REGULATION
Irish ‘bad bank’ to set up shop
in New Year
Go deeper with GlobalData
The Irish government has approved
plans to establish the National Asset Management Agency (NAMA), a
€54 billion ($80 billion) ‘bad bank’ to which five banks –
including the country’s biggest three banks, Allied Irish Banks
(AIB), Bank of Ireland and Anglo Irish – will transfer toxic loans
with a book value of €77 billion from January.
While the establishment of NAMA has to be
approved by the European Union, the government has said it expects
no objection in principle.
The bailout is the biggest in the country’s
history and is in response to the collapse of Ireland’s property
market, among the hardest hit in Europe by the global economic
downturn.
The Irish government currently has indirect
stakes of 25 percent in both Bank of Ireland and AIB, having
injected €3.5 billion into each bank, while Anglo Irish has been
fully nationalised.
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By GlobalData
REGULATION
India eyes domestic rival to
MasterCard, Visa
According to a report published by
the Reserve Bank of India (RBI), entitled Payment Systems in India:
Vision 2009-12, India is looking to set up a payment card system to
rival multinationals MasterCard, Visa and American Express.
The report said the thinking behind the
possible launch of a domestic payment card and PoS network for the
issuance and acceptance of payment cards was two-fold: the high
costs borne by Indian banks for “affiliation” with international
card associations in the absence of a domestic price setter; and
the connection with international card associations resulting in
the need for “routing even domestic transactions, which account for
more than 90 percent of the total, through a switch located outside
the country”.
The proposal to set up a domestic payment card
system has found favour with the country’s Indian Banks
Association. The value of credit card transactions in India in
2008-2009 reached INR653.5 billion ($14.2 billion), up by around
100 percent over the last three years, according to the bank’s
latest annual report, while debit card transactions totalled
INR185.5 billion in the last year.
The RBI will also look to establish a mobile
payments settlement network, stating: “Mobile phones are expected
to emerge as an important channel for transmission of payment
instructions. Efficient mobile payments would require real time
transfer of funds with adequate security… this would require
building a national infrastructure for facilitating real time
mobile payments.”
Release of the report followed Indian press
reports stating that the RBI would not, meantime, consider granting
any additional banking licences in the country despite the interest
in the booming Indian economy (see page 2). “As of now, we are not
giving any new bank licences,” said RBI’s deputy governor, Shyamala
Gopinath.
REGULATION
FDIC orders three-year premium
prepayment
For the first time since its
establishment, the Federal Deposit Insurance Corporation (FDIC)
will order member banks to prepay insurance premiums over the next
three years (around $45 billion in total) in an effort to avoid the
need for banks to pay a one-time fee which could deplete their
capital reserves.
So far this year, 123 US banks have collapsed
at a total cost to the insurance fund of more than $28 billion.
According to the regulator, the existing
premium payment system would not be sufficient to meet anticipated
future losses, which may bring total losses to around $100 billion
for the period 2007 to 2013.
For any bank which can demonstrate that
prepaid premiums would “significantly” diminish their cash or
“otherwise create extraordinary hardship,” the FDIC will set up an
exemption process.
The number of banks on the FDIC’s confidential
“problem list” reached 416 at the end of June, its highest level
since 1994; according to the FDIC, an average of around 13 percent
of “problem banks” end up failing.
The rule change announced in May and set to
take effect on 1 January 2010, to restrict the rate of interest to
be paid by banks deemed by the FDIC ‘less than well capitalised’ to
no more than 0.75 percent above the US average, is widely expected
to accelerate the rate of bank closures.
REGULATION
Bank of Spain seeks savings
bank consolidation
Around 15 of Spain’s 45 savings
banks ought to merge with stronger rivals in a major consolidation
of the sector, according to the central bank’s governor Miguel
Fernandez Ordonez.
While the country’s leading publicly quoted
banks such as Santander and BBVA have weathered the banking crisis
relatively unscathed, a number of the country’s savings banks have
been severely weakened by near-collapse of Spain’s commercial
property sector.
In March, the Spanish government extended a €9
billion ($13.5 billion) bailout to savings bank Caja Castilla La
Mancha, its first such rescue since 1993, when the bank reported
liquidity problems. In June, the country established the Fund for
Ordered Bank Restructuring, which the central bank now plans to use
to promote consolidation of the sector.
PRODUCTS
Zong rolls out
Zong+
US-based mobile payments provider
Zong has rolled out ‘Zong+’, which it says is the first online
mobile payment platform combining carrier billing with credit,
debit and prepaid cards, enabling customers to link any type of
payment to their Zong account via a one-time entry process.
And in an effort to encourage take-up of the
new service, customers will receive loyalty reward points for every
dollar spent through the service.
Zong’s latest initiative follows rival Obopay
offering the ability to link customers’ mobile phone numbers with
their credit cards though Obopay currently focuses on
person-to-person transfers of funds by the mobile channel.
“We view mobile transactions through payment
cards as a win-win for merchants, wireless carriers and consumers
alike and we’re excited to offer this latest addition to our
service,” said David Marcus, founder and CEO of Zong.
In the year to date, Zong’s transaction
platform has processed payments for more than 10 million unique
users.
DISTRIBUTION
Shinsei set to double branch
network
Japanese lender Shinsei, in the
middle of concluding a merger with rival Aozora Bank to form
Japan’s sixth largest banking group, is looking to more than double
its branch network from 38 to around 100 units in the next five
years.
A Shinsei spokesperson told RBI that the bank
planned to open smaller outlets in urban areas which he described
as consulting spots in an effort to boost the size of its
network.
“Each consulting spot would break even in
months, rather than years.”
He added that merger discussions with Aozora
were proceeding “slowly but surely”.
Having lost a combined $4.3 billion in the 12
months to March, Shinsei and Aozora returned to the black in the
six months to September, reporting profits of $122 million and $72
million respectively.
MARKETING
ANZ launches new global
brand
Australia’s third-largest banking
group, ANZ, has launched a new brand identity and positioning to
support its strategy in Asia. The move comes weeks after its
acquisition of substantial parts of Royal Bank of Scotland’s Asian
businesses (see RBI 621).
In a statement, ANZ’s CEO, Mike Smith, said:
“ANZ is increasingly a regional bank operating in 32 countries and
speaking 19 different languages. A strong, unified brand across all
our geographies is an important part of our future growth.”
The new identity and positioning follows 18
months of research involving more than 1,300 customers and 250
staff in Australia, New Zealand and Asia Pacific.
ANZ’s new brand consists of a simplified ANZ
word-mark and a new symbol to give customers, staff and the
community a way, said the bank, “to recognise and connect with ANZ
including countries where non-English characters are used”.
The new branding will be progressively rolled
out over the next 12 to 24 months. The additional cost in 2010 for
buildings, technology and marketing is approximately A$15 million
($13.9 million).
PRODUCTS
New domestic cards range from
BBVA
Spain’s second-largest banking
group, BBVA, has rolled out a new range of cards in its domestic
market. BBVA’s new card formats are to be named based on
customer-elected payment options: Before (prepay); Now (debit);
After (charge); and As You Go (revolving credit).
In addition, BBVA has created the ‘Safe Card’
concept, a free package that comes with all cards that includes: a
mobile alert service; insurance against ATM “muggings”; full card
fraud protection; emergency cash service; and secure e-commerce
transacting.
The bank, which already has a card portfolio
of 10 million, aims to sign up one million new customers in the
next two years. It said it launched the new range with a triple
purpose: to adapt to its customers’ payment preferences; to make
its cards easier to understand and use; and to boost card
security.
“The electronic payment methods business
segment is immersed in profound transformational change as a result
of the economic slump, regulatory changes underway and the status
of the card market itself, shaped by a lack of product/service
differentiation,” said the bank.
The launch comes with two special offers. The
first is a launch promotion on the As You Go Card which consists of
a 5 percent discount on all purchases made using the card until 31
January 2010. The second launch promotion is designed to boost card
usage, said the bank. All purchases made to December using BBVA
Visa cards qualify for a daily draw of €1,000 ($1,501).
STRATEGY
HSBC, BoCom in Chinese card
joint venture
HSBC and China’s Bank of
Communications (BoCom) are in advanced discussions to transfer
their existing joint credit card activities in China to a
newly-established joint venture company.
The move is designed to capitalise on growing
demand for credit in the country. According to HSBC, while China’s
credit card market saw 58 percent growth in circulation figures to
142 million in 2008 and a 320 percent and 76 percent surge in
outstandings in 2007 and 2008 respectively, the market penetration
remains low with only 0.11 cards issued per capita.
The joint venture, it added, will tap a market
which is expected to see exponential growth in the coming years
particularly as, of the 1,800 million cards issued by 235 issuers
in 2008, over 90 percent comprised ATM or debit cards with no
revolving credit line.
The proposed new joint venture company will be
an extension of HSBC’s co-operation agreement with BoCom’s Pacific
Credit Card unit, which already has over 11 million cards in force.
The venture will have an initial registered capital of CNY2.5
billion ($368 million): BoCom will inject CNY2 billion for an 80
percent stake in the joint venture, while HSBC will pay CNY1.16
billion for its 20 percent interest in the share capital.
DISTRIBUTION
Number of ICBC internet
customers hits 70m
Industrial and Commercial Bank of
China (ICBC) has announced that, as at the end of September 2009,
the number of ICBC Personal Internet Banking customers broke
through the 70 million mark to reach 70.8 million.
The bank says it is also seeing a huge
increase in online transactions, which totalled CNY11.9 trillion
for the first nine months the year, or a year-on-year growth of 84
percent.
In September, the bank upgraded its m-banking
platform following the successful trial of a new Third Generation
service. It is predicted, ICBC said, that 300 million Chinese
citizens will access the internet via mobiles by the end of
2012.
PRODUCTS
OCBC SmartSenior Programme
launched by OCBC Bank
Singapore’s OCBC Bank has rolled out
the SmartSenior Programme, a new product it describes as a
“comprehensive programme that offers banking solutions and
privileges to meet an individual’s financial, self-enrichment and
other lifestyle needs in the retirement phase of life”.
Over the last few years, OCBC Bank has
developed a suite of financial products and services to cater for a
range of market segments.
This includes the introduction of the OCBC
Mighty Savers Programme in 2007 (see RBI
620); the bank’s appointment in 2008 as the managing agent of
the Children Development Accounts under the MCYS Baby Bonus Scheme;
and the introduction of OCBC SmartParent, a transactional family
savings account.
SmartSenior offers a range of rewards and
privileges worth more than S$1,200 ($864) to senior customers and
their children, states the bank. To get these benefits, customers
need pay an annual fee of S$60.
The OCBC Group reported a net profit of S$450
million in the third quarter of 2009, an increase of 12 percent.
For the first nine months of 2009, the group’s core net profit
increased 18 percent to S$1.46 billion.
In a further sign that bad debts in Asia have
not been as serious as initially feared, allowances for the third
quarter were S$52 million, down from S$156 million a year ago and
S$104 million in the second quarter of 2009. The non-performing
loans ratio improved during the quarter from 2.1 percent to 1.8
percent.
RESULTS
Russia’s largest bank posts 91%
fall in profit
Bad debts have continued to
bedraggle Sberbank, Russia’s largest banking group. For the nine
month period to the end of September, the bank posted profit before
tax of RUB11.9 billion ($414 million), down 91 percent
year-on-year. For 9M09, the bank allocated RUB282 billion in
provisions, including provisions for loan impairments of RUB263
billion.
Interest income
increased 38.8 percent year-on-year to RUB567 billion. Net fee and commission income increased 5.8 percent
year-on-year to RUB99 billion, which was largely due to commissions
generated on settlements, foreign currencies and precious metals,
operations with banking cards, current account transactions and
lending to corporate clients.
Sberbank said, however, that “subdued consumer
demand for retail loans” reduced fee and commission income on
lending to individuals.
Its retail loan
portfolio shrank by 6.9 percent year-to-date to RUB1.170
trillion.
RESTULS
Bank of China registers 3.8%
rise in earnings for first 9 months
Bank of China has recorded CNY62.23
billion ($9.11 billion) in profit for the first three quarters
ended 30 September, up by 3.82 percent year-on-year.
As at the end of September, the total assets
and total liabilities reached CNY8.34 trillion and CNY7.82
trillion, an increase of 19.95 percent and 20.99 percent
respectively from the end of last year.
It achieved CNY21.11 billion in profit
attributable to shareholders for the third quarter of 2009, an
increase of 18.83 percent year-on-year.
Adhering to the Chinese government’s strategic
direction to “maintain growth, expand domestic demand and adjust
structure”, the bank said, as at the end of September 2009, the
balance of total customer loans rose by CNY1.41 trillion or 42.63
percent to CNY4.7 trillion compared with the end of last year.
Domestic renminbi-denominated loans increased
44.97 percent to CNY3.39 trillion: BOC’s market share of
renminbi-denominated loans rose by 0.98 percentage point to 8.69
percent. Non-performing loans amounted to CNY75.31 billion, a
decrease of CNY12.18 billion and CNY2.178 billion compared with
last year-end and interim of 2009, respectively.
DISTRIBUTION
BNP Paribas and First Data to
deploy ATM network in Turkey
TEB-BNP Paribas, the Turkish
subsidiary of France’s BNP Paribas, has signed an agreement with
payment processing firm First Data which will see the creation of a
network comprised of 1,250 ATMs across Istanbul and other major
Turkish cities by 2012.
The network will be based on convenient
off-site locations, and will be accessible to TEP-BNP Paribas
cardholders as well as those from other banks, with the principle
focus being successful retail outlets.
“Banks are increasingly realising the
opportunities presented by off-site ATM strategies and the benefits
of working with an experienced ATM services provider,” said Paul
Stanley, senior vice-president and general manager of integrated
networks at First Data.
STRATEGY
Wal-Mart rolls out Mexican
banking
US retailer Wal-Mart has received
authorisation to begin opening banking correspondents in Mexico
following approval from the National Banking and Securities
Commission.
Banco Walmart, which received initial approval
from regulators in 2007, will be allowed to offer banking services
across 29 business units in Mexico City, with a rapid nationwide
expansion expected to lead to the opening of over 1,000 units by
the end of 2009.
The correspondent licence enables third-party
retailers such as Wal-Mart to cash cheques and take deposits in its
stores; other retailers in Mexico are expected to follow suit as
the Mexican authorities attempt to open up the country’s banking
industry to more competition.
MARKETING
Asia’s wealthy expected to grow
8.8% to 2018
Asia-Pacific’s population of high
net worth individuals (HNWIs) fell 14.2 percent to 2.4 million in
2008 amid a global economic downturn and market volatility,
according to the Asia-Pacific Wealth Report released by Merrill
Lynch Global Wealth Management and Capgemini. The combined wealth
of the region’s HNWIs dropped 22.3 percent to $7.4 trillion.
Ultra-HNWIs, or individuals with investable
assets of at least $30 million, witnessed steeper wealth erosion
than the HNWI population in the region. The number of ultra-HNWIs
in Asia Pacific fell 29.6 percent to 14,300 and their total wealth
shrank 35.1 percent.
However, growth in the region’s HNWI
population and wealth is set to pick up as market conditions
improve, concluded the report. The region’s economies are showing
signs of recovery and are forecast to grow at a faster pace than
the global economy by 2010.
China and India are likely to lead HNWI growth
in Asia-Pacific, underpinned by robust domestic consumption and a
growing number of affluent individuals. The combined wealth of Asia
Pacific’s HNWIs is estimated to grow at an annual rate of 8.8
percent until 2018, faster than the global average of 7.1
percent.
MARKETING
Commerzbank unveils rebranding
effort
Struggling German giant Commerzbank
has unveiled a new promotional campaign even as it continues to
report heavy quarterly losses. The business, which reported a net
loss of €1.06 billion ($1.6 billion) for the third quarter of 2009,
has unveiled a new logo as part of its continued integration of
former rival Dresdner Bank.
The yellow ribbon logo is accompanied by a new
brand promise: “achieving more together”, and is being launched via
an advertising campaign in print and on German television. The bank
has also moved forward the integration of Dresdner branches by six
months in response to customer feedback, with all former Dresdner
units now set to operate under the Commerzbank name from the second
quarter of 2010 onwards.
Other integration activities will also be
brought forward: branch managers and regional branch managers will
take on new duties on 1 July 2010, six months earlier than
originally planned, while the IT integration will be carried out on
a staggered basis from the second quarter of 2010 rather than the
full-scale migration that had been planned for the fourth quarter
of the year.
RESULTS
Thailand’s SCB unveils solid Q3
results
Non-interest income up 30 percent on
the back of fee income growth and gains on investments helped Siam
Commercial Bank (SCB), Thailand’s largest bank measured by branches
but third largest by assets, report net profit had increased to
THB5.2 billion ($157 million) for the quarter compared to the same
period in 2008 – a 7.7 percent improvement.
The bank also cited its ability to contain
expenses, up 1.4 percent year-on-year, contributed to the improved
bottom line. SCB also managed to reduce its NPL ratio to 4.7
percent compared to 5.2 percent at the end of third quarter of
2008.
Fee income for the third quarter was at
THB4.85 billion and grew 12.8 percent year-on-year as a result,
stated the bank, of the strong sales capability of the bank’s
retail franchise.
STRATEGY
Seegers departs as Barclays
restructures
The UK’s Barclays has announced a
significant restructuring of its consumer banking units that will
see Barclaycard and its global retail banking operations report
together for the first time.
The new global retail banking (GRB) group will
be comprised of UK retail banking, Barclaycard, and the former
global retail and commercial banking (GRCB) business in Western
Europe and emerging markets, and will be headed by current
Barclaycard chief executive Antony Jenkins.
Frits Seegers, current chief executive of
GRCB, will leave as a result of the changes. But Maria Ramos, chief
executive of Barclays South African subsidiary Absa, is among five
executives who will join the group executive committee for the
first time.
