Citibank revising minimum required balance on Feb 1

Office workers using the Citibank ATM services at Raffles Place.
Office workers using the Citibank ATM services at Raffles Place.PHOTO: ST FILE

Citibank Singapore customers will soon have to save and/or invest at least $15,000 with the bank, or face increased account service fees.

For the past few weeks, the bank has been issuing alerts to customers across all its segments - from retail to private banking - about this new, standardised minimum total relationship balance (TRB) that will be implemented next Wednesday.

The impact will likely be felt most among its retail banking customers, known as Citibanking clients. These are customers with less than $50,000 of assets under management (AUM) at the bank.

With the change, the minimum TRB for this segment has now trebled, from $5,000 to $15,000.

The account service fee for Citibanking clients is being hiked, from $10 to $15. This fee will be charged at the end of each month should a customer's TRB fall below $15,000. The TRB is the sum of:

•the average daily balance of a customer's checking, savings and deposit accounts;

•the average daily value of his investments; and

•all outstanding amounts on his secured loan accounts as of the date of his last statement.

COST OF MAINTENANCE

Deposit accounts are sometimes left dormant by customers, but will continue to attract operating costs for the bank from servicing those accounts. In some cases, the cost of maintaining those accounts is higher than the revenue generated by them.

MOODY'S SENIOR ANALYST SIMON CHEN, who noted that moves such as Citibank's are not unusual among banks globally.

The minimum TRB does not apply to credit cards.

Since the revised minimum TRB and account service fee were announced to customers, the bank has been seeing many of them topping up their deposits to meet the new threshold, said a Citibank spokesman.

The move to standardise the minimum TRB and account service fee across all segments was made to help simplify banking for customers, she noted.

The spokesman added that Citibank customers "are largely comprised of emerging affluent and affluent clients" - priority banking customers and above.

In fact, most of the bank's clients will actually get to enjoy a much lower minimum TRB and account service fee after the revision, compared with the previous qualifying criteria, she said.

"With one standard level of TRB and account service fee across all the different segments, including Citibanking, Citi Priority, Citigold and Citigold Private Client, our clients will appreciate a fee structure that is easy to understand."

Citi Priority clients have at least $50,000 AUM at the bank, while clients in the Citigold segment have at least $250,000 and those in Citigold Private Client have at least $1 million.

"The revision supports our aim to remain as our clients' trusted adviser and we will continue to find ways to offer them greater ease and simplicity when they bank with Citibank," the spokesman added.

"Citibank values each and every one of its customers, and will continue to find ways to customise its products and services for them based on their relationships with the bank."

Moody's senior analyst Simon Chen said such moves are not unusual among banks globally. "A bank might raise the bar on the minimum balance requirement so that it can better target certain customer segments," he said.

"Deposit accounts are sometimes left dormant by customers, but will continue to attract operating costs for the bank from servicing those accounts. In some cases, the cost of maintaining those accounts is higher than the revenue generated by them."

By raising the minimum balance requirement across the board, a bank would be able to target clients who have more funds, who could be potential wealth-management clients, or clients to whom it cross-sells insurance and investment products.

Mr Duckju Kang, an analyst with personal finance adviser ValuePenguin, said banks might adjust their minimum TRB and account service fee if they are facing margin pressure, or are feeling more secure about their competitive environment.

"What we do know is that we've been noticing some decline in consumer benefits on credit cards in Singapore in the past few months - higher annual fees for primary or secondary holders, rising annual percentage rate charged on cards, and declining overall benefits in the form of cashback, air miles or welcome bonuses," he noted.


Correction note: This story has been edited for clarity.

A version of this article appeared in the print edition of The Straits Times on January 28, 2017, with the headline 'Citibank revising minimum required balance on Feb 1'. Print Edition | Subscribe