The comparative performance of US and international banks during 2003 reveals a drive to increase revenues. Many are operating in a cost-containment mode but some have started to invest in customer-oriented technologies that help to grow their businesses organically.
Banks that solely implement customer relationship management at an internal sales management level rather than for improving customer service are missing the point, says Chris Skinner.
Fraudsters have begun exploiting account-holders’ trust in their financial institutions and the online channel. A report from anti-fraud and security solutions provider Cyota, Financial Institutions Email Fraud Survey 2004, shows that 75% of account holders are now less likely to respond to e-mail from their banks and more than 65% are less likely to sign up or continue to use their banks’ online service. Only 30% of respondents expressed a high level of confidence that they could distinguish between a real e-mail and a fraudulent one.
Thales e-Security has completed its SafeSign suite of products with the recent launch of SafeSign PSM (Personal Security Module). The next generation of smart card tokens, PSM is a smart card and unconnected reader that provides strong and flexible two-factor authentication. By authenticating and managing all identities from a single platform, SafeSign not only provides ease of management but also better customer service and reduced levels of fraud.
For online shoppers who are reluctant to use their credit cards for online purchasing or who wish to remain anonymous, the latest prepaid solution from Gemplus and Valista (recently formed from the merger of Network365 and iPIN) is a gift. Gem-eCash is a prepaid solution, already delivered to Paynet Group in the Czech Republic. It is designed for micro payment purchases over the internet. By combining a prepaid card with online purchasing power, users can make secure purchases for digital content, such as mp3 music files, videos, games, newspaper articles and horoscopes, etc. Users scratch off a panel on the phone card to discover the secret code, which corresponds to their prepaid credit.
Schriptor is offering banks a new range of counter pens that are designed to suit the general public and disabled (arthritic or visually impaired) people internationally. They have a non-slip grip and a silver rim where the pen sits to guide people with sight difficulties. They are designed to fix to the counter easily and have a visual low-ink indicator.
Kari Mäkelä: ‘some central banks are relying on Microsoft Excel spreadsheets’
Central banks in the new EU member states are at different levels of technological advancement, with some even ahead of their western counterparts. Michael Imeson reports.
The European Union gained 10 more countries last month, and with them 10 more central banks. For anyone doing business with central banks, the EU is a bountiful hunting ground, now with 26 such institutions – one for each country, plus the European Central Bank.
Top African bankers have been told they have to reduce costs, satisfy clients and become compliant. Parveen Bansal reports.
Tim Jones: banking community must understand it hasn’t responded to changing payments needs
Tim Jones, CEO of Simpay, talks to Parveen Bansal about the future direction of the payments industry and the power of technology to shake up accepted ways of doing things.
The payments world has evolved in a complicated way, says Tim Jones, chief executive officer of global mobile payments scheme Simpay. This state of affairs – due to “all manner of reasons” – has led to the current way in which the world’s payment systems operate, which he describes as “complicated, and by no means optimal”.
The global debit transaction market is set to grow this year, with Europe leading the way. Wendy Atkins reports.
Andreas Treichl: ‘We chose to focus on retail banking at a time when retail banking was not sexy, and no other bank considered it to be a real market opportunity’
Parveen Bansal talks to Mr Andreas Treichl, CEO of Erste Bank, to learn how and why the bank spread its wings across central Europe.
Founded in Austria in 1819 by a Catholic priest to help devout people save money for difficult times, Erste Bank today is home to the savings of around 12 million customers across central Europe.
“When we went public in 1997, we set several targets, one of which was to become the leading retail banking service provider in the region,” says CEO Andreas Treichl.
The bank is already benefiting from the unusual decision in 1990 to focus on retail banking in central Europe.
Banks in the Gulf have rarely taken minority stakes in banks elsewhere in the region but in recent weeks two prime players, Bahrain’s Ahli United Bank and National Bank of Kuwait, have been drawn to the attractions of the Qatar banking market.
Turning on the gas: The Emir of the State of Qatar, Sheikh Hamad Bin Khalifa Al Thani, inaugurates RasGas Train 3 in March. Investment in liquefied natural gas is beginning to pay off for Qatar
Huge hydrocarbon reserves and modern infrastructure are creating a gold-rush mentality among bankers, with local banks’ profits rising and foreign institutions trying to get a look in. By Stephen Timewell in Doha.
Qatar’s booming economy is proving to be a bonanza for banks. Well-established local institutions have boosted profits and new regional players are buying in to get a slice of the huge opportunities available. Despite events in Iraq, investors and bankers are seeing the massive potential offered by Qatar’s unique hydrocarbon reserves and the modern infrastructure put in place in recent years.
Abdulla bin Khalid Al-Attiya: ‘We would like more economic integration with the GCC states’
Abdulla bin Khalid Al-Attiya, governor of the Qatar Central Bank, talks about Qatar’s financial future.
Q The Qatar economy is seen to be booming; how do you see its prospects and the years ahead?
A The economy has been growing strongly, reaching 8.8% growth in 2003 and a GDP total of Qr70.8bn ($19.5bn). Other factors have been positive, too, with the balance of payments surplus rising 34.2% to Qr10.9bn in 2003 and inflation, although rising, kept at 2.3% last year. Clearly the economy is influenced by developments in the oil and gas sectors, and the growth in gas revenues has and will be significant, with gas revenues expected to be higher than oil revenues by 2010.
Qatar is on the verge of becoming the richest country in the world in terms of GDP per capita as it sees the fruits of its investments in extraction of huge liquefied natural gas reserves. By Stephen Timewell in Doha.
James Eedes finds that Nigeria’s finance minister is determined to put the country back on track.
Building for the future: construction has already started on the planned Bahrain Financial Harbour
Stephen Timewell reports on how a major new financial centre, a strong regulatory environment and a plethora of projects are set to cement Bahrain’s reputation among its Gulf neighbours.
Brimming with confidence after its successful Formula 1 grand prix in early April, Bahrain is ambitious to project its long-established role as the Gulf’s premier financial and banking hub and capitalise on the booming economies in the region.
Philip Butterfield, Bank of Bermuda
Bermuda is relaxing its rules on foreign ownership of banks, witnessed by HSBC’s recent acquisition of Bank of Bermuda. Mairi Mallon reports on changing times.
Walking into one of the two main banks in Bermuda is like going back in time to England in the 1970s. The doorman knows many customers by name and long queues form every Friday as customers deposit their weekly pay cheques.
Luiz Fernando Furlan, Brazil’s minister of state for development, industry and foreign trade, tells Brian Caplen that his country’s approach to trade is positive.
Luis Peña, Banorte: ‘Foreign banks are after the whole enchilada in Mexico’
Mexico’s prospects look bright but, as Monica Campbell reports, politicians are resentful that the dominant – and prosperous – foreign banks are not doing enough to help the local population.
Nearly a decade after a financial crisis ripped through Mexico, local bankers are now beaming as earnings rise. But, as profits are transferred to the headquarters of the foreign banks that dominate Mexico’s financial landscape, resentment is deepening among local politicians. Stepped up scrutiny may toughen the operating environment for banks.
A trade boom coupled with WTO aspirations are prompting a more open market, writes Nick J Freeman.
India’s securities went from third to first world in record time. But is T+1 a step too far, asks Kala Rao.
Matei Paun reports on the host of foreign banks hoping to cash in on Romania’s burgeoning finance sector.
With a new presidential term for Vladimir Putin and crucial administrative reforms underway, Ben Aris considers the future shape of Russia’s over-banked financial system.
Fernando Teixeira dos Santos, chairman of the Portuguese securities market commission, tells Peter Wise what the commission is doing to keep Portugal aligned with best international practices while allowing the market to develop.
Portuguese banks wanting to expand into foreign markets are still searching for the right locations and client bases for making competitive inroads.
Millennium BCP is emerging from a spate of troubles that hit its share value hard. Focusing closely on core business has helped the turnaround.
António Horta Osório: hopes Totta will gain another 1% market share this year
Portuguese banks have proved themselves buoyant in a challenging economic environment, diversifying and cost-cutting to achieve good results. Peter Wise reports.
Recession? What recession? Despite six successive quarters of economic downturn, Portuguese banks are achieving robust growth. Most of them outshone analysts’ forecasts by a wide margin in 2003 and several recorded their best annual results ever.
A new generation of directors, bankers, economists and politicians are determined that Portugal will be completely transformed, writes Peter Wise in Lisbon.
Gerhard Bruckermann, Depfa: “in a low-margin business, low tax is important”
Ireland continues to be a magnet for foreign banks conducting international business, and some are now targeting the domestic retail market. Michael Imeson reports from Dublin.
Dublin was a fitting location for the EU officially to welcome the 10 accession states last month – not just because the Irish currently hold the EU presidency, but also because Ireland is a shining example to the new members of how a small country on the fringes of Europe can benefit from membership.
Terry McCaughey, adviser to investment management consultancy Citisoft
While the consultation continues on how the EU might achieve a harmonised infrastructure for cross-border transactions, Frances Maguire finds that another highly charged debate is going on: should ICSDs and CSDs compete with global custodian and agent banks?
When is a bank, not a bank? When it’s an international central securities depository (ICSD). At present, both Europe’s ICSDs, Euroclear and Clearstream, are banks, and despite moves by Euroclear to restructure its banking and its depositories into separate entities, and the European Commission’s accusation that Clearstream is abusing its “dominant supplier position”, the fact still remains that both ICSDs offer “bank accounts” to their securities customers that do not pay interest.
Fabien Buliard looks at how centralised treasury systems have altered relationships between large companies and their banks.
Barton Biggs is back, or maybe he never went away. Morgan Stanley’s famously outspoken chief strategist who retired in January is heading up Traxis Partners, a hedge fund that already has $2bn under management.
No-one should be surprised that the internet visionaries of Google are capital markets’ dinosaurs. While on the one hand they are offering to break the investment banks’ grip on the IPO process when the internet search engine comes to market (an act that may or may not be as progressive as it is billed), on the other they have come up with a shareholding structure that exhibits all the worst features of the most backward models still found in some emerging markets.
Natasha de Teran explores Europe’s rocketing corporate credit spreads and the resulting surge for asset-backed securities.
An ambitious restructuring plan has brought the Swedish-Swiss engineering group a more positive credit rating, which in turn is translating into a healthier order book. However, unsettled asbestos claims remain a large blot on the landscape, says Geraldine Lambe.
In the world of banking, as with most other fields, it is not often that a first can be said to have been achieved. However, says Geraldine Lambe, the E300m AFD 10-year bond issue was, for many reasons, exactly that.
Many banks have left behind private equity and its volatile earnings but a core remain committed to in-house funds. However, Basel II’s proposed increase in the regulatory capital could deal a crippling blow to their investment ability. By Joanna Hickey.
CEO, Corporate Bank and Financial Markets, Royal Bank of Scotland
The Royal Bank of Scotland has grabbed the headlines recently for its successful forays in the US market, but the real story is the success of its overall strategy, reports Geraldine Lambe.
ABN AMRO's Alexandra Cook and Steven Gregg highlight why financial market strategies should be built on industry sector dynamics and knowledge of global and local markets.
Long-term strategic success depends on good management of short-term operational capital – centralised cash management and balanced investment are vital, says ABN AMRO’s Ann Cairns.
Perceived under or overcapitalisation can damage a company’s share price and destroy value for investors. A sound strategy for such a situation is paramount, says Jan de Ruiter, joint CEO of ABN AMRO Rothschild.
Basel II’s restrictions on banks are bound to change their relationships with their corporate clients. Jules Stewart looks at what firms should expect once the new Accord is in place.
Adding an inflation dimension to a liability portfolio opens up new strategies for asset liability and debt managers, say ABN AMRO’s Brice Benaben and Sebastien Goldenberg.
The uptake of credit derivatives by corporates is lukewarm at best but Natasha de Teran finds bankers bullish about the future of this market.
Matthew Daniel of ABN AMRO offers some hints to organisations implementing the International Accounting Standard 39.
When a company decides to make an acquisition, it may not be a planned event. However, finance directors need not be caught short of funding, says Sophie Roell.
Ratings agencies provide an impartial analysis of the strengths and weaknesses of a company. Engaging proactively with them can help assess funding options, says ABN AMRO’s David Beardsall.
Firms must actively manage their excess cash if they want to prevent unnecessary expense and reduce risk, say Rob Boyd and Ash Belur of ABN AMRO’s Financial Markets Advisory.
Corporates are looking to securitisation to lift the value of their real estate investments, reduce debt costs and optimise financing.
Matthew Curran and Ronan Donohue of ABN AMRO explore the increasing appetite for hybrid capital among corporates attracted by the increased financial flexibilityit provides.
The African Development Bank Group’s mission is to promote economic and social development. James Eedes reports on some of the projects it is helping to fund and finds the bank has developed a solid financial standing.
A small but definite trend has begun in attracting private capital to Africa as countries take more responsibility for finding the resources to achieve their poverty reduction targets.
Too little aid is flowing into Africa from the developed world to make agreed poverty reduction targets a reality. James Eedes assesses the state of capital inflows.
Despite relief initiatives, nothing is being done to address the root cause of unsustainable debt.
Africa remains on the margins of world trade. Regional trade agreements and domestic pro-poor policies could be the keys to trade growth, reports Jacqui Pile.
Botswana and Mauritius have bucked the African trend and achieved long-term strong economic performance. Institution building plays a part.
KY Amoako believes Africa has entered an era of greater political inclusiveness
A study of governance by the UN Economic Commission for Africa demonstrates how much progress has been made across the continent and exposes areas that are still weak. James Eedes reports.
The complex relationship between forms of government, the effectiveness of state and economic development has been the subject of scholarly research for more than a hundred years. Though political scientists and philosophers have yet to arrive at the definitive conclusion, a rough blueprint is emerging.
Nepad’s scope is broad and ambitious and places accountability firmly on the shoulders of African leaders. Jonathan Katzenellenbogen looks at progress.
Much analysis of Africa fails to take into account the differences between its 53 countries.
African economies are improving but they, and the rest of the world, must keep their eye on the target, African Development Bank president Omar Kabbaj tells James Eedes.
Poverty and conflict still dog African countries. But signs of a change of perspective by developed nations, plus reform and new initiatives within Africa could provide reasons for new confidence, James Eedes reports.
Winner: LogicaCMG
Logica’s National Payments System was considered highly innovative since it enables banks and financial institutions within a country to make secure, high-value, inter-bank payments virtually instantaneously across the country, and also settles government securities trades in real time.
Winner: Searchspace
Searchspace’s enterprise-wide approach to fraud prevention uses patented technology that emulates human logic and reason, on an immense scale, automating a range of decision-making functions including fraud. In one bank, Searchspace was able to catch 50% of frauds previously missed while reducing analyst resource needed to investigate cases by 90%. This had a massive efficiency impact and a positive effect on customer retention. Another bank prevented 70% of frauds previously missed. This increased operational efficiency with savings of close to £1m a year.
Self-Service
Winner: NCR
The judges noted that NCR is making use of existing, proven technologies to deliver significant value to the Indian marketplace.
Technology to the Sell Side
Winner: Arcontech Real Time Systems
Innovation of the Year
This category got the highest number of entries and competition was tough. The judging panel finally decided that Apama had the most innovative solution overall, with BT Syntegra and Intelligent Results as joint runners-up.
As global banking and regulatory requirements continue to grow, so too does the demand for innovative technology solutions. The days of in-house software development are limited as more and more organisations look for packaged technology solutions that can be easily implemented and integrated to solve real business problems. Keeping up with technology innovations is important if businesses are to remain agile.
It was with this in mind that The Banker Technology Awards were founded last year to recognise innovative excellence of vendors, based on real results. Our goal is to highlight those vendors, large and small, who have contributed to advancing shareholder value and customer service.
When Mr Passera took it over, Intesa was nominally one merged bank but in reality it consisted of three perpetually battling entities
Intesa managing director and CEO Corrado Passera tells Karina Robinson how he plans to keep the bank on an upward path after turning it around.
Italy. Land of wine and olives. Of Lazio and Vespa motorcycles. Of strikes. Strikes at Fiat. Strikes at Alitalia – saved by a whisker from bankruptcy in May.
European banks are rushing to buy American banks, but will they make money? Or will it all end in tears, as it did the last time they tried in the 1980s. Sophie Roell investigates.
From afar, America looks like the land of opportunity – and for no one more so than European banks. With its large population, a banking sector fragmented into thousands upon thousands of institutions, and fee-friendly consumers who think nothing of paying $30 for a new set of cheque books, it seems to offer everything Europe doesn’t: high margins and room for growth. Never mind that its lure has proved fatal in the past. “Historically the US has been a graveyard for foreign bank capital,” says Chris Ellerton, an analyst at UBS. “In the 1980s, the UK banks all bought US banks and generally sold them again at a loss.”
It’s time to embrace the multilateral policy challenge and recognise and enhance the IMF’s central role therein, says Mohamed A El-Erian.
Over its 60-year history, the International Monetary Fund (IMF) has repeatedly adapted to changing global conditions. In maintaining an important role in the international economic system, it helped countries navigate the shift away from the Bretton Woods regime of fixed exchange rates in the 1970s; it sought to moderate the impact of the two oil shocks in 1973/74 and 1979/80; it helped solve the generalised 1980s debt crisis in Latin America; and it responded to the crisis that broke out in east Asia in 1997, spread to eastern Europe and risked engulfing Latin America.
The Ukrainian and Russian parliaments ratified an agreement, at the end of April, to create a free-trade Unified Economic Area (UEA). The pact, tying the two fast-growing economies more closely together, has forged the European Union of the east.
China is set to use medicine strong enough to cool down its investment fever, but not so potent as to bring the economy to a standstill. Banks are at the forefront of this austerity campaign, acting on the orders of the central government to choke off credit supply to overheated sectors.
India’s Congress Party will lead an alliance of political parties that will form the next government after it emerged the surprise victor in the country’s national elections in early May. Voters shunned the previous regime led by the Bharatiya Janata Party whose economic reforms appear to have left a large majority of rural Indians unmoved.
Manmohan Singh, the former finance minister, will be the new prime minister after Congress party president Sonia Gandhi turned the job down.
German mortgage banks are campaigning to develop a common legal definition and standard for covered bonds. The dispute was sparked last year by three UK banks issuing covered bonds which do not legally qualify as this asset class.
Bank of China (BoC), the largest of China’s big four state-owned banks, has announced that its non-performing loans ratio will be down to around 5% by the end of 2004 as it plans to bring in a strategic investor later this year in preparation for its IPO. This significant reform of the bank’s ownership structure reflects the Chinese authorities’ determination to reform the big four banks which account for 55% of China’s bank assets.
With the uncertainty surrounding the two-month long impeachment process of President Roh Moo Hyun now finally resolved, and the president firmly back in the saddle, South Korea is keen to push ahead with more financial reform and, in particular, focus on asset management.
The SIA’s Richard Thornburgh explains why clarity and clear regulatory regimes are good for business.
Extensive foreign control of bank assets in nearly all the new member states highlights the importance of information sharing.
Despite pronouncements of consensus, US regulators may yet reject Basel II causing the US to take unilateral action thereby creating problems for banks elsewhere.
Many of the Gulf states are experiencing an economic boom, which cannot be solely attributed to high oil prices.
While the US gets further embroiled in Iraq, economies such as China and Brazil are starting to assert themselves.
The Middle East is not wholly comprised of Iraq. While geographically obvious, the economic consequences of this fact can be easily missed. Bahrain and Qatar, two Gulf states that might have been overwhelmed by the Iraq crisis, are in fact booming. Editor-in-chief Stephen Timewell visited both countries in May and filed reports headlined: “Bahrain’s roaring success” and “Qatar builds the dream”.
