Citibank Shanghai Branch Sued by a Shanghai Citizen

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Last updated at: (Beijing Time) Thursday, April 18, 2002

Citibank Shanghai Branch Sued by a Shanghai Citizen

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Reporters learned recently from the case-registration court of the People's Court in Pudong New District, Shanghai Municipality, that the court is making an investigation on a case in which Wu Weiming, a Shanghai citizen sued the Citibank Shanghai Branch of collecting money management charges from him.

The court will, in accordance with the judicial procedures, decide within seven days if it is going to accept and handle the case.

Wu Weiming, a citizen in Shanghai lodged a suit to the People's Court of Shanghai Pudong New District, prosecuting the Citibank Shanghai Branch of charging money management fees from the depositors whose savings in the bank are lower than 5,000 US Dollars for the measure has restricted the consumption rights of the public.

He requested that the court would rule it that the Citibank Shanghai Branch make an apology and indemnify him RMB 34 yuan for his traffic expenses.

On April 8, when Wu Weiming, a personnel of Shanghai Guangming Law Firm went to open a personal account with the Citibank Shanghai Branch Puxi Branch located at Section 1, Zhongshan Rd East, ready to put US$ 800 in the bank as deposit, he was told that any client with a deposit balance less than US$ 5,000 would be charged six US Dollars (or an equivalent of RMB 50 yuan) per month as deposit management fee.

Wu expressed since the money was only put in the bank as savings and there's no need for the bank to finance and manage at all, hoping that it could be handled free of charge, but he was turned down.

Wu deemed the charge discrimination to small depositors

When interviewed Wu deemed it that the practice of the branch was discrimination to small depositors.

It is an action restricting the consumption rights and is not permitted by the law.

In accordance with the "Law of Commercial Banks of the People's Republic of China" and the "Regulations for Management of Deposits", though they do not regulate explicitly that the bank should not take management charges from depositors, they've made it clear that the commercial banks should abide by the principle of "voluntary deposit and free to fetch it, to deposit with interest paid and to keep secret for depositors".

However, the management charges collected by the Citibank Shanghai Branch is higher than the interest a depositor can get from the bank. This is a sheer alteration in violation of the principle of "to deposit with interest paid".

Personnel of the bank declined to make comment

Personnel of the bank said to the reporter so far he didn't like to make any comment on the matter.

China has opened wider its financial sectors to the outside world after its entry into the World Trade Organization. On the day of March 21, the bank became the first solely-owned foreign capital bank for handling foreign exchange business of Chinese clients in China and followed the conventional way of charging management fee on small-amount deposits.

The practice has put back the wishes of the people in Shanghai who hope to open accounts for depositing foreign exchanges in it and have quite some complaints about it.

Nevertheless before Wu raised the suit nobody had brought up any action against it.

Suit aroused different reactions from financial circles

Wu's suit against the bank has roused different reactions among the financial and judicial circles in Shanghai.

"For a long time in the past the commercial banks of domestic capitals have offered people with deposit service, i.e. to keep money in the bank for the people by giving them interest as if they were offering people 'welfare service'. Instead, the bank has made a turn-round by changing services to commodities, canceling the 'free of charge luncheon' and therefore, the Chinese populace are not used to it," said Huang Liming, a postgraduate student in the International Finance Department of Fudan University.

An official in the foreign-capital department of the People's Bank of China, Shanghai Branch said to the reporter that for the bank to charge certain proportion of handling fee from the small depositors is a commercial behavior of foreign capital banks. It indicates that the bank tends to the high-level business in the choice of clients.

Song Yixing, lawyer and deputy-secretary of financial research institution of Shanghai Law Association holds that to pay small depositors a minimum amount of interest or even charge some "safekeeping fee" from the clients is a conventional way of doing business in many developed countries. However, the bank is doing business in China and so it must abide by the relevant law of China.

Experts hold that there exist disparities between the foreign capital banks and banks of domestic capital in some of their practices.

The foreign capital banks, setting out from market analyses often alter the rates of interest in areas with sparse business spots in order to grasp the major and let off the minor, thereby taking a firm hold of "fat clients" by offering them "good services".

Whereas the banks of domestic capitals often set up business spots even in sparsely populated areas in order to facilitate the life of the people.

According to the introduction, so far, no matter how small an amount the deposit is banks of domestic capital won't charge any service fee for managing their deposits in the bank.

By PD Online staff Han Rongliang

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