This year’s rankings show that not only have profits grown, but so has the size of the world’s biggest banks. Stephen Timewell reports.
Research by Terry Baker-Self, Beata Ghavimi & Matthew Dickie.
The global economic recovery and the return to profitability of the Japanese banking sector after massive losses has helped to produce record profits in the Top 1000 banks worldwide. After a damaging drop in profits of 29.7% in fiscal 2001 and a modest recovery the following year, fiscal 2003 proved to be a bumper year for banks around the globe.
US consumer banks with less than $20bn in assets dedicate 49% of their IT spending on core banking systems to traditional deposit systems. These are mostly legacy application systems that include basic functions like teller support, statements and funds transfer. Larger banks have been directing most of their technology investments to specialised consumer finance products, like cards, loans and mortgages.
The tiny but intriguing radio frequency identification chip is already being used for contactless payments and could eventually be part of the euro note. But it also lends itself to applications for improving client services. Chris Skinner explains.
In a drive to stimulate Aussie and Canadian dollar FX trading volumes across the globe, EBS®™, a provider of trading technology solutions to the FX and precious metals trading communities, has launched the EBS Aussie and CAD packages. The packages are aimed at traders’ needs for price, depth and liquidity and for access to trading on the G7 currencies.
Jack Jeffery, CEO of EBS, said: “We will be focusing our efforts to encourage more volume onto our system at critical times of the day, and to create and sustain the Aussie and the CAD trading communities, by delivering the global book and providing access to more counterparties around the world.”
IBM has added four more financial services institutions to its portfolio of IT outsourcing service clients. Germany’s HSH Nordbank has signed a five-year contract valued at more than E100m and Spain’s Banco Guipuzcoano has extended a services contract for seven years. In Latin America, BankBoston has signed a 10-year agreement with IBM for managing and operating the services and security of its data centre and contingency. And in Venezuela, Venezolano de Crédito has renewed its business continuity and recovery services contract to overcome potential business interruptions and ensure its operational continuity.
The Northern Region of Computer Sciences Corporation (CSC), comprising the UK, Ireland and the Netherlands, is the first major IT services organisation globally to be awarded the BS15000 approval. The standard, obtained from the IT Service Management Forum (itSMF), is designed to ensure that an integrated set of management processes are used to improve the delivery of IT services continuously. The certification enables companies to measure the service they receive against an external standard.
To improve customer service for its buy-side clients, Merrill Lynch has implemented a new e-mail management system that enables its investment banking sales staff to send customised and timely information to clients on a one-to-one basis, while avoiding e-mail and information overload.
Using the new software from point-to-point communications software provider Clovis, Merrill Lynch is able to send corporate bond market indices and prices directly to its clients’ desktops in Microsoft Outlook. The information is automatically filed into folders, merged and updated as new e-mails arrive. As a result, buy-side users can always have the latest market view at their fingertips. This data can also be linked directly to Excel so that new e-mails automatically update desktop spreadsheets.
Guy Warren: there must be value in an outsourcing contract for both parties
Guy Warren, managing director of the financial services division of LogicaCMG, talks about business process outsourcing and the growing importance of offshoring. Interview by Michael Imeson.
The effectiveness of the ATM network is increasingly based upon the software solutions that are devised to combat any problems and therefore reduce downtime, says Keith Taylor.
The way to enhance a service is not simply to ‘throw technology at it’ but to develop innovative ways to incorporate the consumers needs into any offering, says Parveen Bansal.
The bank branch is undergoing another transformation as the emphasis shifts further towards self-service offerings, using ATMs, smart ATMs and online kiosks. Rekha Menon looks at progress.
Deposit automation will be the most important ATM application since cash dispensing, say Morten Jorgensen and Dominic Hirsch of Retail Banking Research. It offers potential benefits for banks and their customers, and will spread rapidly in the new self-service culture.
Plans to ensure business continuity in the event of a disaster are becoming an essential requirement for banks and some are considering extending their plans to cover self-service systems, like ATMs. Wendy Atkins reports.
Technology can keep banks one step ahead of the criminals at the ATM and ensure that customers continue to view the service as a safe and secure way of accessing their funds, says Jeff Lutz of NCR.
Whichever channel banks choose to concentrate on, they must not lose sight of their customers’ needs and preferences. That is why service levels must be maintained, whether in-branch or at offshore call centres, says Parveen Bansal.
Having sold its banking arm 10 years ago, the UK Post Office has engaged in a joint venture to offer a whole range of financial services products to the UK market, Parveen Bansal reports.
Mr Mramba: reforms are slowly and steadily revamping Tanzania’s economy
Tanzania’s finance minister Basil Mramba talks to Steven Timewell about moves to secure natural resources and update land legislation to free up domestic financing.
Finance minster Yaw Osafo-Maafo tells James Eedes how Ghana has managed to shake off financial chaos in the past four years and take the lead in establishing new benchmarks of governance in Africa.
In the past decade, the Bolivian banking system has faced economic crises brought on by social unrest but has withstood them. Jason Mitchell reports from La Paz.
Market players are once more eyeing up Indonesia’s banks, indicating a return of confidence but, as Tim Johnston reports from Jakarta, the long-term outlook is by no means certain.
Chen Shui-bian’s victory in retaining his hotly contested presidency has set Taiwan firmly on the road to modernisation. Dennis Engbarth reports from Taipei.
In a bid to boost South Korea’s sluggish economy, the government has revised asset management laws to encourage the growth of private equity funds. But the move has its opponents, as Kim Ji-hyun reports.
South Korea’s banks have been suffering wide profit swings. Park Sang-soo reports from Seoul on their efforts to find alternative sources of income to beef up their profitability.
The latest high in China’s repeated boom-to-bust story has spurred the government into corrective action with a new austerity campaignwhile the central bank is continuing with reform of the banking sector. Louise do Rosario reports from Shanghai.
Malaysia’s central bank governor Tan Sri Dato Zeti Akhtar Aziz tells Brian Caplen why she is focusing on economic stability, and discusses Islamic banking, keeping the dollar peg and relations with China.
The Ukranian economy is undercapitalised and companies are placing a steady stream of corporate bond issues to raise investment, says Ben Aris in Kiev.
Ben Aris reports from Kiev on the shape of the banking sector and banks’ strategies to build up universal business now that the economy is faring well.
Boris Timonkin: ‘The economic risk under Yanukovych or Yushchenko is not that different’
Ben Aris reports from Kiev on the benefits that the new eastern bloc CES alliance is expected to bring and on the country’s growing relationship with the EU.
The leaders of the four biggest countries in eastern Europe gathered in the Crimean resort of Yalta in May to create their answer to the EU: the Common Economic Space (CES). The new free trade zone is designed to feed flourishing economic growth in Russia, Ukraine, Kazakhstan and Belarus.
Alexander Kotcherguine: changes are taking place rapidly in the banking sector
Jules Stewart reports on the main points raised at The Banker’s Banking on Russia conference.
Three leading market participants addressed a conference on Russian banking organised by The Banker on May 24 to review progress made in reforming the sector and assess the outlook for future progress.
Turkey is endeavouring to meet requirements for EU membership by extending its IMF standby agreement to combat spiralling debt while attempting to recoup money that was used to rehabilitate shaky private banks. Metin Demirsar reports from Istanbul.
Charles Milhaud, Caisse d’Epargne: faces the challenge of consolidating divergent businesses
French government efforts to encourage mergers between state-owned and private banks are paying off, says Jan Wagner. But Germany’s Sparkassen are resisting efforts to get them to follow suit.
MTS Group, the electronic market for bonds, has joined with ATFox, a provider of an electronic short-term swaps platform, and interdealer broker, HPC, to develop an electronic swaps trading platform.
Thus far, the parties have signed an agreement that should see the combination of ATFox’s swaps franchise, HPC’s liquidity and MTS’s distribution and market-making model.
ATFox says it will accelerate its growth in the short-term swaps business as a foundation for expansion into medium and long-term swaps as those markets evolve. The company says it will also incorporate some elements of the MTS business model with regard to corporate governance and the close involvement of market participants in setting the strategic direction of the platform.
The Chicago Board of Trade (CBOT) has launched DataExchange, a suite of products available through its website that enables users to easily access up to 30 years of the exchange’s historical data.
Market users are able to customise their requests through DataExchange by choosing from a complete list of all CBOT futures and options products, selecting the data fields and specifying the file format they would like to receive.
The new service offers the following products: End-Of-Day Data showing open, high, low, close and settlement prices, and volume and open interest numbers; Tick Data with complete daily time and sales information for all CBOT products; Volume at Price detailing the total volume traded at each price during the day; Market Profile, which is a bell curve graphic display that shows time and price of every trade during the trading session; and the Liquidity Data Bank, which provides a detailed view of trading activity classified by four types of trader – local, member, member trading on behalf of another member and non-member. Activity is reported as net buy/sell volumes at a particular price.
JP Morgan’s Institutional Trust Services has launched a corporate administration service in Dublin. It enables clients to easily establish special purpose vehicles (SPVs) for securitisation transactions and is an extension of the firm’s existing trust and agency services.
Setting up SPVs is typically an administration-intensive process and organisations are increasingly looking to their trustees to effectively manage this process, says the bank.
JP Morgan says the service will facilitate the arrangement of structured finance transactions, such as conduits, collateralised debt obligations, asset-backed securities and repackagings, by assisting in the establishment of special legal entities that are required for these deals.
Paul Hedges, global head, securities services and sales and relationship management, Standard Chartered
Asia Pacific’s geographical diversity makes the idea of a regional approach to custody seem far-fetched. But, as Francis Maguire reports, if the Japanese market can be cracked, then a regional solution may be possible.
Terry Duffy, CME chairman ‘The agreement will be mutually beneficial to all parties that
trade FX’
Reuters’ hook-up with the Chicago Mercantile Exchange has been welcomed by the market. More importantly, it marks the start of another evolution in FX trading, as William Essex reports.
Is it time to sell when Deutsche Bank’s securitisation bosses think that a fitting thank you to their clients is to fly the UK pop group Sugababes to perform for 600 at a specially arranged dinner at a country estate outside Barcelona?
Bank analysts are paid to worry and so worry they do. Rob Ford, head of asset-backed trading at Barclays Capital, is concerned that prepayment risk is rising and that the impact is not being properly priced in.
“In a perverse way, it would be good for the [asset backed] market to have some kind of credit event because deals are currently pricing on top of each other. No-one is taking account of structure. We should hope for some kind of limited credit event that will sharpen up our analysis again.” These strong remarks from Mike Nawas, global head of asset-backed securitisation (ABS) at ABN Amro, sum up the state of the securitisation market.
The over-the-counter derivatives market needs to achieve automation and, with this in mind, its representative body, the International Swaps and Derivatives Association, has provided an estimated time of arrival. Natasha de Teran reports.
Having already dismissed out of hand two offers for the high street chain, Marks & Spencer boss Stuart Rose seems to have seen off his old rival, UK billionaire Philip Green – at least for now, says Geraldine Lambe.
The brains behind Casino’s innovative credit spread offer, from left to right: Hugues Delafon, Henry Nevstad, Sean Park and Gregoire Audibert
After two years in development, the fruits of DrKW’s credit bankers’ labours have finally been realised with the issue of €500m-worth of credit spread warrants for French supermarket operator Casino. Natasha de Teran talks to the team.
After a heady rise to prominence, research fell from grace just as quickly. Now it is making a recovery – although, as Edward Russell-Walling reports, banks are ensuring that this time there are firm barriers between research and their other functions, such as sales.
Following Lehman Brothers’ push to diversify its business over the past few years, Geraldine Lambe talks to Jeremy Isaacs, Lehman’s CEO of Europe and Asia, about the firm’s new focus and toeing the company line.
Hedge funds are a form of alternative investment that is growing rapidly. But this diverse group uses a variety of strategies with very different risk/return profiles, which can be confusing for investors. Laurent Le Saint explains the pros and the cons.
Investors who have suffered at the hands of the recent bear market can be forgiven for being a little cautious, however, many are simply turning to structured products, says Delphine Simon.
Warrants are fast becoming an essential part of any investor’s portfolio since they can make money whether the market is rising or falling. David Lake provides a guide to these useful financial tools.
In only four years since exchange-traded funds were introduced in Europe the market has exploded.This is due, in large part, to their simplicity and tradability, says Isabelle Bourcier.
Equity derivatives have shown strong growth recently and major banks have been quick to adapt and strengthen their departments to capitalise on the boom. Natasha de Teran reports.
The banking industry worldwide appears to be nearing a time when core systems will be replaced. But, says Christine Barry, the methods used may be very different.
A single version of the truth enables a timely, accurate view of the organisation and its customers that can be used to make better strategic decisions, says Juan Rada, senior vice-president, Industries, Oracle EMEA.
The introduction of a shared service centre can lead to a more efficient, flexible infrastructure but requires significant management commitment. By Andreas Andreades, CEO, Temenos
Packaged solutions are making headway as the best approach to replacing legacy core-banking infrastructure, but organisations should look to current trends when planning their system migrations. By Peter Middleton, VP financial services, Oracle EMEA, and Andre Loustau, CTO, Temenos
James Eedes quizzes chief financial officers and, on page 30, corporate treasurers about the hot financial topics as well as the prevailing economic environment and reasons for optimism.
HSBC’s purchase of a minority stake in a private Indian bank has been pruned to 14.6%, confirming that the move made last year by the Indian government to raise the foreign investment limit in private banks to 74% is not an open invitation to foreign banks.
In her article on European clearing and settlement (‘Are ICSDs too close for comfort?’, June 2004), Frances Maguire wrote that the cost of Euroclear’s Single Settlement Engine (SSE) project is E350m. The figure should have been E90m. We apologise to Euroclear and its users for the error.
Switzerland’s UBS Group heads the Top 10 list of global private banks with $1031.2bn in assets under management, according to the latest report from wealth management consultancy, Scorpio Partnership.
Premier Yu Shyi-kun appointed Taiwan Sugar Corp chairman Kong Jaw-sheng to head Taiwan’s new Financial Supervisory Commission (FSC), which will begin operation on July 1.
Total wealth of high net worth individuals (HNWIs) has only now “returned to levels only seen before the global recession took hold in 2001,” according to a recent report.
Iceland’s biggest financial institution, Kaupthing Bank, has continued its aggressive expansion with the acquisition of the Danish medium and long-term financier, FIH, for DK7.1bn ($1.2bn). The purchase, from Sweden’s Swedbank, which surprised bankers who expected FIH to be bought by a Swedish bank, allows Kaupthing to expand its corporate banking capabilities and its presence in the Nordic region.
In June, Eurex US unveiled a package of incentives to try to encourage greater use of its fledgling futures exchange. Since the launch of the exchange in February, it has failed to gain traction or to take liquidity from the Chicago Board of Trade (CBOT).
Abdullah Al-Ghurair, chairman of Dubai-based Mashreqbank, receives the Union of Arab Banks’ (UAB) Arab Banker of the Year award from Dr Joseph Torbey, chairman of the UAB, at The International Arab Banking Summit
gala dinner held in association with The Banker at Goldsmiths Hall in London June 23.
Wachovia, one of America’s biggest banks, has agreed to purchase SouthTrust of Alabama, the US’s 31st largest bank, for $14.3bn, in an all-share takeover. The bank that will result from the acquisition will be the fourth biggest US bank by assets and a leading retail bank in some of the US’s fast-growing, south-eastern states, such as North Carolina, Virginia, Georgia, South Carolina, Alabama and Florida.
THE CENTRAL BANK OF RUSSIA (CBR) sparked a mini banking crisis last month after it used new anti-money laundering laws for the first time to strip a bank of its licence.
Professor Thomas A Pugel explains China’s forthcoming crisis, advisinIn almost any current discussion with government officials and executives of export-oriented companies in almost any country (except the US), the “China locomotive” phenomenon – the positive effects of the expanding Chinese economy – comes up. China’s growth probably will slow somewhat in the next year or two. But that will be nothing compared with the crisis likely to hit in the next decade.g policymakers to focus on the next decade.
The Banker Top 1000 shows that the Japanese banks seem to have finally turned the corner and that, despite dominating the listings, EU banks are suffering from the lack of profitability of German banks.
The Banker’s latest Top 1000 World Banks listing shows that banks are back making record profits. The aggregate pre-tax profits of the Top 1000 shot up by a mammoth 65.4% to reach an all-time record of $417.5bn as the Japanese banks moved back into profit and institutions around the globe revelled in improving economic conditions. The listing also highlights the dominant position of EU and US banks, which account for almost three-quarters of total profits, and the unrivalled profitability of the US banks.
Compliance with Basel II has the potential to bring improved financial performance to an organisation but only if it is applied uniformly across the whole organisation, says Jason Kofman.
Although the proposed new accord is an important improvement on Basel I, it fails to create a supervisory regime that embodies a credible and strong market discipline, says Harald Benink.
John Hawke: “We have really no sound basis whatsoever for assessing capital impact”
As the Basel Committee releases the new Accord rules, Accenture, Mercer Oliver Wyman and SAP provide analysis of a research project on the implementation of Basel II. In this first section, they consider banks’ progress and the bumpy road ahead of them.
