Standard Bank Explains the New Unutilised Facility Fee for Business Accounts

As part of Standard Bank’s Business Banking offering they offer access to an overdraft facility up to an agreed limit. Under the new Basel rules, banks are required to raise the quality and quantity of the regulatory capital base. In their statement Standard bank said:

“As a bank, we are obliged to hold capital against the overdraft facility, regardless of whether it is used or not. Unlike most other financial institutions, Standard Bank have not previously charged a fee to offset the cost of holding this capital, but the new regulatory environment has necessitated the introduction of this fee.

Therefore, and according to the terms and conditions of the overdraft facility, a fee of 1.2% per annum will be levied on the unutilised portion of your overdraft, with effect from 1 July 2014. The fee will be accrued daily and recovered monthly on your monthly billing date.

This fee will only be levied for the days where a business utilises less than 80% of its total overdraft facility. If your business uses more than 80% of its overdraft facility during each monthly cycle (from the 25th of the previous month to the 24th of the following month, inclusive) it will NOT be charged this fee.

If you find that your business generally uses less than 80% of its overdraft (or if the business uses the overdraft for emergencies) you may want to consider reducing the overdraft facility to avoid paying these fees. Your business can also cancel its overdraft facility and apply for one again when the business really need the funds.”