New banking laws governing credit cards and fees for debit-cards and overdrafts are proving easier for banks to surmount than weak loan growth and low interest rates — even though those laws are projected to cost the country’s 20 largest banks $12.5 billion in lost revenue in 2012.
"Banks are taking a very proprietary approach to fee strategy," Patricia Hewitt, Director of Debit Advisory Services for financial research and consulting group Mercator Advisory Service told CNBC.
Big banks have already made progress in recouping money lost from the new regulations, making up the lost revenue by cutting expenses, reworking existing products for greater efficiency and higher profit and creating new products, according to Barclays analyst Jason Goldberg.
For example, Bank of America’s “New BAC” program aims to cut $5 billion in costs by 2013 and Wells Fargo’s Project Compass plan is designed to cut $1.5 billion in costs by 2012.
Many banks are considering bundling services in ways that allow them to charge additional fees by including higher-margin products in the mix, or raising fees on services used less frequently.
The Wall Street Journal reports that Bank of America Corp. has told U.S. regulators that it is willing to retreat from some parts of the country if its financial problems deepen, according to people familiar with the situation.
While people close to Bank of America insist that no retreat is imminent, even the possibility of selling branches and losing customers it spent huge sums to acquire underscores the depth of its problems.
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