A small victory for the Chinese bank depositor

The lowly depositor has taken one small step towards getting more respect from Chinese banks.

Long neglected by China’s banks in favor of big corporate borrowers and punished with queues that sometimes consume half a day, China’s depositors can expect some relief from the ever increasing and bewildering array of bank fees that are the norm in China’s banking industry.

The China Banking Regulatory Commission has issued rules that stop banks from charging their customers excessive fees that have become a focus of increasing national resentment.

The new rules said all fees must be set by banks' head offices and not local branches. It also orders that banks must give three months' notice before raising fees.

Over the past year, unregulated bank fees have become a focus of mounting complaints, with customers bemoaning being charged for even such mundane activities as changing their Internet banking password.

For banks, fee income now constitutes an ever larger share of bank revenues. In some banks, these fees account for over 50% of operating income. These fees have allowed banks to post record-breaking profits each quarter at the expense of the lowly depositor, who also receives terrible customer service in return.

Traditionally, China's big state-owned banks have paid little attention to retail investors in favor of big corporate borrowers.

"The branches of big state banks aren't structured for retail banking," said Douglas Red, formerly a vice president at the Bank of Tianjin who has worked in China's banking and finance sector for 20 years.

"They were set up to service companies, represented by a driver or an accountant who's paid to stand in line all day."

Boston Consulting Group, which surveyed 1,600 consumers in 15 Chinese cities last year, said in August that more than half of home- and car-loan seekers claimed that procedures were too time-consuming and that China's main banks took up to a month to process a loan application.