You are in:
- Archive » 2004 » September
Bank awards reveal record profits despite global economic instability
The Banker’s Bank of the Year Awards this year reflect a bumper year for profits, as many banks have posted record earnings in 2003 and continue to improve in the first half of 2004. While the global economic recovery remains unsteady and the political environment uncertain, aggregate profits in our Top 1000 listing in July reached record highs, up 65.4% on the previous year.
CRM solution for ATM channel
NCR, the leading global supplier of ATMs, has launched a software solution in the UK that enables financial institutions to run customer relationship management (CRM) campaigns through the channel. Known as APTRA Relate, the software also allows customers to personalise their ATM transactions and obtain information at the ATM, such as home insurance renewal dates. Banks in the US, the Netherlands and Singapore have trialled the application, which links the ATM network to bank databases.
Communications over the ATM channel can be managed at a fraction of the cost of direct mail and acceptance levels at two major US banks on pre-approved credit card offers made at the ATM were more than 30% higher than the mailed offer.
Survey shows risk is sidelined
A global survey of more than 250 financial institutions and regulators indicates that one-fifth of such organisations still have no formal operational risk programme in place, despite the advancing regulatory compliance schedule in the shape of the new Basel Capital Accord (Basel II). The results of the survey of medium and large financial institutions, conducted by Risk Waters Group and SAS, showed that 19% have not yet identified the best organisational framework for addressing operational risk.
“It appears that the lack of a clear regulatory framework may be holding some organisations back. The draft of the Basel II Accord may spur those organisations into action,” said SAS UK’s Peyman Mestchian. “However, the most successful will be those that avoid the scattershot approach and view compliance as an opportunity to initiate an integrated and co-ordinated risk governance programme supported by a robust business case.”
Towergroup sees offshore savings
TowerGroup, the US research firm, believes that offshoring and offshore outsourcing in India and other countries will help the US mortgage lending industry to lower total origination costs per loan by 6% on average by 2008, and will ultimately reduce total direct loan origination and loan servicing costs by 2%-4% by 2010.
Craig Focardi, senior analyst at TowerGroup and author of the research, said: “The hype regarding 25%-50% offshore cost savings may be true for individual sub-processes but it ignores the fact that lenders will neither offshore their entire loan origination or servicing process, nor offshore their entire book of business.
“Return on investment and cost savings estimates must include a careful assessment of start-up investments, marginal costs necessitated by the offshoring initiative, and overheads.”
Abbey’s best offer lies with SCH
Abbey needs to be snatched up soon, before it deteriorates further, and Spain’s SCH has the right track record.
Venezuela retains appeal for investors
Chávez’s hold on power is not unwelcome in the business world, though some are insuring against nationalisation.
Nordea’s research move opens way to criticism of ratings industry
Outsourcing to rating agencies is not the answer to providing an independent research function; the conflict of interest problem and the accompanying censure will simply move to the rating agencies – and who will regulate them?
EMU could spawn new power bloc
All EU member states have ratified treaties that commit them to endeavouring to join the monetary union (EMU) – with the exception of the opt-outs negotiated by the UK and Denmark at Maastricht in 1991. What if a significant number of accession states stayed outside EMU for a long period? Would it affect the development of the rest of the EU?
Citigroup makes first move on fragmented domestic market
Citigroup has taken a step forward in its strategy to focus on the home market with the acquisition of First American Bank in Texas. The move is in line with that of other US banks such as JPMorgan Chase, which merged with Bank One in July.
SMFG adds new twist to Japan’s big banks saga
The battle in Japan to produce the world’s biggest bank took a new twist in late August when Sumitomo Mitsui Financial Group (SMFG) launched a hostile bid for the smallest of the “Big Four” banks – UFJ Holdings.
HSBC leads latest forays into China with 19.9% BoCom stake
HSBC bought 19.9% of Bank of Communications (BoCom), China’s fifth largest bank, for $1.75bn last month, demonstrating the country’s continued allure for major foreign banks eager to invest. Goldman Sachs is also due to follow with an investment of $170m in a planned joint-venture securities firm with Chinese partners.
Standard Chartered’s Asian vision
With a 52% increase in first half profits, Standard Chartered could hardly have done better. But on the acquisition front, it seems to have gone sideways, selling a 9.76% stake in South Korea’s KorAm and watching HSBC beat it for a stake in China’s Bank of Communications (BoCom). Group CEO Mervyn Davies explains the bank’s strategy to Brian Caplen.
Germany launches Europe’s first Sukuk
Saxony-Anhalt has become the first state government in Germany and Europe to issue a sub-sovereign bond under Islamic prin-ciples. The €100m bond – called Sukuk in Arabic – does not offer interest payments to its investors.
Europe’s first Islamic bank opens its doors
Islamic Bank of Britain (IBB), Europe’s first Islamic bank, plans to raise £38.5m to develop a branch network prior to its listing on the UK’s Alternative Investment Market (AIM) in the autumn. IBB, which was licensed by the UK’s Financial Services Authority (FSA) in early August, is the first Islamic bank in the UK and plans to provide a full range of retail banking services on a wholly Sharia-compliant basis, primarily to the UK’s 1.8 million Muslims.
Banks lined up to open in DIFC
The controversial Dubai International Financial Centre is set to open for business in mid-September. Following the abrupt departure in June of the two most senior regulators of the Dubai Financial Services Authority, the DIFC’s regulatory body, the project secured the personal involvement of Dubai Crown Prince Sheikh Mohammed bin Rashid al-Maktoum and is now proceeding at speed.
Adhering to the Basel II framework
The Basel Committee recently published the Basel II framework. Jaime Caruana, chairman of the committee, responds to The Banker’s queries on it.
Q Might the US try to rewrite the framework after its extended QIS4 studies and, if so, will the framework have to be changed?
A Firstly, let me say that the framework we published on June 26 is an excellent product, agreed by all Basel Committee members and the result of long and careful discussions, wide consultations and comprehensive impact studies.
Eyes on the balance sheet
Exploring balance sheet possibilities is part of the reason for the company’s diversification into financial services
As Swiss Re attempts to diversify its business, CEO John Coomber tells Karina Robinson why he is taking lessons from the banking industry.
James Forese
Having been present during the turbulent times in the bond market in the mid-1980s, James Forese has since switched sides and is now a major force in the equities market at Citigroup, reports Sophie Roell.
Emerging from the shadow of the dollar
Despite being dismissed by forex traders when it was launched five years ago, last year the euro became the dominant currency in bond issuance, says Edward Russell-Walling.
Citigroup rivals should stop bleating
In 2004, markets cannot operate on the basis of a gentleman’s agreement. That’s why – love it or hate it – Citigroup’s e11bn sale of eurozone sovereign paper that sent prices down, allowing the bank to buy back €4bn-worth at a lower price half an hour later, should not be the subject of an outcry from banks that lost money.
SCH/Abbey deal will not lead to copycats
A high-profile M&A deal such as Santander Central Hispano’s (SCH) bid for the UK’s Abbey may grab headlines and no doubt generate hefty fees for the advisers (Goldman Sachs and JPMorgan for SCH, Morgan Stanley for Abbey).
Gas deal fuels Russian ABS
Rob Ward (left) and George Niedringhaus: the structure that ABN AMRO created could help to generate business from other issuers
Gazprom secured a hit with Russia’s first investment-grade securitisation, and one that will help to drive the country’s asset-backed securities market. Geraldine Lambe talks to ABN AMRO about its part in the deal.
The value of innovation
Being first to market with a new product can benefit a bank in terms of reputation and margin. But is the cost of development really worth it? Natasha de Teran reports
Superior forex service pulls in hedge funds
The link between hedge funds and banks seems obvious, yet if the banks want to make the most of this relationship, they must start offering the kinds of services that the hedge funds are asking for, says Mark Pelham
Dancing on both sides of the ballroom
|
Frances Maguire profiles JPMorgan Chase’s ITS division. Newly renamed and empowered in 2001, it is set to grow organically and inorganically. Peter Lighte, head of Europe and Asia, believes that “being joined at the hip to the investment banking sector” is the secret of success
The Banker Awards 2004
Record profits and improving economic conditions have characterised the financial environment over the past year or more. But while many banks produced such performances, uncertainty remains in the political sphere and economic recovery is still unclear.
The Banker Awards – sponsored by global IT and networking services company BT and software solutions provider Oracle – reflect the success and overall achievements of the world’s financial institutions.
Our 162 Bracken winners from 133 countries represent the cream of the global banking community and the top achievers in the industry.
Crédit Agricole ends HSBC reign
The Banker’s Top 300 European Banks listing sees HSBC trumped and a new leader emerge.
Manama raises the stakes
Bahrain is making efforts on many fronts to strengthen its status as a financial services hub. The Banker reports on current projects and developments.
Monetary policy imperative
As well as regulation,the Bahrain Monetary Authority is responsible for setting and overseeing monetary policy objectives, to protect the Bahraini dinar’s value and maintain general economic stability, as well as that of financial markets.
Single currency move
Several other members of the six Gulf Co-operation Council (GCC) economies have traditionally had dollar pegs. And since the December 2001 Oman GCC summit decided to move the regional grouping towards a single currency by 2010, all Bahrain’s partners have moved to a dollar peg.
Whatever happened to joined-up banking?
Retail banks promised their customers multi-channel access to their accounts many years ago, so why has this not progressed beyond the preserve of the wealthy? Angus Hislop reports.
Lacklustre service in the branches
Retail banks are realising that effective customer service centres are a business generation tool that they cannot do without. Yet a recent survey finds service quality has improved little, says Remus Brett.
A networked future
Chris New, head of finance industry solutions at BT, talks to The Banker about the growth of the digital networked economy and the implications for the finance sector.
Beware casting off all skills
IT outsourcing, business process outsourcing and offshore outsourcing make good economic sense. But there is a danger: if so many of an organisation’s skills are external, how will they grow the next generation of internal expertise? By Chris Skinner
Automated alerting costs less
Automating a manual outreach process can substantially reduce the average cost of service. TowerGroup estimates that an inbound call connected with a bank’s call centre costs an average of $2.77 to handle. By contrast, automated proactive alerts can cost as little as $0.10 to $0.15 for an informational alert and up to $0.40 for a more complex, two-way alert – an average of about $0.25 is standard globally.
What drives change?
As businesses have become increasingly globalised and more complex, moving into new territory, regulators have been obliged to adapt compliance rules in a bid to make financial information more consistent. Subrata Majmudar examines the challenges.
Basel’s new dawn
With the publication of the Basel II framework, The Banker asks Vijay Sharma, head of i-flex consulting, what banks should now be doing to prepare for the framework becoming statute.
Costs to watch
Sir John Bond: ‘regulation is a growth area’
Banks around the world are facing increasing regulatory obligations and ballooning associated costs. Michael Imeson examines some of the advice that is on offer on how to cope with the ever-increasing demands.
Power to report
As financial services firms are bombarded by new regulations, they are being forced to change their methods of reporting. This is generating a massive shift in IT investment, says Anthony Gandy.
Time for a rethink
Developing internal rating systems is a crucial first step towards mitigating credit risk under Basel II for many banks, writes H S Rajashekhar.
Seven steps to comply
Baijayanta Chakrabarti and R Prabahar outline a four-phase, seven-step approach to help banks plan and implement their compliance with the Basel II Capital Accord.
Tough Act to follow
With banking regulation tightening and outsourcing increasing, Pradeep Godbole examines how institutions can keep their noses clean.
Credit goes to the innovators
Electronic trading: technology could provide the solution to growth in the CDS market
Banks are facing growing competition from other financial services firms in the credit derivatives market. Rekha Menon finds they are relying on technological innovation to give them the upper hand.
Would you bet your business on Linux?
Round the table: (clockwise from far right) Suresh Viswanathan, Chris Skinner, Clive Whincup, David Hanley, Wijnand de Kruijff (senior ICT co-ordinator at ING Direct), Bob Fuller, V Senthil Kumar and P J Di Giammarino
A recent roundtable organised by The Banker looked at issues surrounding the non-proprietary Linux operating system. A group of senior bankers took part in a group session discussing Linux adoption and prospects, chaired by The Banker’s technology columnist Chris Skinner.
