitute the old one undertaking all of the possible risks.

12^th September 2013