All articles by Douglas Blakey
Douglas Blakey
The evolution of GE Money
According to GEs 2007 annual results, published in January, GE Money reported the fastest revenue growth of GEs six business segments it grew 31 percent last year, followed by GE Infrastructure (22 percent), GE Commercial Finance (14 percent), GE Industrial (9 percent), broadcaster NBCU (6 percent) and GE Healthcare (-3 percent). GE Money, which has $200 billion in assets, ended 2007 as the third most important unit in terms of revenue contribution to GE: for the fourth quarter its revenue was $6.58 billion, compared with GE Infrastructures $17.34 billion and GE Commercial Finances $9.32 billion.It has not been all plain sailing: the company exited Japans very difficult consumer finance market last year and sold most of its US mortgage unit, WMC, for a loss
The Chase for better business
A new ad campaign from the USs third-largest retail bank, Chase, aims to reposition its brand as a more customer friendly organisation and features a new tag line Chase What Matters Chase, the retail banking division of JPMorgan Chase, has launched a nationwide advertising campaign in the US, featuring the tag line Chase What Matters, in an attempt to highlight the banks customer service credentials.In a statement, the bank said: Chase What Matters is more than just an advertising campaign
A brand new China
China Lifes brand value rose the most, doubling in value, while China Construction Bank replaced Bank of China as the most valuable bank brand, writes Douglas Blakey. Chinese banks and insurers dominate Interbrands 2007 Best Chinese Brands survey, filling ten of the top 16 places.The countrys largest insurer, China Life, was the strongest overall performer, doubling the value of its brand, while China Construction Bank (CCB), up one place to second, was the strongest performing bank.Its brand value rose by 22 percent, enabling it to replace Bank of China (BoC), now ranked third, as the most valuable bank brand despite being the third largest bank by assets after Industrial and Commercial Bank of China (ICBC) and BoC
Concern over impact of new loans
A senior Standard & Poors analyst in Japan has warned the countrys consumer lending market could crash if Japan Post Bank, the commercial bank being slowly spun out of Japans vast postal service, is granted permission to offer consumer loans.
Sweden’s SBAB targets savings
The successful implementation in 2007 of Financial Objects activebank software by Swedens public-sector bank SBAB has enabled the bank to challenge the countrys large retail banks by offering an expanded product range, in particular savings products, ahead of a possible privatisation, writes Douglas Blakey. Sveriges Bostadsfinansieringsaktiebolag (SBAB), the public-sector bank mandated by the Swedish government to drive down the cost of domestic mortgages in a market dominated by four major banking groups, has reported a successful launch of its first range of savings products.Last April, as it sought to diversify its product line-up, the bank installed UK-headquartered Financial Objects activebank retail banking software, which is, according to the vendor, a clear alternative to legacy core banking systems.Not only can we now take deposits to the open market and lend against these, but we can also bring new products to market quicker The capabilities of activebank Retail have improved the services we offer to existing customers and we are now better placed to attract new ones, said Ulf Tingstrm, chief information officer at SBAB.In an interview with RBI, Tingstrm said: Our position is that traditional Swedish banks dont offer competitive interest rates on their savings products and our belief is that SBAB can contribute to increased competition in this field, leading to more favourable rates for our customers
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Alpha Bank expands ambitious three-year plan
The bank also said its international division will be targeted to contribute 30 percent of group profit by 2010, up from its current 25 percent, enabling the bank to raise its estimate for pre-tax profit contribution from south-eastern Europe to 550 million by the end of the decade from 400 million.Speaking at a presentation in London on 16 January, the banks chief executive, Dimitris Mantzounis, said: Two years into the Agenda 2010 implementation we feel increasingly confident of Alpha Banks capacity to exceed its 10 percent market share target in south-eastern Europe and continue strengthening its leading position in the Greek market.Following strong uptake of our retail and corporate banking proposition in south-eastern Europe, which has delivered impressive new loan and deposit balances across the region in 2007, we will increase our network investment to double our current footprint and reach over 1,500 branches by 2010.In Greece, the bank plans to open a further 125 branches to increase its network to 536 units by 2010 and will press on with an overhaul of its consumer finance product range as well as promoting new bancassurance products developed with French insurer Axa.In its domestic market in the period to 2010, Alpha is targeting a CAGR for mortgages, consumer credit and small business earnings of 20 percent, 28 percent and 25 percent respectively (see table)
A world of risk just got riskier
It adds that economists are divided on whether consumption-led growth in Asia can drive the global economy; in Europe, the prominence of the UKs financial sector makes it vulnerable, while large current account deficits in some central and eastern European economies may prove increasingly unsustainable in 2008.The report, published on 9 January, calls for new thinking on systemic financial risk in response to the revolution in financial markets over the past two decades.It says that the significant changes in the financial markets over the past two decades have led to the ownership of risks being highly decentralised, along with greater opportunities for risks to transmit between individual firms and markets making effective risk management all the more critical.Four main risk factorsThe study, Global Risks 2008, focuses on what it says are the four main risk issues which will impact the world economy and society in the decade ahead: systemic financial risk; food security; supply chain vulnerability; and energy risks.While many of these cannot be avoided, they can be better understood, managed and mitigated, argue the reports authors (it has been written in co-operation with Citi, Marsh & McLennan Companies, Swiss Re, the Wharton School Risk Center and Zurich Financial Services).In terms of systemic financial risk, the report states that while a re-pricing of risk in financial markets was predicted by some observers at the beginning of 2007, the scale and nature of the systemic financial crisis of 2007-2008 has raised fundamental questions as to the vulnerabilities within the current model of financial markets.Diversification of risk may have strengthened stability in good times, says the report, but systemic financial risk remains acute
Wachovia offers its customers
Wachovia, the fourth-largest bank in the US, has introduced Way2Save, an automatic savings programme which at first glance appears to be based on rival Bank of Americas (BofA) Keep the Change programme, a runaway success since its launch in 2005.Way2Save, which is to be promoted by Wachovias largest ever advertising campaign, offers bonus payments for customers who make regular deposits to their savings accounts.The Wachovia programme requires its customers to link a current account to a Way2Save savings account.
Canadian CEOs remain optimistic
While the knock-on effects of the US subprime meltdown ripple across global financial markets, retail banking heads in neighbouring Canada remain cautiously optimistic, despite ongoing concerns about the Canadian governments policy banning major bank mergers, says Douglas Blakey. The annual Canadian Bank CEO Conference, held in Toronto on 15 January, featured presentations by the heads of four of Canadas largest banks Royal Bank of Canada (RBC), Toronto-Dominion (TD), Scotiabank and Bank of Montreal Group (BMO) all of whom remained cautiously optimistic about the year ahead
Canara shifts up a gear to stay ahead
Canara Bank, Indias third-largest public sector bank, has unveiled a new brand identity and rolled out an advertising campaign as part of a major repositioning exercise