Current Issue - RBI577
Issue Date: 2007-08-24 Issue Code: 577 Not Logged In1. Second half of 2007 to be tough as subprime mortgage crisis deepens
Half-yearly interim results at major European and US financial groups were largely published too early to take full account of potential problems (third-quarter figures should be much more stressed), though banks such as Citi, Bank of America (BofA) and Wachovia reported significant increases in loan loss provisions fomented by a weakening US retail banking environment (see Strong interims despite credit concerns). JPMorgan Chase, for instance, the US’s third-largest banking group, increased...Login to view full article
2. Promise buys rival to form Japan’s biggest consumer finance firm
Promise, which boasts a market share of around 13 percent, is looking to acquire all the shares of Sanyo Shinpan, which has around 4 percent of the market (see below). On 31 July, Promise acquired Asahi Enterprise, the largest shareholder in Sanyo Shinpan with a 25.2 percent stake; the president of Sanyo Shinpan, who holds 19 percent of the company, has already agreed to tender his shares.Login to view full article
3. GE Money in Spanish joint venture
Unicaja and GE Money will each hold 50 percent in the joint venture, which will have a share capital of €25 million ($33.7 million) and a loan portfolio of €200 million, and inherit 500,000 cards from Unicaja’s current credit card business. Unicaja is the eighth-largest financial services group in Spain; it operates in 15 provinces via 870 branches and has more than 2 million customers. “This further enhances our presence in the Spanish market,” said William Cary, president and CEO of...Login to view full article
4. The mortgage meltdown
Problems in the US subprime mortgage market continue to rock financial institutions, particularly so in Germany, where many banks, even state-sponsored institutions famous for their low profitability, have shown a remarkable appetite for risk. In late July, the IKB Deutsche Industriebank (IKB) – a small German lender to the Mittelstand (SME) business sector – made headlines when it announced losses as a result of its investments in US subprime debt.IKB’s major shareholder, state-owned...Login to view full article
5. Strong interims despite credit concerns
Half-yearly earnings figures reported by most of the major banking groups in the US and Europe have largely been strong. In Europe, Spain’s Santander has been particularly impressive; in the US, investment banking revenues helped JPMorgan Chase to a 36 percent rise in profits year-on-year.But looking forward to the third quarter and the rest of 2007, the signs suggest that US banks in particular will face much tougher market conditions brought on by significant credit quality concerns...Login to view full article
6. Sovereign funds come under scrutiny
Barclays, attempting to win ABN AMRO against a competing offer by a Royal Bank of Scotland-led consortium, raised its bid to €67.5 billion ($93.5 billion) at the end of July after lining up investments from China and Singapore worth $18.5 billion. China Development Bank and Singapore’s Temasek both bought strategic stakes in the UK bank, allowing it to increase its offer for the Dutch lender.Last year, Temasek became the largest shareholder in UK-headquartered Standard Chartered, a bank...Login to view full article
7. Breaking the Big Four
BankWest, the wholly owned subsidiary of the UK’s third-largest banking group, HBOS, has made two decisive moves in its Australian market over the past two months, announcing an ambitious branch expansion plan and launching a direct savings account paying a headline-grabbing rate of interest of 8 percent. The BankWest Regular Saver Account carries no charges and customers must deposit between A$50 ($40.3) and A$500 a month, make no withdrawals over the course of the month and link the account to...Login to view full article
8. Keeping the lead in the Czech Republic
Since its acquisition by Erste Bank in 2000, Česká Spořitelna (ČS), the Czech Republic’s second-largest bank by assets and the country’s largest retail bank, has undergone a significant transformation. In the year leading up to its sale by the Czech Republic government to Erste, ČS lost CZK6 billion ($292.6 million), 45 percent of its loans were non-performing and many of its ATMs failed to work properly.Soon after acquisition, Erste implemented a modernisation programme...Login to view full article
9. The spend-centric strategy
Despite the escalating US subprime mortgage market crisis and the spiralling effect it has had on the credit industry both in the US and abroad, American Express has posted strong half-yearly results that continue to build on the business momentum of both 2006 and the first quarter of 2007. Revenues net of interest expense for the second quarter increased 12 percent to $3.6 billion, according to Amex, reflecting higher spending and borrowing by consumers and small businesses.Year-to-date...Login to view full article
10. Mashreq’s new brand promise pays off
Since its formation as Bank of Oman in 1967, Mashreqbank – it changed its name in 1991 – has grown to become the largest privately owned bank in the United Arab Emirates (UAE). In particular, it has played a pioneering role in retail banking in the region: it introduced the first ATMs in the UAE and was the first bank in the country to launch credit cards. It now boasts the largest retail customer base in the UAE, according to Nabeel Malik, marketing director of retail banking at the bank, who says...Login to view full article
11. Another good year for bank brands
HSBC and ING have again benefited from strong rises in their brand value, according to 2007’s global ranking of brand strength from consultancy Interbrand and BusinessWeek magazine. HSBC was one of the highest overall performers, both in the rise of its brand value (up 17 percent) and its rank (up five places to 23rd). ING’s brand rose 12 percent in value, fuelled almost entirely by its ING Direct retail banking subsidiary.HSBC’s continued brand strength is shown by...Login to view full article
12. How to Become a Lemonaire
When the bank gives you lemons, make lemonade, or so the saying goes. Ever-clever Oregon-based Umpqua Bank’s latest marketing campaign takes small business owners back to their mom-and-pop roots – literally.In its How to Become a Lemonaire campaign, the small-but-growing Umpqua set up children with lemonade stand kits, a guide to starting a small business and $10 in start-up capital in the 96 cities in Umpqua’s three-state chain. The guide serves as an educational tool providing suggestions...Login to view full article
13. HSBC’s annual Singapore sale goes green
“Our annual bank-wide sale has always been popular with customers for offering great value on a wide range of products. In introducing the green element to our bank-wide sale this year, we seek to go beyond the conventional value we’ve delivered to them by helping them to invest in the future of our environment, which has the potential to impact our lives in a huge way,” said HSBC Singapore’s chief executive officer, Guy Harvey-Samuel.“It is in the interest of our customers and businesses...Login to view full article
14. News digest
This service is being provided by MoniLink, a joint venture between VocaLink, the operator of the UK ATM network, and UK IT firm Monitise. The bank is stressing to its customers that data will not be held on phones themselves and only a handset that is linked to the account can be used to access account information, ensuring privacy and security. The service is free, but there may be a data charge from some network operators, said RBS.Cards strategyBofA...Login to view full article