Report: In SEC filings, banks put numbers to Durbin losses

From: ATMMarketplace.com

A report from Charlottesville-based SNL Financial provided some initial insight into the cost of The Durbin amendment to U.S. banks in the 2011 fourth quarter.

As expected, the legislation to limit debit card interchange fees for banks with more than $10 billion in assets had a significant impact on some of the nation’s biggest banks. In 2011 form 10-K reports to the Securities and Exchange Commission, banks provided loss totals.

  • JPMorgan Chase & Co. said annualized net income may be reduced by $600 million because of Durbin limits; the FI said that it may be able to recoup some lost revenue, but likely not all of it.
  • Bank of America Corp. reported an interchange loss of $430 million in the fourth quarter. A plan to make up losses with a $5 monthly fee to debit cards holders was reversed due to customer backlash.
  • Wells Fargo & Co. posted $365 million less in pretax debit interchange income. The company expects to make up at least half of the lost revenue through increased volume and product charges.
  • U.S. Bancorp said it lost $77 million and will lose $300 million annually before mitigating actions; however a new “Checking with Choice” product is expected to offset a good portion of lost revenue.
  • PNC Financial Services Group Inc. took a $75 million hit in the fourth quarter, translated to an annual loss of $175 million. Additional customer volume and product repricing could reduce the net impact.

The SNL report noted that some large banks are worried about crossing the $10 billion asset threshold, given the resulting limits on their interchange income.

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