November 1.

One of the most significant changes is the introduction of a $3 per month fee to chequing account customers.

On top of this, customers will be allowed only ten free cheques per month, with a charge of 20 cents for each additional cheque.

The charge for `bounced' cheques is going up from $15 to $20, foreign drafts are being increased from $3 to $4 per item and there are further increases in the cost of mailing cheque books.

The increases bring the Bank of Bermuda's retail banking fees roughly into line with the Bank of Butterfield.

Butterfield has been charging a monthly fee for chequeing accounts for more than a decade, with the current charge standing at $3 for chequeing accounts with balances under $500.

Butterfield charges 22 cents per cheque for every cheque written above the first ten per month.

In a bid to alleviate the impact of the increases on some of its customers, the Bank of Bermuda is introducing a `special option' on its chequeing accounts.

There will be no monthly fee for average daily balances of $2,500 or more; a $7 monthly fee for balances below $2,500 and 40 free cheques will be allowed per month, with a 20 cents fee for each additional cheque.

Mr. Alan Richardson, the Bank of Bermuda's manager of retail banking, said yesterday the Bank did not expect to lose many customers because of the changes.

Banks all over the world have traditionally lost money on retail banking, he said.

The charge increases were merely a way of reducing the Bank's retail banking losses.

"The costs involved with chequeing accounts are not insignificant,'' said Mr.

Richardson.

"Three dollars a month does not even come close to recovering what we estimate to be the average cost of processing a cheque.

"The reason for the introduction of the monthly charge is to allow the Bank to begin to recover some of the cost associated with clearing local cheques.'' The Bank of Bermuda was trying to encourage chequeing account customers to write fewer cheques and make more frequent use of automatic teller machines (ATMs), he said.

"This will help reduce the waiting time in teller lines and lead to less paper work,'' said Mr. Richardson.

"The increases are to offset the costs of providing paper-based services.

There will be no increase in fees for our electronic banking services.

"BermudaCard will continue to be offered with no annual card fee and there are no fees associated with the use of our Personal Touch Tellers.'' Mr. Richardson said the changes were part of the Bank's overall cost-efficiency programme, which has led to sharp decreases in costs over the last 18 months.

Retail banking in Bermuda was not a profitable operation, as witnessed by Bermuda Commercial Bank's drastic cutbacks in retail banking, he said.

Mr. Richardson said the changes had been under "careful consideration'' for several months.

The Bank of Butterfield's general manager of retail banking, Mr. Colin Furr, agreed that the charges of Bermuda's top two banks were now more or less equal.

He forecast that the Bank of Bermuda may lose some of its foreign draft sales income as a result of the changes.

"We would, perhaps, expect some of the Bank of Bermuda's clients to shop around and see what fees the other banks are charging,'' he said.

The Bank of Butterfield reviews its retail banking fees every year and made its last changes in July, he said.

The Bank of Bermuda's credit card customers can now use their cards at over 100,000 ATM machines worldwide, if they make the effort to give the Bank a Personal Identification Number.

Mr. Alan Richardson.