DISTRIBUTION
Reserve Bank of India pushes m-banking
The popularity of mobile phones in
India – and the development of mobile commerce in the country – is
so profound that India could bypass ‘traditional’ internet-based
e-commerce altogether and focus just on m-commerce over the coming
years, according to the Reserve Bank of India.
Go deeper with GlobalData
The central bank said the number of mobile
devices in the country surpassed 500 million in September and,
despite a need for caution and strong regulation in making sure
m-commerce is not mis-used and is safe, opportunities abound in a
booming Indian economy.
Speaking at the India Telecom 2009 conference
on 4 December, KC Chakrabarty, the central bank deputy governor
said: “While e-commerce has skipped the majority of the population
due to the cost of setting-up such channels, m-commerce has the
capability to be inclusive due to the widespread use of mobile
phones.”
His speech comes at a time of significant,
pivotal interest in India in mobile banking and mobile payments,
with all the major banking groups investing in the channel. The
country’s largest bank, State Bank of India, for instance, launched
a service called mShop at the end of November, which enables its
credit card holders to shop from over 100 merchants across the
country using their mobile phones.
RESULTS
Nigerian banks post gloomy results
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By GlobalDataThe Nigerian central bank directive
to establish a uniform reporting period across the sector makes
year-ago comparisons difficult to discern, with banks posting
earnings for differing periods as they work towards a common fiscal
year-end. But by any measure the results contained little festive
cheer.
Bank PHB posted a NGN439 billion ($2.9
billion) group pre-tax loss for the 15 months to the end of
September, hammered by provisions for risk assets, loan losses and
goodwill impairments of around NGN370 billion, while exceptional
items were NGN80.7 billion.
At Intercontinental Bank, one of the nine
banks rescued by the government in a $4.1 billion sector-wide
bailout in the third quarter, the position was if anything, worse.
Exceptional items of NGN437 billion resulted in a pre-tax loss of
NGN447 billion for the seven months up to the end of September.
Union Bank, another of the bailed out lenders,
reported impairments of more than NGN250 billion, resulting in a
pre-tax loss of NGN223 billion, for the six months to
September.
Finbank and Oceanic Bank also posted losses:
NGN94.3 billion pre-tax at the former for the 11 months to
September and NGN401 billion at the latter for the nine months to
September.
MARKETING
Citi extends ‘promise’ nationwide
Flushed with the success of a New
York-based customer service proposition which debuted in the third
quarter, ‘Our Promise to New York’, Citi is to roll out the scheme
across the US.
The New York initiative involved the extension
of weekday and Saturday opening hours at the bank’s Manhattan
branches by up to 40 percent.
“With stiff competition in Manhattan – some
city blocks are home to as many as six different banks – we saw an
opportunity to remind New Yorkers of what sets us apart, our
long-standing presence and our commitment to helping the
communities we serve here,” said Bill Brown, Citi’s divisional
manager for New York in a statement.
In addition, the bank launched an online
discussion board for customers to post comments and questions at
www.citibank.com/promises which also flagged up various local
community and charitable organisations being supported by the
bank.
“Because of its success in New York, rolling
this out nationally is a key focus and priority for us in 2010,”
the bank’s vice-president for corporate affairs, Natalie Riper,
told RBI.
REGULATION
FSA raises bar in UK
UK regulator the Financial Services
Agency (FSA), is to impose what it terms more “robust” stress tests
on the country’s banks, including for the first time, reverse
stress-testing, to ascertain what kind of financial crisis would
force them into financial difficulties.
“These changes send a clear signal to firms’
senior management that they need to engage in building a robust
stress-testing infrastructure as an important part of effective
risk management and use that to assess capital needs,” said Paul
Sharma, FSA director of prudential policy, in a statement.
The FSA has also kicked off a consultation
process, to run until the end of March next year, on how best to
beef up the rules for banks to build up capital ahead of future
economic downturns.
MARKETING
State Bank of India rolls out online rewards
In an effort to get as many of its
estimated 150 million customers as possible using its direct
banking channel, State Bank of India (SBI) launched an online
rewards programme at the end of November, similar to schemes in
Europe and the US.
Despite huge investment in its 12,000-strong
branch network and 9,000 ATMs, SBI believes there is scope to keep
existing customers happy and incentivise them to stay, as well as
attracting new ones by maximising use of the online channel by
offering an innovative rewards programme.
The new scheme requires no registration and
all internet banking customers old and new who conduct transactions
online are automatically eligible.
SBI customers will earn points, which can then
be redeemed online for cash, based on the number of online
transactions, including:
• Bill payments, online shopping and online
merchant payments;
• Government and state payments and
transactions such as central/state taxes;
• Railways ticket booking through the online
passenger reservation system IRCTC; and RTGS/NEFT (retail internet
banking transactions only)/Visa Money Transfer.
The reward programme covers only online retail
transactions via the bank’s INB portal (www.onlinesbi.com). The
redemption amount is immediately credited to the customer’s
transaction account on opting for redemption, subject to the
availability of a minimum of 400 loyalty reward points in the
account.
A user can earn a maximum of 10,000 loyalty
points in a year for an account.
A report of VRL’s recent loyalty round
table is on pages 9-20 of this issue.
STRATEGY
Fortis integration ahead of target, says BNP
In an upbeat trading update, BNP
Paribas has revealed that the integration of Fortis, the
Belgian-based unit of the eurozone’s biggest bank by deposits, will
lead to annual savings of €900 million ($1.3 billion) and boost
earnings as early as 2010 before restructuring costs, with the
return on invested equity set to exceed 20 percent by 2012.
“The integration project is going well. BNP
Paribas Fortis businesses have stabilised asset flows and even
gained inflows in retail banking,” BNP said in a statement.
It added that the BNP Paribas Fortis units
have contributed €538 million to group profits for the period
between 12 May and 30 September and “significantly improved their
risk profile by reducing risk weighted assets in corporate and
investment banking over the same period”.
DISTRIBUTION
Permanent tsb, NIB slash branch networks
Danske’s Irish subsidiary National
Irish Bank (NIB) is to shutter 25 branches, almost half of its
58-strong-branch network, as part of a restructuring of its
international operations designed to slash operating costs.
The Irish branch closures will begin early in
the New Year with a target date of mid-2011 to complete the
exercise.
In a gloomy prognosis, NIB chief executive
Andrew Healy said: “The Irish banking sector is on life
support.”
Danske’s 83-branch Ulster-based subsidiary
Northern Bank said it was unaffected by the changes with no branch
closures planned.
Permanent tsb, the retail banking arm of Irish
Life & Permanent, Ireland’s third-largest financial services
group, is also cutting its network – by 11 units to a total of 92 –
as part of a cost-cutting exercise. Earlier this year, the bank
closed its network of 48 tied agents.
STRATEGY
UK government launches consultation on Post Office
plans
The UK government has kicked off a
public consultation on plans for the country’s Post Office to be
transformed into “a leading player in financial services”, offering
an expanded retail banking product range from all of its
11,500-branch network.
The government’s aims include the provision of
current accounts accessible from any post office branch, a range of
children’s savings accounts, business accounts, partnerships with
credit unions and weekly budgeting accounts that ring-fence a
proportion of income each week to pay bills.
Government estimates suggest that investment
of £1.7 billion ($2.8 billion) by 2011 would be required for its
plans to proceed.
In October, a Post Office spokeswoman told
RBI its plans to introduce a current account next year
were on track. In the meantime, work has already started on an
investment programme to refurbish its larger branch offices
(see RBI 621).
STRATEGY
Wells says Wachovia integration on target
Fresh from completing the rebranding
of its former Wachovia branches in Colorado, Wells Fargo president
and CEO John Stumpf has outlined plans to rebadge Wachovia branches
in the remaining five states in which both banks have outlets.
Talking to analysts on 8 December, Stumpf said
Wachovia branches in Arizona, Nevada and Illinois are scheduled to
convert in the first quarter with California and Texas-based
branches set to rebrand in the second quarter of 2010.
Stumpf stressed that the Wachovia integration
was on schedule and set to generate savings in excess of the
original budget, with some of the riskier retail mortgages acquired
as part of the deal set to generate lower losses than originally
forecast.
In an upbeat presentation, Stump added: “We
expect credit losses to peak in 2010 with consumer losses
potentially peaking in the first half of the year and gradually
declining, and commercial real-estate losses to peak later in
2010.”
Less than a week after the presentation,
Stumpf revealed plans to sell $10.4 billion of new stock to help
repay $25 billion of Troubled Asset Relief Program (TARP) funds,
received from the US government at the height of the economic
crisis last year.
DISTRIBUTION
AmBank rolls out AmGenie
Malaysia’s fifth-largest bank by
assets, AmBank, has launched AmGenie, a mobile banking service it
says will operate on up to 90 percent of the country’s mobile
phones in an effort to maximise service take-up.
Incorporating services including balance
inquiry, transaction history, funds transfer, bill payment, cheque
order, stop cheque request, rates inquiry and branch/ATM locator,
AmGenie has been developed by the bank in partnership with local
telecoms provider FSBM Net Media.
The service is on offer to all of the bank’s
internet customers and has been flagged up by an advertising
campaign as well as a promotional campaign entitled ‘Sign-up and
Use’ – offering prizes including laptops, mobile phones and
iPods.
RESULTS
StanChart to report record earnings
Emerging markets-focused Standard
Chartered (StanChart) has announced that its profits for fiscal
2009 will hit record levels following a trading update.
And while the bank’s strong levels of income
and operating profit so far this year have been based on a record
performance from its wholesale unit, StanChart said that income
levels at its retail unit were recovering.
In particular, the bank was at pains to stress
that it does not believe Dubai-driven impairments will be material,
following reports that it has around $1 billion of loans linked to
crisis-hit emirate holding company Dubai World.
“The fundamentals of the group remain very
strong; we are highly liquid, strongly capitalised with a
conservative forward funding profile and we have a firm grip on
risks and costs,” said StanChart chief executive Peter Sands said
in a statement.
STRATEGY
Banco do Brasil eyes US acquisition
Latin America’s largest bank by
assets Banco do Brasil is interested in acquiring a retail bank in
the US, according to an interview given by CEO Aldemir Bendine to
Brasil Economico.
Analysts forecast that Banco do Brasil is
likely to concentrate on Massachusetts, Florida and New Jersey for
any US expansion – states with large Brazilian and Latino
communities.
And even without such an acquisition, the bank
is forecasting healthy growth in 2010.
Bendine told analysts the bank’s credit
portfolio would grow by around 20 percent next year, led by
consumer credit.
In the third quarter, the bank’s total lending
was up 41.2 percent year-on-year to BRL285.5 billion ($161.8
billion) while retail lending rose by 97.3 percent to BRL85.7
billion.
Net profits for the quarter rose 6 percent
compared to a year ago to BRL1.98 billion. While non-performing
loans reached 3.6 percent up from 2.2 percent in the corresponding
period in 2008, Bendine said the bank’s “non-performing loan rate
has reached its peak. The trend is now downward.”
MERGERS AND ACQUISITIONS
New York Community snaps up failed AmTrust
Cleveland-based AmTrust, the
fourth-largest of the 133 bank or savings institutions to fail so
far this year, has been acquired by 212-branch-strong New York
Community Bank (NYCB) in a deal assisted by the Federal Deposit
Insurance Corporation (FDIC).
As of 27 October, AmTrust Bank had total
assets of approximately $12 billion, deposits of approximately $8
billion and 66 branches (29 in Ohio, 25 in Florida, and 12 in
Arizona).
The FDIC, which estimated the collapse of
AmTrust will cost its deposit insurance fund around $2 billion, has
entered into a loss-share transaction with NYCB on approximately $6
billion of AmTrust Bank’s assets.
While NYCB has been expanding rapidly with
nine acquisitions in as many years, the AmTrust deal represents its
first deal outside its home state.
