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Banks offer cash for new clients

Customers receive payments to open, transfer accounts

By František Bouc
Staff Writer, The Prague Post
August 31st, 2005 issue

Some commercial banks have come up with a unique way to win customers and capture those of their competitors — giving away cash.

"After banks have been described as those who are taking money away from people, it's a good marketing maneuver to lift them into the position of those who are giving out money," said Next Finance analyst Markéta Sichtarová.

A government-led campaign demanding that banks reimburse expenses related to transferring an account from one bank to another put banks in the spotlight recently.

Citibank and CSOB decided to turn that bad publicity around and give away money in hopes of getting customers to switch.

Until the end of this year, Citibank is offering up to 1,000 Kc ($41) to clients who transfer their accounts from competing banks, Citibank announced on its Web site. The 1,000 Kc bonus should help clients cover expenses related to the transfer.

"The bonus is targeted to bridge expenses related to switching banks," said Citibank spokeswoman Markéta Dvorácková.

CSOB is offering similar bonuses to select clients who open new accounts. "We will consider [awarding a bonus] on an individual basis, as they are available to clients who could be potentially significant for the bank," said Milan Tománek, CSOB spokesman.

Fees to close client accounts were one of the chief items to come under government fire. Finance Minister Bohuslav Sobotka insisted banks should abolish them.

Since then, many commercial banks did dispense of the fees, but they still charge clients for canceling automatic payments.

Citibank's Dvorácková said the 1,000 Kc bonus should help clients cover those expenses.

Business analysts claim the offer of free money was more a result of tough competition than pressure from the government, though they admit the government attack helped.

Allegations of banks taking advantage of customers prompted the Finance Ministry to launch an unprecedented campaign against commercial banks. In early August, the government sent banks a questionnaire, with 88 proposed changes it wanted banks to make.

Simplifying and quickening the process of transferring accounts from one bank to another without charges was among the key proposals.

CSOB board member Jan Lamser said implementation of the Finance Ministry's requirements would require billions of crowns, which inevitably would increase client services fees.

As for proposals banks are unwilling to accept voluntarily, Sobotka said he is prepared to introduce bills that should pass through Parliament by the end of this year.

The Finance Ministry earlier set a deadline for receiving a response to its queries by the end of this month and refused requests for extensions.

František Bouc can be reached at fbouc@praguepost.com


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