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CEOs prescribe rapid transition for the relief of merger pain
The Banker is not trying to emulate Tatler or other society magazines with their focus on personalities. All the same, in the financial industry and beyond we constantly demonstrate that we have access to the senior players that is second to none. Last month, we featured HSBC’s chairman Sir John Bond on the cover. This month, we have interviews and input from a wide variety of senior figures, ranging from Hong Kong property magnate Vincent Lo to US Securities and Exchange Commission chairman William Donaldson, who discusses the implications of Sarbanes-Oxley in Viewpoint.
Who is regulating the regulators?
Everyone is talking about regulation and little wonder, considering the burden and cost. Over-regulation not only poses a threat to the finance industry today – it is storing up problems for tomorrow.
Madrid puts Basel II back on track for 2006 implementation
Following the Basel Committee meeting last month, the US is on side again and the accord looks likely to keep within its timetable.
Legislation changes fuel euroscepticism in London
Paranoia is in vogue in UK financial circles. The EU’s recent move to ban internalisation could hit London exchanges hard and the europhobes are out in force.
Regulatory risk may be next banana skin
One of the biggest risks for the financial system is regulation, says City of London think tank, the CSFI.
Freddie Mac scandal deepens
Freddie Mac, the US’s second largest mortgage finance lender, is delaying its earnings restatement until this month, having previously said it would restate its earnings for 2000-2002 by the end of the third quarter.
Deutsche wins Saudi licence
In an important financial and political move, Saudi Arabia announced it would grant a full branch banking licence to Germany’s Deutsche Bank, Europe’s second largest bank by assets.
Australia slashes credit card interchange fees
Interchange fees for credit card transactions in Australia are to be virtually halved following tough action by the Reserve Bank of Australia (central bank) and the failure of an appeal by Visa, MasterCard and BankCard in the federal court.
US loan persuades Turkey to send troops to Iraq
The Turkish government is gearing up to dispatch troops to Iraq to assist in US-led peacekeeping operations and in the rebuilding of its south-eastern neighbour, in return for an $8.5bn soft US loan, despite protests from the Iraqis themselves and from Kurds living in the northern part of the country, writes Metin Demirsar.
RSA gets balance right for empowerment charter
News that South Africa’s financial sector has agreed to an ambitious black empowerment charter has pushed financial stocks upwards. The government-endorsed charter sets down detailed empowerment targets for companies, paving the way for as much as 25% of the sector’s value to be in black ownership by 2010.
Mediterranean focus on integration impact
The impact of the Euro-Mediterranean integration process on the
financial services industry in the Mediterranean region, is the theme
of a banking conference in Malta on November 27 and 28.
The keynote address will be given by Giandomenico Magliano, director
general for multilateral economic and financial co-operation, Italian
Ministry of Foreign Affairs. The organisers are the World Savings Banks
Institute and the Mediterranean Bank Network.
Price of change will pay off in long term
William Donaldson, chairman of the US Securities and Exchange Commission, argues that the costs of Sarbanes-Oxley and other reforms are opportunities from which companies can benefit.
CEOs’ tips for merger success
As global consolidation continues apace, one essential ingredient for
success is becoming evident – to integrate the respective parties
quickly. Karina Robinson reports.
Time is of the essence when integrating an acquisition. “Speed is the
main thing I would change,” says Lars Nordstrom, CEO of Nordea,
reflecting on the merger of four banks from four countries to create
the largest bank in the Scandinavian region. While every deal is
different – size of operation, location, local labour laws, longevity
of the management team, current economic circumstances, and many
factors play a part – all participants from the cases mentioned in this
article agreed that speed was the top priority.
Property magnate and babe magnet
What advice does he have for those seeking to make money on the mainland? No bribes and lots of lobbying
Hong Kong property tycoon Vincent Lo talks to Karina Robinson about his strategy for doing business with mainland China.
Vincent Lo is referred to in the Chinese media as “Sheung Hoi Siu Yeh”,
which roughly translates as Shanghai Tycoon. “He is a much admired and
sought after gentleman by the ladies in Shanghai,’’ says a Hong Kong
peer, speaking of the owner of one of the largest foreign property
development companies in China.
Charlie Berman
Managing director, co-head European credit markets, global fixed income credit markets, Citigroup
Charlie Berman tells Geraldine Lambe that Citigroup is perfectly positioned to capitalise on a European shift to a capital markets-based corporate funding.
Spot the difference
Europe’s leveraged finance market is following in the US’s footsteps. However, inherent differences in the bank lending culture, investor base and legal landscapes mean that Europe still lacks the rational pricing of the US market. Joanna Hickey reports.
They shoot… they score
Over the moon: (from left) Adrian Carr, Jean de Skowronski, Eve Flotron, Lee Rochford and Andrew Pearse
CSFB’s cancellation bond for Fifa last month proved that the capital markets are increasingly willing, and more than able, to absorb risk traditionally taken by the insurance sector. Geraldine Lambe reports on this idiosyncratic issue.
New-fangled tool breaks into the market
Mark Stainton: EDSs “fill in the gap” between the credit and equity markets
The trend for cross-asset trading has spawned a new product, equity default swaps. Supporters are championing their advantages but, says Natasha de Teran, it is likely that EDSs will have to jump through a few more hoops before take-up is widespread. For some banks the fall in equity prices and the demise of the dot.com-fuelled equity investing culture happily coincided with an increased focus on credit risk management and the fast development of the credit markets. Those that managed to gain a lead in the rapidly growing credit sphere have reaped the rewards.
Investors’ row looks set to run and run
European bond investors are on the attack. They have not so far manned the barricades but they are distinctly edgy, maintaining that they are suffering from mushroom syndrome: people keep them in the dark and feed them bullshit. So they are fighting back. Their main bone of contention is that a company can be restructured with a negative impact on existing bonds and with little in the way of financial disclosure.
It’s hard work to get hands on capital
The European pension fund crisis could be partly resolved by persuading companies to manage their working capital better and release funds. One estimate is that European companies have about E600bn trapped in inefficient cash flow management. Release it and they can top up their ailing pension funds and a lot more besides – new acquisitions, new growth, things that could bring moribund European economies back to life.
An old hand avoids new red tape
Where are they now? Michael Philipp, former head of global asset management at Deutsche Bank, hands me a business card that reads: “Vision Fuel Services, Peachtree Street, Atlanta”, a company of which he is “principal”. Is it an opticians or a fuel supplier? “It’s my son’s business,” he says, none too helpfully.
Tightening trend continues
Geraldine Lambe analyses The Banker’s Credit Risk 500 and finds the figures add up to a positive picture for corporates and financials as spreads tighten across all sectors.
Private banks fail to keep the customers satisfied
A new survey reveals that many private bank clients are dissatisfied with the services they receive, mainly due to middle and back office failures. If the banks do not act quickly not only could they lose custom but service providers could also suffer mandate losses. Roxane McMeeken investigates.
GSS Notes
Euroclear plans business contingency revamp
Settlement system Euroclear plans to implement a new business
continuity programme built on a framework of three data centres to
store and process transactions. Euroclear maintains that the
arrangements will enable each of its entities to resume their technical
operations within one hour of a local disaster, such as a fire or a
bomb, or within three hours of a major regional disaster that disables
both primary data centres. It will also be able to work in its new
business contingency environment for up to two years.
Peculiar powers for policing
Manfred Weber: upset by news report
Jan Wagner reports from Frankfurt on the unique powers of the German financial regulator but finds that its approach has not prevented banking troubles.
Maltese at crossroads over euro vision
John Dalli: Being in the EU will mean “losing control of the steering wheel and accelerator”
Malta will be one of 10 states joining the EU next year. Michael Imeson reports on preparation in the financial sector, and the consequences that membership will bring. Malta suffered a resounding defeat in the Eurovision song contest in May, coming second from bottom. Only the UK did worse, with “nil points”. The two nations, which have ties stretching back centuries, took it on the chin and treated the international humiliation as a joke. The voting that really mattered to Malta took place earlier in the year.
Market booms
Foreign-owned bank expansion and strong economics are fuelling the growth trend. Alice Brand reports.
CEOs with eyes on expansion
The heads of the top three banks in Singapore tell Karina Robinson about their strategies for growth – three different routes to overseas expansion.
All uphill for foreign banks
Despite the liberalisation of China’s banking system, in line with WTO guidelines, foreign banks still face major hurdles in operating profitably, says Louise do Rosario.
Crisis? What crisis?
Political upheaval can translate into easy money for the financial sector – despite what the bankers might say, argues Jonathan Wheatley.
Safe spot for investment
Monica Campbell reports from Mexico City on why investment bankers’ optimism has not been dented by the slumping economy and political frustration.
Gulf gets a retail boost
While Gulf banks enjoy strong results, banks in non-oil countries have seen a drop in their profits. Stephen Timewell reports.
Bulls in a tight economy
It is a wonder that Zambia’s banks survive, let alone make money, in a country where running costs are high, reports Gill Baker.
A bigger slice of the wallet beckons
Kasikornbank’s David Hendrix talks to The Banker about the bank’s restructure and progress in growing the retail business – improving efficiency and cutting costs while enhancing customer service.
Russian banks fight harder for consumer business
Competition is heating up among Russia’s banks and foreign players for a slice of the growing retail banking and mortgage lending markets that are catering for the new middle class. Anthony Robinson reports from Moscow.
Alignment of ‘planets’ signals an IT revolution in banking
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Parveen Bansal talks to Oracle’s Andrew Derrer about the new astrology that will lead to change in IT in the financial services industry. Banks that square up to these challenges will have positive horoscopes, he predicts.
New platforms can reduce costs
Skipton CEO John Goodfellow; new system needed
Cost and business intelligence have been behind firms’ resistance to change legacy systems but, as Parveen Bansal reports, platform replacement may prove to be a cost-saving long-term option as new, cheaper alternatives are developed.
UBS puts global tech centre in oz
Offshoring is making its way to Australia, boosting the country’s position as leading financial services hub in the Asia-Pacific region. United Bank of Switzerland (UBS) is setting up a global technical support centre in Sydney and is relocating up to 200 posts from London and New York. The centre will provide 24-hour technical support for UBS’s 16,000 staff globally.
This follows UBS’s relocation of its technical support operations from Tokyo, Hong Kong and Singapore to Sydney last year. Australia’s highly skilled financial services workforce and low-cost business environment were significant factors in the decision.
Sun in utility computing move
SchlumbergerSema has teamed up with Sun Microsystems to offer utility computing to customers. The company, a member of the Sun iForce community, will deploy Sun’s utility architecture so that customers can dynamically match IT sourcing to business needs. SchlumbergerSema vice-president, computing infrastructure outsourcing, Hossein Sazegar, said: “Our experience at providing variable-cost and variable-capacity solutions has shown that such models can address business objectives to generate cost efficiencies and improve return-on investment.”
Sybase offers Basel II solution
AS the Basel II Accord nears agreement, enterprise infrastructure and integration company Sybase and global banking risk management consultancy Quadrant Risk Management International have launched a new end-to-end solution called B2. The modular, open-architecture solution comprises seven integrated components and is said to incorporate all of the strategic, tactical and technological tools needed to deal with the implications of Basel II on risk management.
Swift notes rise in FIN traffic
Swift’s FIN message traffic peaked at an all-time high of 9,685,754 million messages at the end of September. More than one million of them were sent over SWIFTNet. FIN traffic year-to-date is ahead of plan, with 1.5 billion messages, representing a 12.4% growth in volume.
The drivers for this rise are payments reporting messages and Treasury messages, particularly MT 300 Foreign Exchange Confirmation. Messages sent via SWIFT per day have tripled in volume in the past seven years, up from three million in 1996 to nine million messages per day in 2003. FIN message traffic reached a record 1.8 billion messages in 2002, growing by 18.5% over the previous year mainly due to the launch of NewCHAPS in the UK and RTGSPLUS in Germany.
Temenos offers innovative T24
A radically changed banking system from Temenos offers the same functionality as Globus but on a state-of-the-art technology platform. The result of three years of development effort and more than $24m of investment, the solution, T24, is highly innovative in that it removes the need for batch end-of-day processing, allowing independent close-of-business processes in a multi-country environment. Using a browser front end, web services, an open development environment and an enterprise console to monitor and analyse system performance, the new T24 offers the next generation of core banking systems to existing (as an upgrade) and new customers.
Processing coup for Postbank
As banks focus on their core competencies, they are better able to offer their best-in-class services to other banks, as shown by Germany’s Postbank. Deutsche Bank and Dresdner Bank have both signed agreements to have their domestic payments processed by Postbank, making it one of Germany’s leading payment clearing houses.
The deals are of great significance to Postbank, and signal the consolidation of the German banking market.
Postbank, Deutsche and Dresdner also plan to develop a joint SAP-based IT platform, and Postbank plans to offer the same services to other partners in the near future. It currently handles more than 10 million transactions per day.
Bank break-up
Banks are busy deconstructing in the face of competition, outsourcing key processes in the search for higher efficiency and lower costs.
Chris Skinner wonders whether they will end up becoming shells of their former selves.
Lightening the legacy burden
Banks’ investments in technology represent more than 40% of the estimated $334bn that financial services institutions are spending in 2003, mostly on routine legacy maintenance.
Sterling proves a valuable survivor
Since the introduction of the euro and the accompanying demise of the tradable currencies it replaced, sterling has become increasingly attractive. Andy Webb looks at the long-term trends.
An asset class in its own right
FX stands up as an asset class because it is liquid and transparent, and it has trends, volatility and big user numbers. William Essex looks at the likelihood of this enduring.
