Despite the global economic slowdown of the past few years, consumer banking services have kept pace in terms of total revenues and profits compared with banks’ other lines of business. A sample of large US and international banks with diversified business shows that retail banking products and services profits accounted for $184bn, representing an average of 54% of the total for 2003.
Technologists are already developing Internet2, the super-fast web promising to deliver speeds that leave Broadband in the proverbial dust. But with many banks still grappling with today’s technology, how many will be ready for tomorrow’s? By Chris Skinner
ADP Wilco has extended its range of business process outsourcing (BPO) services for the financial services community. BPO services form part of ADP Wilco’s drive to save customers money. Customers are able to outsource elements of operational processes by using ADP Wilco’s offshore services, which include many of the day-to-day tasks performed by back-office staff.
“We have been developing our BPO services for several years in response to specific requirements for our customers and other business units within ADP Brokerage Services Group,” said Elizabeth Lake, CEO of ADP Wilco.
Indian company CashTech Solutions, which handles cash management and transaction settlement problems, has implemented a remittance solution for ABN Amro Bank in Japan.
The Outward Remittance System will enable ABN Japan to process outgoing foreign currency remittances initiated through the ATM network in alliance with Japan Post Office and also remittance requests received by the bank.
A new style of phone box is hitting UK high streets. The Travelex-branded red, white and blue kiosks have an ATM on the exterior of one side and a payphone on the other.
For security, the ATMs will have an ink-staining system – a DNA-traceable, indelible powder that stains everything, including the cash, if an attempt is made to steal from the kiosk. If initial trials of this joint venture by BT Payphones and Travelex UK are successful, then up to 300 will be rolled out in the UK this month.
In response to a UK Financial Services Authority’s (FSA) discussion paper on reducing money laundering risk, Mantas, a global provider of anti-money laundering (AML) technology, has called for the establishment of an industry coalition that would develop a monitoring standard to combat money laundering. This would help major financial firms put technology in place to identify and eliminate money laundering without increasing the regulatory burden on financial institutions.
Mantas believes that effective know-your-customer and AML programmes underscore a risk-based approach to fighting fraud and that automated monitoring systems offer benefits such as an understanding of customers’ needs and an enhanced ability to detect and prevent laundering activity. Mantas also suggests the FSA consider introducing a system to incentivise firms to implement effective AML controls.
In their relentless drive to save overheads on call centres and other service facilities, bank chiefs are weighing up the many benefits of voice recognition software. Wendy Atkins reports.
Application service providers – hailed as the next big thing in 1990s – failed to live up to their press. Now, however, small and medium-sized organisations are realising the benefits ASPs canoffer. Parveen Bansal reports.
Paul Caplin, founder of Caplin Systems, discusses in which direction he sees the trading world moving, with special regard to data networks. Interview by Parveen Bansal.
Russia’s financial sector is in recovery from the 1998 crisis and banks are keen to gain an edge by using customer relationship management. But, as Wendy Atkins explains, first they must do their homework.
Growing competition and the countdown to losing its state guarantee on retail deposits are two challenges that Russia’s giant Sberbank faces. But as chairman Andrei Kazmin tells Ben Aris, he isn’t panicking.
Russia’s mutual funds were wiped out in the 1990s crisis. However, news that the state pension fund is unlikely to provide its citizens with much of a nest egg has fuelled new growth in the area. Ben Aris reports.
Russian banks that used to primarily focus on large corporate customers are now looking at the retail business as a key element of their market strategies.
A flourishing economy is allowing the average Russian to enjoy a hitherto-unknown lifestyle, a fact which hasn’t escaped the notice of the bank and loan men. Ben Aris reports.
Despite its shortcomings, Russia’s banking sector appears to be stable enough to avoid a systemic crisis, even when faced with a worsening foreign economic environment. Andrey Kostin, CEO of Vneshtorgbank, explains.
Personal customers in the Czech Republic and Poland have mixed feelings towards the foreign banks that dominate their financial services industries,a new survey shows. Michael Imeson reports.
Douglas Beckett: ‘Africa is a high cash-based society. We are trying to culturally drive the transition towards more automated transactions’
Douglas Beckett, regional head of consumer banking at Standard Chartered explains the bank’s strategy in Africa, following its recent re-entry into South Africa and Nigeria. By Parveen Bansal.
With its roots in both Asia and Africa, Standard Chartered Bank has emerged in the past 150 years as a leading financial institution in these markets. The present-day bank is the product of a 1969 merger between Standard Bank of South Africa and the Chartered Bank of India, Australia and China, the latter being the older institution, having been founded in 1835 following the grant of a Royal Charter from Queen Victoria.
The governor of Zimbabwe’s central bank has had to introduce tough measures – in the face of death threats – to pull the country back from the brink of meltdown. But are they too little, too late? James Eedes reports.
Michael Esrubilsky: customers do not have to prove their income
Young Argentines who sold a small internet site to Banco Santander for millions of dollars at the height of the internet bubble are jumping into Brazilian banking to compete with the region’s largest financial institutions.
With interest rates falling, Brazil’s banks are losing the drip feed that is government debt and are looking to increase lending and fees. Bill Hieronymus reports from Săo Paulo.
After Malaysia’s stormy financial fortunes in the late 1990s, the country has recovered well, and its economy is proving of valuable interest to international markets.
Dr Zeti: ‘The dollar weakness is unlikely to have any fundamental implications for Malaysia’
The Banker’s Central Banker of the year for 2003, Tan Sri Dato’ Zeti Akhtar Aziz, is now in her second term at Bank Negara Malaysia. She helped Malaysia through the 1997-1998 financial crisis and has since presided over a dramatic consolidation of Malaysia’s financial sector. The country is now reaping the benefits.
For a large, underpopulated country, Kazakhstan has achieved impressive economic growth in recent years. And, despite Western criticism of endemic corruption and poor distribution of wealth, the country looks set to continue on the same path. Chris Pala reports.
Despite concerns over the wisdom of letting a state bank manage Russia’s pension fund, profits so far have been promising. Ben Aris reports from Moscow.
Positive economic indicators in Romania have heralded an influx in foreign direct investment. Thus opening new doors for the country’s financial sector.
Mugur Isarescu, governor of the National Bank of Romania, tells Matei Paun why he decided to issue a set of regulations that limit retail banking growth.
Patrick Gelin, chief executive, BRD: ‘Our strategy for 2004 includes being more active in factoring in order to finance very small companies for which we are now drafting an offer and to play a more active role in the public sector’
Privatisation in the Romanian banking sector has sent foreign assets soaring in the last six years. And the flurry of activity shows no signs of dissipating.
Since privatisation began with the 1998 sale of the Romanian Development Bank (BRD) to France’s Société Générale Groupe, the percentage of banking assets represented by foreign banks in Romania has skyrocketed to more than 50%. Besides the French, the Austrians are traditional players in the central and eastern Europe (CEE) banking sector, as are the Greeks, playing on their regional familiarity. The Dutch, Italians and even the Americans, through Citibank, also have considerable presence.
Nicolae Danila, BCR’s president: ‘We intend to actively support the growth of our clients and to team up with them in order to seize the medium and long-term business opportunities provided by the Romanian economy’
Banca Comerciala Romana is awakening to a world of opportunities and challenges With its know-how and a 300-strong branch and agency network, it is well-placed to distribute its products and services and make headway in the retail market.
Banca Comerciala Romana (BCR) is the Romanian banking sector’s sleeping giant. Not only is it the largest bank, with roughly a 30% market share and nearly four million customers (doubled from two million in early 2000), but in the period 2000-2003 it generated total profits of almost $750m. In 2003 it delivered a strong performance with net profits of over $160m, in line with 2002’s performance.
As Romania does all it can to create a smooth path towards EU membership, investors are discovering that the countries holds great promise. Matei Paun reports from Bucharest.
Despite some difficulties, several new EU member countries could also be part of the euro currency zone as early as 2008. Given the demands of the process and their consequences, Marianne Kager reports on whether sooner is better.
The ECB’s Tommaso Padoa-Schioppa dismisses talk of a double standard being applied to the 10 EU accession countries. Interview by Jan Wagner in Frankfurt.
South east Europe is growing fast and the major banks in the region, particularly the Greek banks, are rapidly expanding their capital base as they expand their networks into neighbouring countries. This year’s Top 50 South East European banks listing shows that aggregate Tier 1 capital has risen by 33.6% to $32bn from $24bn in last year’s listing. Some of the major Greek banks significantly increased their capital to support future expansion. National Bank of Greece (NBG), the largest bank in the region, increased its Tier 1 capital by 58.8% to $3.71bn at the end of 2003 thereby markedly raising its Tier 1 capital adequacy ratio from 7.4% to 10.3%. Alpha Bank also saw Tier 1 capital rise by a significant 48.9% to $2.64bn. Panayotis Thomopoulos, deputy governor of the Bank of Greece, believes Greek banks have the highest levels of Tier 1 capital in the EU at 10%.
A raft of favourable economic conditions has facilitated a long-overdue reversal of fortunes for Greece’s key financial institutions. Stephen Timewell reports from Athens.
Greece’s newly elected conservative government has pledged to boost growth and reduce unemployment. However, Prime Minister Costas Karamanlis has more pressing issues to contend with first – namely, to ensure the success of this year’s Olympic games. Kerin Hope reports from Athens.
Francisco González: BBVA chairman announces a surprise $4.1bn cash bid in February to buy the rest of Bancomer, Mexico's biggest bank, just as Latin America's economy moves up a gear
Spanish banks have had an uphill struggle in Latin America but now the continent is delivering returns at the same time as the domestic market remains buoyant. Jules Stewart reports.
Last month’s terrorist attacks in Madrid may have raised a question mark over Spain’s political agenda, but for the banks it is business as usual, only more so. The outlook for 2004 is for continued growth inoperating profits.
Until now, reducing costs and improving flexibility have driven the development and change of core banking systems. However, the burden of new regulations is also putting pressure on banks to unify their customer and product data, as Anthony Gandy reports.
Core banking system replacement is risky and complex but is an increasingly likely scenario for banks. Like their smaller peers, larger institutions may need to opt for packaged solutions to keep costs and time-to-market down. Rekha Menon reports.
The demands of competition and regulation mean banks need to be poised for action. Their core systems must be able to evolve with industry changes, says CSC’s Anita Bradshaw.
While most banks know their core systems are overdue for replacement, the dual obstacles of high cost and high risk are preventing them from taking the plunge. James Eedes reports.
LCH.Clearnet (LCH) has completed the migration of central counterparty services from the OM London Exchange to LCH and has begun providing clearing services for London Stock Exchange-owned EDX.
Electronic trading platform, EuroMTS last month launched what it hopes will become the main platform for trading treasury bills. To ensure the deepest possible liquidity, Euro Benchmark Treasury bills will be offered via a parallel listing on the EuroMTS Benchmark Treasury bills market and on their own MTS domestic markets.
Société Générale has set up a new division, Global Securities Services for Investors, to provide full investor services on securities and listed derivatives covered by the group worldwide.
Much has been said about the need for greater consolidation in the securities industry, especially to bring together the fragmented clearing and settlement infrastructure in Europe but, as Frances Maguire finds, consolidation is not always what it is cracked up to be.
James Eedes reveals the results of The Banker’s second FX banks listing. Once again, UBS is the runaway victor but there is still much to play for in terms of global control.
Investors hoping for a blanket European definition and law for covered bonds shouldn’t hold their breath. Michael Marray reports on the market which is growing across the continent.
Communists don’t usually bother capitalists these days but in the Portuguese parliament Communist deputy Lino de Carvalho has been giving Vitor Martins, a consultant to Citigroup, a hard time over the bank’s contract to securitise uncollected tax and insurance payments.
Saga Group, a UK company that specialises in the grey market (hair that is, not off-exchange deals) has teamed up with hedge fund manager RAB Capital to launch two absolute return funds. Even granny it seems is waking up to the fact that the standard equity unit trust is a bit of swizz and rarely returns enough to cover the exorbitant charges.
It may be a bit esoteric as an intellectual exercise for day one in a new job. All the same, when Helen Weir takes up the post of finance director of Lloyds TSB, she might find the relationship between the bank’s credit spreads and the price of its equity options rather interesting.
In the wake of a tough market and a poor reception for its new-look Golf, German carmaker Volkswagen has revealed a downbeat outlook for 2004 and announced plans to cut expenditure by 10%. Yet, it seems, analysts are still sceptical. Geraldine Lambe reports.
The Citibank team from left to right: Nicole Biden, Peter Apostolicas, Robert Liao, Ramnik Ahuja, Alison Galt
In last month’s HBOS securitisation, Citigroup proved that a long-term relationship is still the rock on which deal-making is built. Mark Pelham talks to Citi’s team about the largest retail mortgage-backed securities deal ever seen.
Following a critical reorganisation, Brian Lawson, chief operating officer fixed income, Europe, at Nomura, says the business is once again ready to recapture its pre-1998 position. He talked to Geraldine Lambe about the focus of building intelligent, long-term businesses.
Rodrigo Rato: “I need something more manageable. The IMF job is an impossible one to do well.”
Karina Robinson reviews the main candidates for the top job at the IMF and finds that the front-runner is Rodrigo Rato, Spain’s former finance minister.
Had I been talking to the next head of the International Monetary Fund in the characterless offices of Spain’s Ministry of Economy in Madrid last November?
Bankers who think that credit derivatives give them risk protection may find themselves on the wrong end of market mispricing. Natasha de Teran reports.
For some while now the world’s leading banks have been seen as the villains of the credit derivatives (CDs) markets. They parcel up their poorly performing assets, it is claimed, and sell them on to unsuspecting investors. Then, when a credit blows up – Enron, Worldcom, Parmalat – it is the insurance companies and other investors that take the hit and not the banks, complain critics. It is great for the world financial system as bank collapses are avoided. But dreadful for shareholders and buyers of with-profits policies from insurance firms whose returns are ruined.
As South Africa celebrates 10 years of democracy, Roelf Meyer looks back at the progress made since apartheid was ended and forward to the challenges ahead.
Citigroup’s agreement to purchase KorAm Bank in late February has sparked a round of consolidation, reflecting a keen interest by foreign investors in South Korea’s retail banking sector, the third-largest in Asia after Japan and China.
International rating agencies have reacted with mixed feelings to new improvements made to the Pfandbrief, Germany’s well known investment-gradecovered bond.
Despite the kickstart to merger and acquisition (M&A) given by two high-profile US deals, a report from Fitch Ratings last month stated that a growth in cross-border consolidation among financial institutions in Europe is unlikely. The report said that Europe was still fraught with regulatory, fiscal and cultural barriers, “not to mention a lack of any realistically achievable synergies”.
What is the truth behind credit derivatives? Is the pricing of credit derivatives misleading bankers? Are participants fooling themselves over the benefits? This month we look at the risk management reality of these instruments and assess the latest market trends.
In reflecting on the Madrid bombings, we note in our supplement on Spain (one of six supplements this month) that business continues as usual. We also examine the chances of Spain’s outgoing finance minister Rodrigo Rato being the new head of the IMF, which faces credibility issues over Argentina. And we reveal the results of The Banker’s extensive FX poll and consider South Africa’s 10 years of democracy.
