German central banker sees free banking ending - newspaper

Andreas Dombret, member of the board of the Deutsche Bundesbank speaks during a news conference at the Deutsche Bundesbank's Regional Office in Hesse in Frankfurt October 26, 2014. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - Banking fees are likely to become more prevalent in Germany in an environment of record-low interest rates, a senior board member of Germany’s central bank said in a newspaper interview on Monday.

“We see the end of the free banking culture,” said Andreas Dombret, the Bundesbank’s top supervision expert, interviewed by daily newspaper Die Welt, adding that banks were already charging for products and services and the trend would accelerate.

“However, these products will have to be attractive, otherwise banks and saving banks will not be able to enforce these prices,” he said.

As low interest rates prevent banks from making money on lending from deposits they need to lower costs and start charging customers for previously free or low-cost offerings.

Dombret declined to say whether fees would decrease, should the European Central Bank (ECB) respond to pressure, especially from Germany, to end its policy of ultra-low interest rates, with inflation in the euro zone rebounding.

“That will be a matter of competition,” he said.

Last year Bavarian bank Raiffeisen Gmund broke a long-held taboo and said it saw no alternative but to start charging wealthy clients for depositing their money, as it did not want to cut back services or merge with other lenders.

Asked whether there were too many banks in Germany, which counts some 1,900 lenders, mostly smaller savings and cooperative banks focused on retail, Dombret said that the supervisory role of the Bundesbank did not mean that it would meddle in structural policy.

“I make one exception. The sustainability and the flexibility of the business models of the banks. Those we are examining very carefully,” he said.

Reporting by Vera Eckert; Editing by Greg Mahlich