Political life is seldom dull in the Philippines. Two past presidents – Ferdinand Marcos and Joseph Estrada – have been brought down by popular demonstrations. Now President Gloria Macapagal-Arroyo is fighting to stay in office and carry out essential reforms. “I must do what has to be done and damn the torpedoes for a while,” she told The Banker’s senior editor, Karina Robinson. For an understanding of the various contradictory forces that make reform such a challenge in this troubled country, see this month’s Karina’s Kolumn and the article on the Philippines that follows.
While tighter security is essential in preventing terrorism so, too, is addressing its root causes. This includes tackling disaffection with globalisation, which must be seen to benefit the wider community.
China’s decision on July 21 to replace its currency peg to the US dollar with a managed floating exchange rate regime has been welcomed by those clamouring for currency reform. But the relatively small 2.1% revaluation of the renminbi leaves many questions unanswered.
Juan Ramón Quintás: says the cajas have to pick up the pieces from the commercial banks
The war of words between savings banks and commercial banks is heating up as the European Commission prepares its study of obstacles to banking consolidation in the EU.
“The cajas [Spanish savings banks] acquire the leftovers of bankrupt banks,” said Juan Ramón Quintás, chairman of the Confederación Española de Cajas de Ahorros (CECA) – the association of Spanish savings banks.
Cost pressures and increased competition will prompt a growing proportion of financial services companies worldwide to expand their shared service centres and the range of business processes they are willing to outsource, both locally and offshore, according to a survey report from the Economist Intelligence Unit (EIU).
The argentine authorities are introducing capital controls on speculative inflows even though Chile abolished its controls in 2001 amid controversy over their effect.
Holland’s Rabobank has acquired a 36.5% stake in Sekerbank for $90m, as European banks continue to snap up shares in Turkish banks ahead of the country’s membership talks with the EU in October.
In last month’s Top 1000 ranking of world banks, a number of banks did amazingly well.
They flew up the charts by hundreds of places and chalked up best profits on assets and capital. The Banker editors decided to find out why these banks did so well. In the following article, we look at the Top 50 contenders for next year’s Top 1000.
Reports by Stephen Timewell, James Eedes, Jan Wagner, Will McSheehy, Monica Campbell and Simon Montlake.
What do you call a bank that has doubled in size every year for the past eight years and that jumps 248 places in The Banker’s latest Top 1000 world banks listing to reach 211th place? Some call it a miracle.
Hreidar Mar Sigurdsson, the youthful chief executive of Iceland’s Kaupthing Bank, takes a more modest approach and calls it sustained rapid growth.
But how has Kaupthing catapulted itself onto the world stage, quintupled its balance sheet in the past three years and more than doubled its net earnings in 2004?
In the race among western European banks to expand in the promising new market of central and eastern Europe (CEE), Austria’s banks are out in front of the competitors.
Erste Bank, Bank Austria-Creditanstalt (BA-CA) and Raiffeisen are among the fastest growing banks in the region. BA-CA’s strong position in CEE was a major reason why Italian bank UniCredit – itself a big player there – last month decided to acquire HypoVereinsbank, BA-CA’s parent.
Five years ago, Abu Dhabi-based First Gulf Bank (FGB) was a parochial non-entity with Dh2.4bn ($653m) of assets and a Dh50m profit. Today, the bank’s management is celebrating the results of a turnaround programme that has propelled the institution far up the global rankings.
Boosting profits at a mid-size bank in an often turbulent market is not easy. But, with Indonesia on an upswing during a smooth political handover in 2004, Bank Internasional Indonesia (BII) discovered many opportunities to raise its game. The result was a 101% increase in Tier 1 capital to $383m and net profit almost doubled.
Should banks review their strategies for lending to poor customers? South Africa’s African Bank, a specialist lender to the country’s low-income, under-banked population, produced a 17.9% pre-tax return on assets in the year ending September 30, 2004.
Last year proved stellar for Bancolombia, one of Latin America’s oldest banks and the largest in Colombia in terms of equity and assets. The institution reported pre-tax profits of $339m, up 53%, ranking it as one of the world’s best performing banks.
Earnings reported so far in 2005 are also positive. “The bank is growing at a healthy rate thanks to our basic strategy of sticking to a wide range of retail offerings,” says Jorge Londoño, president of Bancolombia.
An aggressive merger and acquisition strategy is helping North Fork Bancorporation – a full-service commercial bank based in Melville, New York – to become an increasingly important player in an increasingly competitive US market.
Volkswagen, the auto maker that is one of Germany’s best-known companies, has been in trouble lately. Since late June, it has been plagued by an ugly bribery scandal involving senior executives in the personnel department.
Philippines President Gloria Macapagal-Arroyo gives Karina Robinson a glimpse of the tenacity that is now keeping her in power.
“She has a PhD in politics,” says a top official about President Gloria Macapagal-Arroyo of the Philippines, when discussing whether the youthful 58-year-old with a 1985 doctorate in public finance is a technocrat or a politician.
While political drama grabs the headlines, Philippine reform efforts are paying off in the form of economic gains, and intentions for further improvements remain intact. Karina Robinson reports from Manila.
Aurelio Montinola: BPI wants to be a regional player
The Philippines did not suffer from the Asian crisis as badly as its neighbours. Ironically, the result has been a banking system that has taken longer to recover.
Many banks are still dealing with non-performing loans (NPLs) – arguably the highest in the region – that are about 10% of the system. Although down from their peak of 18% in 2001, a comparison with the 5% in 1997 is a better indication of what still needs to be done.
Lloyds TSB has risen to dominate the UK syndicated loan market since Chris Shawyer became its capital markets chief but he admits it will be tough to stay at the top, writes Edward Russell-Walling.
Swingeing change is likely at Morgan Stanley under its new chairman and CEO John Mack as he attempts to integrate the cultures of its many parts. Nick Kochan reports.
Through a ruthless public relations campaign, eight dissidents brought about Phil Purcell’s exit from the CEO post at Morgan Stanley.Nick Kochan looks at how and why they did it and asks if this sets a precedent in corporate governance.
Slough Estates faced a few hurdles in its plans to replace old bonds with current-value new bonds. But, as Edward Russell-Walling recounts, the investors recognised a good deal when they saw it.
Citigroup, l to r: Tomas Lundquist, Peter Charles, Eirik Winter, Kapil Damani, Peter Jurdjevic and Jeanne Lu
Corporates’ historic avoidance of hybrid capital is giving way to enthusiasm following a change of heart by rating agencies. Now Sweden’s Vattenfall is leading the charge with a groundbreaking deal, structured by Citigroup. Edward Russell-Walling explains.
The rapid growth of the credit derivatives market, and its seemingly unending appetite for complexity, has meant banks and investors have had to work hard to keep their risk management practices up to scratch. What can they learn from recent events in the ailing US car industry? Natasha de Teran investigates.
Could Citigroup’s fixed income traders have done better if they were not acting under the restraints of the new squeaky-clean Citi policy? Most investment banks suffered a poor second quarter due to the fallout from the downgrading of GM and Ford bonds. Citi’s fixed income revenues fell 28% – but then, Bank of America’s fell 77%, so market conditions were extremely tricky.
As pension assets drop and future liabilities rise, traditionally conservative pension funds are turning to complex derivatives-based products. This offers a well-timed opportunity for investment banks that have the right skills, as Natasha de Teran explains.
Francesco Burelli, managing consultant and strategist in the financial services team at
RSM Robson Rhodes
Charging more for a cross-border payment than a domestic payment in the eurozone is forbidden – but Europe is still awaiting the infrastructure to support euro cross-border payments, in the form of a pan-European automated clearing house. Frances Maguire reports.
Five years after the introduction of the euro, the European Union still does not operate fully as a Single Euro Payments Area (SEPA). There remains a differentiation in costs, either to the customer or the banks, depending on whether payments are made within one country’s borders or cross-border.
When Santander bought Abbey, not everyone agreed it was a good idea. But its strategy for turning around the ailing bank has proved the doubters wrong, as Brian Caplen reports.
While the EU’s political and currency projects grind to a halt in many of the big states, Malta has just joined the ERM. Next stop, the euro. Michael Imeson reports.
The past few months have been tough for proponents of closer union in Europe. But in Malta, which joined the EU just over 12 months ago, the integration process continues.
Italy’s UniCredit has bolstered its presence in the ‘new Europe’ with its purchase of HVB. But, as Nick Spiro reports, integration will present it with a real challenge.
Foreign banks that are keen to tap the potential of the under-penetrated Indian market are finding a variety of ways in, despite the barriers. Kala Rao reports.
While some believe the G8 summit in Scotland was a missed opportunity,James Eedes reports that solutions originating in Africa promise to have themost lasting and meaningful impact.
Initial reticence about the election of Iran’s new hard-line president, Mahmoud Ahmadi-Nejad, has turned to optimism in the financial sector. Gareth Smyth and Najmeh Bozorgmehr report from Tehran.
Vneshtorgbank is using its acquisition of Guta Bank to build up its retail services, planning more branches and aiming for a leading role in the mortgage market. By Brian Caplen.
Russian state-owned Vneshtorgbank is pushing ahead on the retail front, aiming to claim an 8%-10% share of the market by 2010. During that period, total assets are expected to rise from $15bn to $35bn, including a forecast rise in mortgages from $150m to $2bn and in consumer lending from $300m to $3bn.
Marcus Treacher of HSBC tells Dan Barnes about the rationale for its technology strategy and why banks that can think like treasurers and CFOs will beat the competition.
The tech vision of Marcus Treacher, head of global transaction banking e-Strategy at HSBC, is firmly rooted in using the SWIFT network and the ‘value added’ services that can be provided to customers.
The banking sector often needs to exchange confidential information as part of its routine business, which opens it up to potential fraud. Kris Sangani reports on security measures to prevent such disasters.
Regulation may be a burden for banks but consultants and IT firms are turning a profit from their woes. However, Chris Skinner questions whether bankers are too quick to throw money at the problems in search of a quick fix.
Ibrahim Dabdoub, chief executive of
National Bank of Kuwait
Ibrahim Dabdoub, chief executive of National Bank of Kuwait discusses the biggest challenges ahead for the gulf banking sector:
Globalisation, liberalisation and technology pose the biggest challenges for Gulf banks, which will have to compete with large, financially strong, global banks with a broad product offering, high-quality personnel and a greater capacity to absorb risk. International players are also technologically sophisticated and enjoy efficiencies of scale.
Bahrain’s economy has benefited from diversification, and Manama’s status as the Gulf’s premier financial hub is not under imminent threat, write James Gavin and Kevin Godier.
Bahrain’s relative lack of hydrocarbon resources has helped it to become one of the region’s most diversified economies, stimulating a steady flow of project finance and other corporate activities in a range of sectors.
A wind of change is quietly blowing through key sectors of the Kuwaiti economy which is slowly opening up to foreign businesses, writes Jon Marks, with Kevin Godier and James Gavin.
Consolidation has been the watchword for Omani banks in recent years. With the entry of a new Qatari player, consolidation is helping to internationalise the Muscat financial market, writes Jon Marks, with James Gavin and Eleanor Gillespie.
Besides record oil revenues, Saudi Arabia has made significant developments in its capital markets, especially in its equity markets. By Timothy S Gray.
The death of the UAE’s president may have been a blow to its citizens but a smooth transition of power reflects the stability that has made the region a top investment destination. Will McSheehy reports.
