By Peter Evans
LONDON--Marks & Spencer Group PLC (MKS.LN) said Wednesday it will charge monthly fees for its new current accounts as it sets out to differentiate itself from traditional banks in the wake of a series of banking scandals.
Many banks offer premium current accounts, but M&S will stand alone in the U.K. by not offering a free version. The company said customers will receive perks--including an interest free overdraft and in-store vouchers--for their fee of 15 pounds ($23) or 20 pounds ($31) a month, depending on the service.
M&S launched a current-account service last month, backed by HSBC Holdings PLC (HBC), and plans to open 50 branches across the U.K. The retailer said the accounts will be available from October, with pre-registrations available from Wednesday.
The U.K. retail banking sector--long dominated by the "big four" of Lloyds Banking Group PLC (LYG), Royal Bank of Scotland Group PLC (RBS), Barclays PLC (BCS) and HSBC--has seen a number of new entrants in the last two years as companies look to take advantage of unprecedented levels of distrust toward traditional banks following a series of crises. Over the past few weeks, Barclays has been embroiled in a scandal related to the alleged manipulation of a key interest rate, while HSBC has been criticized for failing to stop drug money laundering in Mexico.
Metro Bank, the U.K's first new retail bank in 100 years, said it is targeting 125,000 customers by the end of the year and is on track to make a profit by 2014. Virgin Money, which is backed by entrepreneur Richard Branson, has 75 branches in the U.K. and plans to roll out a current-account service shortly.
Retail giant Tesco PLC (TSCO.LN) will also join the fray next year, while rival supermarket chain Asda Group Ltd., owned by Wal-Mart Stores Inc. (WMT), recently relaunched its personal finance division.
Colin Kersley, chief executive of M&S Bank, said: "With over 25 years in personal finance, our loyal customers trust us to deliver the products and services that are right for them."
Write to Peter Evans at peter.evans@dowjones.com
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(END) Dow Jones Newswires
July 18, 2012 10:16 ET (14:16 GMT)
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