Tuesday, December 27, 2011

BAY likely to acquire HSBC retail loans pending approval

UK-based HSBC is reported to have succeeded in divesting its retail banking business here _ worth 30-40 billion baht _ to the Bank of Ayudhya (BAY).

According to a source in the banking industry, BAY is seeking approval from the Bank of Thailand to acquire HSBC's retail business.

The deal is expected to be complete early next year, said the source.

The pact is not a surprise in the banking industry as HSBC's global policy is to restructure, reducing its focus on retail banking business.



Previously HSBC Thailand reported it was continuing retail banking business as http://www.blogger.com/img/blank.gif
usual amid speculation it might sell some units for global restructuring.

HSBC's retail loan portfolio contains total debt outstanding worth 30-40 billion baht. After approval, HSBC will transfer the loan portfolio, including personal loans and around 500,000 credit cards, to BAY.

BAY's head of consumer finance, Philip Tan, refused to comment, saying the bank is unable to discuss the matter.

He stressed BAY's policy is to search for opportunities in retail business expansion to maintain market leadership in credit card and personal loan business. BAY has 4 million credit card holders, tops in the industry.

"Inorganic growth will be the bank's method of expanding in the retail banking sector, and such opportunities could occur next year," Mr Tan said

Saturday, November 19, 2011

CORRECT: Virgin Money Looks To Shake Up UK Retail Banking

LONDON (Dow Jones)--Virgin Money is looking to shake up the tightly knit U.K. banking sector and attract customers fed up with the country's biggest banks, Chief Executive Jayne-Anne Gadhia said Thursday, after agreeing to pay as much as GBP1 billion to buy Northern Rock from the government four years after the lender's near-collapse.

Gadhia told Dow Jones Newswires that Virgin Money will look to take market share from the "Big 5" banks that dominate U.K. retail banking with better customer service and by focusing on online banking. Rather than a hindrance, she said acquiring just 75 branches from the sale means the bank will be more efficient than peers who have "huge overheads" from extensive and often-underused branch networks.

Virgin Money earlier Thursday was named as the new owner of Northern Rock, five months after Chancellor of the Exchequer George Osborne formally put the bank up for sale.

The financial arm of Richard Branson's Virgin empire had narrowly missed out on buying Northern Rock in early 2008, when the government was considering ways to keep it afloat following a dramatic run on the bank and injection of emergency funds several months earlier. Instead, it was nationalized and restructured into a "bad bank" retained by the government and a smaller, "good bank" that will have around GBP14 billion in mortgage loans and GBP16 billion in deposits when its sale to Virgin Money completes Jan. 1.

http://online.wsj.com/article/BT-CO-20111117-710794.html

Wednesday, November 16, 2011

UK domestic banks offer good reasons for cheer

As the dust settles on the third-quarter reporting season, what have investors learnt about the UK banking sector? Have its prospects improved? Could the sector enjoy a year-end rally or will it continue to lag the wider market?

Based on what has been said over the past couple of weeks, the outlook remains gloomy. The part-nationalised banks – Lloyds Banking Group and Royal Bank of Scotland – have abandoned key performance targets because of the fragile UK economy. Lloyds has also lost its high-profile chief executive to stress.

Read more

Monday, October 31, 2011

Barclays Quarterly Profit Climbs

Oct. 31 (Bloomberg) -- Barclays Plc, Britain’s second- biggest bank by assets, reported a quarterly profit that beat estimates as earnings at the U.K. consumer bank more than doubled and investment bank revenue declined by less than European rivals.

Pretax profit before debt valuation adjustments in the three months to Sept. 30 increased by 5 percent to 1.3 billion pounds ($2.1 billion) from 1.27 billion pounds a year earlier, the London-based company said in a statement today. That beat the 1.24 billion-pound median estimate of 10 analysts surveyed by Bloomberg. Revenue at the Barclays Capital investment banking unit fell 15 percent to 2.25 billion pounds in the period.

Saturday, October 8, 2011

Little bank benefits as big ones stumble

s Bank of America and Citibank try to soothe customers fed up with the recent announcement of new banking fees, there’s one group happy to sit back and capitalize on the situation.

Community banks and credit unions say the big-bank fees led to an increased number of inquiring customers at their branches last week, and executives believe the growth will continue to pick up speed over the coming months.

Bank of America announced plans on Sept. 29 to institute a $5 monthly fee, starting next year, for customers who make purchases with their debit cards, and Citibank said Thursday it will raise minimum account balances for its customers, who will be faced with a monthly fee if they fail to meet the new requirements.

Both banks have highlighted options for customers to avoid such fees, but many consumers aren’t buying it.

“They keep shooting themselves in the foot,” said Dick Lavoie, vice president of marketing at Nashua’s Triangle Credit Union. “They keep implementing restrictions on their accounts, so people are finally getting fed up and moving.

“And where are they moving to? They’re coming to credit unions.”

Triangle Credit Union has grown about 7.5 percent in 2011, Lavoie said, and he expects those numbers to rise further after Bank of America’s announcement.

Lavoie even called Bank of America an “ally” because it continues to alienate customers with fees, and those people end up at Triangle or other local banks.

Lavoie said he has witnessed “an awful lot of changes” in nearly 40 years of experience with credit unions, but that the new fee from Bank of America is a blunder of rare proportions.

“Now is not the time to come up with a new fee, in this economy,” he said. “As a personal consumer, I can’t see the justification in it.”

Bank of America spokeswoman Betty Riess said the new fee allows the bank to make ends meet.

“This new fee allows us to continue to offer the service and convenience customers have come to expect from Bank of America,” she said. “We’re making sure customers understand the value and convenience of debit cards and the choices they have to avoid the fee.”

Riess said the fee is “clear and transparent.” It will start in early 2012, and all affected customers will be notified in writing at least 30 days in advance.

“It is a result of the cost of doing business,” said Karen LaPlume, vice president of marketing at Granite State Credit Union. “They’re paying for it on one end, so they have to charge the customer on the other end.”

LaPlume said Granite State Credit Union has seen a “slight influx” in people asking about their checking accounts and fees in New Hampshire over the last week.

“In light of Bank of America being in the news, we are finding that more and more people are coming to us,” she said.

Large regional and national banks are as quick as local banks or credit unions to try to capitalize on the debate.

A TD Bank representative said the bank has “no plans to charge” its customers for the use of debit cards.

“We’re confident in the products we offer now and look forward to the opportunity to take market share,” said Rebecca Acevedo, public relations manager at TD Bank, which is based in Canada.

Still, the organizations with the most to gain are community banks. With a growing presence in small towns and fewer restrictions on customer accounts, local banks believe they offer a viable alternative to large national banks.

Nashua Bank plans to “capitalize with advertising” and will begin a campaign for new customers today by offering a limited-time promotion of $5 to anyone who opens a new checking account, President G. Frank Teas said.

Tuesday, September 27, 2011

U.K. Bank-Sale Proceeds Should Go to Cut Debt

Ed Balls, the Treasury spokesman for the U.K.’s opposition Labour Party, said proceeds from selling off state-controlled banks should be used to reduce the national debt rather than in giveaways to voters.

The government took stakes of 41 percent of Lloyds Banking Group Plc (LLOY) and 83 percent of Royal Bank of Scotland Group Plc in late 2008 and early 2009, rescuing the companies from collapse. Both are currently trading at about half the average price at which the government bought the stakes.

In March, four people familiar with talks between the banks and Prime Minister David Cameron’s government said a sale could start as soon as next year. While Deputy Prime Minister Nick Clegg has called for the shares to be distributed to taxpayers, Chancellor of the Exchequer George Osborne may prefer a straight sale to raise funds that could be used to cut taxes before the 2015 election.

“Even as bank shares are falling again, David Cameron and Nick Clegg are still betting on a windfall gain from privatizing RBS and Lloyds to pay for a pre-election giveaway,” Balls told his party’s annual conference in Liverpool, northwest England today. “We will commit instead in our manifesto to do the responsible thing and use any windfall gain from the sale of bank shares to repay the national debt.”

Tuesday, September 13, 2011

Taming the banks

The Vickers report is elegantly argued, long and detailed. It has been welcomed in official quarters. But its proposals risk damaging a vital sector of the UK’s economy, hitting tax revenue and employment. Moreover, it does not achieve total bank safety. Its main target is the universal bank model, the combination of commercial and investment banking. But a well managed universal bank can be perfectly safe – something that is not fully recognised – and while the commission recommends increased regulation, relying on regulation without good management does not guarantee safe banking.
See link http://www.ft.com/cms/s/0/b8bc7ffc-ddf3-11e0-a391-00144feabdc0.html

Thursday, September 1, 2011

UK banks prepare for inevitable shake-up- sources

(Reuters) - Britain's top banks have begun preparing for a major shake-up ahead of a government decision, sources with knowledge of the matter said, in an attempt to reassure investors that they can handle expected changes to the way they operate.

The "Big Four" banks - Barclays , HSBC and part-nationalised lenders Lloyds and Royal Bank of Scotland - have stepped up lobbying against excessive new regulation in the run-up to The Independent Commission on Banking's (ICB) final report on Sept. 12.

But analysts say banks have accepted that moves to make them ring-fence retail operations from riskier investment banking activities and hold more capital appear inevitable -- even if the government does not implement the ICB's expected recommendations for several years.

"Typically what will happen is that banks will work out what timeline they need to hit to appease investor and market confidence, and so they may well implement a plan ahead of an official schedule," said Ajay Rawal, senior director Alvarez & Marsal, which specialises in bank restructurings.

The banks have begun preparing for how to deal with ring-fencing their main retail operations rather than hope for the government to delay the reforms, sources told Reuters.

"Work is already under way, based on what we know and what we expect. The banks have already started preparation for what is required," a source at one of Britain's top four banks said on Thursday.

Another source at a second top-four British bank said companies had been analysing various scenarios after the government-appointed ICB first suggested the ring-fencing option in April.

"There is not much you can do until we know for sure what is contained in the ring-fence but clearly people have thought of how it may work and what it may look like," said the source.

Brokerage Seymour Pierce estimates that Barclays and RBS would be hit the hardest by a ring-fencing model, partly because of their large investment banking operations, adding that the industry could not escape from an eventual restructuring.

"The banking system has been on life support and opiates since 2007. There must come a time for the patient to undergo surgery and physiotherapy, in our view," it added.

The ICB is expected to back proposals made in an interim report, when it said UK banks should ring-fence their retail operations from riskier investment banking activities to protect taxpayers from future financial crises.

However, the precise details of how this would work and the time frame given to banks to implement it remain unknown and a topic for political wrangling in Britain.

Shares in Britain's beaten-down bank stocks rose sharply on Thursday on hopes that major new reforms may be delayed. RBS, Barclays and Lloyds all rose by between 5 and 7 percent. The sector has fallen by some 20 percent this year.

Saturday, June 18, 2011

U.K. Bank Revamp Is a Leap in the Dark

George Osborne has taken a major gamble. The U.K. chancellor of the exchequer's decision to endorse a half-formed proposal to force banks to separate their U.K. retail operations from their investment-banking arms is a leap in the dark that could have unintended global consequences.For Mr. Osborne, the gamble is good politics. Last year, he rashly handed control of the bank-overhaul agenda to an Independent Commission on Banking, leaving himself with little choice but to accept its recommendations or risk a clash with his coalition partners. By adopting its central proposal three months before the commission is due to deliver its final report, Mr. Osborne can at least reclaim the initiative, presenting himself as a bold and radical reformer while proclaiming an end to regulatory uncertainty for the banks.

Friday, February 4, 2011

British oil companies and banks in limbo over Egypt protests

British companies are flying out staff and halting operations as the civil disorder escalates in Egypt but they have also found themselves under verbal attack for being too close to the government of president Hosni Mubarak.

BP has also been accused of working "hand in glove with dictatorship" while Vodafone is under fire for bowing to presidential pressure to shut the mobile telephone network down.

BP, which has sunk $14bn into oil operations and is hoping to double production there, said "hundreds" of employees or their dependents were being evacuated from Cairo and some drilling operations had been halted.

BG, formerly part of British Gas, said it had closed its Cairo office and flown home all non-essential expatriate staff from Egypt, but its production of liquefied natural gas goes on.

Vodafone has flown 25 people and their families back to the UK in recent days, the company's chief executive Vittorio Colao disclosed.

The boss of the world's biggest mobile phone operator added that two of its Egyptian employees are known to have been injured in rioting between supporters and opponents of Mubarak. One of the two is missing, and the company is trying locate him.

And British banks such as Barclays, airlines such as BA and others with exposure to the growing Middle East market have seen their shares hit as investors worry about the damage to UK plc from the turmoil in the region.

BP has been criticised by the non-governmental organisation Platform, which claims the oil company had with other British and American oil companies "worked hand in glove with dictatorship."

The environmental and social justice group also said Hesham Mekawi, the BP Egypt chairman, has praised "the stability of the country" and claimed BP had allowed the American Chamber of Commerce in Cairo - of which it is a member - to put pressure on US Congress not to support a recent motion calling on Mubarak to hold fair elections and respect human rights.

BP said it had played a constructive role in Egypt which had benefited the entire population. "We've been in Egypt for 40-plus years as a major investor in the country's industry, employing a well-trained workforce in quality jobs, supplying significant amounts of energy to meet the rapidly growing population's needs," said a spokesman.

BP has made Egypt one of its top priorities after a major gas find in the Nile Delta last summer. It hopes to more than double its oil and gas production to over 320,000 barrels a day – almost a tenth of its global output.

Meanwhile Vodafone's Collao said: "We have also suffered some 'infrastructure damage'," which he defined as mobile stations out of action due to fuel shortages, or because Vodafone staff are unable to provide essential maintenance.

The British company owns 55% of Vodafone Egypt which employes around 6,000 and has nearly 29m customers.

Colao defended his decision to shut down its mobile phone network in Egypt last week on the regime's orders. "The network was down for 24 hours. We didn't have any option as the government was within its rights under emergency powers that it invoked after the outbreak of demonstrations."

He said disruption to services is continuing with many Egyptian customers unable to send text messages, but that the network was operational for those taking advantage of 'roaming' agreements between different operators.

"Our main concern at the moment is for the safety of the people of Egypt and our colleagues. But we are not telling people to stay at home, some employees can work their shifts. This is a very fluid situation."

Last year, Vodafone was approached by its Egyptian partner, Telecom Egypt, with an offer to buy out the British company's stake. But talks broke down because the two sides couldn't agree a price.

Vodafone reckons its holding in its Egyptian joint venture will rise in value because only around 70% of Egypt's population owns a mobile phone, whereas in Europe there is saturation coverage- GUARDIAN UK

Group: Don’t break up British banks

LONDON: British banks must not be broken up as a result of a government review on the sector since this could harm the Britain's role at the helm of global finance, the Confederation of British Industry (CBI) said.

The CBI, which is Britain's main business lobby group, added that the sector had to tackle ongoing public anger over large bonuses for bankers, while ensuring that British banks could still attract top talent.

Britain set up the Independent Commission on Banking (ICB) last year to examine a possible shake-up of the industry after the credit crisis, which saw top lenders such as Royal Bank of Scotland and Lloyds needing taxpayer bailouts.

The ICB is currently examining whether or not to split up companies' retail banking operations from their investment banking arms.

It is due to publish an interim report in April before a final report in September.

The CBI said it made a submission to the ICB in which it warned against a full break-up of the banks.

“We believe that breaking up banks would be a mistake. We need a strong banking system to help support the economy and growth,” said CBI director-general John Cridland yesterday.

Despite calls from politicians to cull the investment banking industry, many industry members and analysts say it is unlikely that British banks will ultimately be forced into a full break-up.

Most universal banks, with activities ranging from trading to retail banking, proved stronger in the crisis than many “narrow lenders”, such as mortgage and retail specialist Northern Rock which nearly collapsed and had to be nationalised.

Britain's banking industry is dominated by the “Big Four” of RBS, Lloyds, Barclays and HSBC.

Last month, ICB head John Vickers hinted that the ICB was unlikely to recommend a formal break-up of the banks but could support plans to distance banks' retail arms from their trading units via a form of subsidiarisation.

This would entail “ring-fencing” retail banking operations so that depositors' funds would not be used to subsidise more risky investment banking activities.

The CBI said it backed plans to strengthen the capital of banks and supported moves for companies to have contingent capital securities. These are bonds that turn into equity if a bank hits trouble, thereby bolstering its capital position.

The CBI added that it was vital to address concerns over banks' bonuses, with many members of the public still angry that an industry blamed for causing the crisis could use taxpayers'money to award its staff large salaries.

“Addressing the bonus culture is part of winning back trust,” said Cridland.

“Boards need to be sensitive to public concern over the quantum of pay, a task they must juggle with the need to be able to compete for the world's best talent.” he added. Reuters