Banks to Give Customers the Boot, Analyst Dick Bove Says

Not happy with your bank?  The feeling is likely mutual.

Don't be surprised if your bank soon decides they don't want your business anymore, says Rochdale Securities bank analyst Dick Bove.

Why?

Bank regulators and Congress are looking at ways at making the system more safe and sound in order to avoid another meltdown. What on the surface seems like a wise and prudent decision, however may have unintended consequences, most notably higher fees for bounced checks, credit card balances and the like.

"The way a bank discourages a customer from doing business with it is to make the cost of doing business so high the customer gets upset and leaves," Bove says. "I think that’s the methodology," although some unprofitable accounts will be closed by the banks, as American Express has been doing. (AmEx canceled 3.3 million cards globally in the second and third quarters, TheStreet.com reports.)

Update: In another example, HSBC "has decided retail customers aren't profitable enough and is demanding those clients remove their gold to make room for more lucrative institutional customers," The WSJ reports.

Bove says as much as 30% of U.S. households could find themselves being forced out of their banks since they're not deemed profitable.

The shift will create investment opportunities as depositors look to other companies to provide banking services. In this scenario, Bove thinks consumer finance firms, payment system companies, pay-day loan companies and pawn shops will pick up the slack.

As the government moves to make the cost of banking higher for the banks, they're going to have to pass on those costs to the consumer," Bove says. "If the consumer doesn’t like it, the consumer is going to have to rely on these less-established methodologies of getting finance and moving money."