The Laredo, Texas-based International Bancshares Corp. announced on Friday that it will shutter 55 grocery store branches and lay off approximately 500 people in response to the Durbin Amendment, which will cap what banks can charge merchants for debit card transactions.
“Government many times passes regulations that end up hurting the very people they were intended to help,” International Bancshares Corp. chairman and CEO Dennis Nixon said. “This appears to be one of those cases.
Nixon said that the $11.8 billion International Bancshares will close the grocery store branches so that it can continue offering free checking to its customers following the new interchange legislation, which takes effect on Oct. 1. The company said that it relied on revenue from debit card fees to cover the cost of free products and services for consumers and is shutting the branches to offset the loss of revenue.
“Our customers have always made it clear to us that free products and services are extremely important to them,” Nixon said. “To keep those free offerings in place, we will have to reduce expenses. This means we will close 55 of our smaller in-store branches located in grocery stores.”
Fifteen branches will be closed in San Antonio and the surrounding areas, including three branches in New Braunfels, Kyle and Palmview, Bizjournals.com reports. An additional 17 Houston-area branches will also be closed.