The CEO of SunTrust Banks Inc. recently said that higher fees on debit cards are a result of businesses getting creative as they respond to one revenue stream being diminished.
In an interview with the Tennessean, Rob McNeilly, the regional president and CEO of SunTrust, said that the bank had no other options but to look for new ways to make up for lost profits as new regulations changed how banks operate.
“It’s a result of one revenue stream being diminished, the interchange fee (merchant fee),” McNeilly said, the Tennessean.com reports. “As an organization or a business, if you’re going to be taking (in) less revenue, you can’t have the same expense costs. So, banks are getting creative.”
SunTrust is among a handful of banks that have introduced $4 and $5 debit card fees for checking-account customers.
SunTrust customers can avoid the fees, McNeilly said, by choosing to not use debit cards for purchases.
“If you use it as an ATM card, there’s no charge,” McNeilly said, the Tennessean.com reports. “We will have options available so our clients can minimize or avoid incurring fees.”
SunTrust’s stock is down nearly 40 percent for the year. It opened the year with shares trading just shy of $30 and dropped to $17.71 per share through Thursday’s close on Wall Street.
The banks stock’s volatility, McNeilly said, is similar to other financial industry stocks.
“We feel like we are in a low-growth environment,” McNeilly said, the according to the Tennessean.com. “We, as an industry, have to adjust to the fact that top-line revenue is being cut. So, if we continue to spend at the same pace, earnings will continue to drop.”
According to McNeilly, the more regulatory scrutiny SunTrust faces the more costs they incur.
The heaviest regulation to hit the bank’s revenue steam was the Durbin Amendment. An attempt in the Senate to delay the Durbin Amendment was rejected by both Georgia Senators. SunTrust in the largest bank in Georgia.
Georgia's Republican Sens. Johnny Isakson and Saxby Chambliss voted for the Durbin Amendment price controls initially and voted against delaying them after heavy lobbying from Atlanta-based Home Depot, CEI.org reports.