Subprime fallout
UK government and EU to decide Rock’s fate

Stricken UK mortgage bank Northern Rock, which is
now believed to have borrowed up to £25.3 billion ($51.8 billion)
from the Bank of England since being offered emergency funds on 14
September, has revealed there has been no interest in a bid for the
whole firm.

The 16 November deadline for indicative proposals having passed,
Northern Rock and its advisers are now considering a number of
proposals from interested parties.

The UK finance minister is coming under increasing political
pressure to clarify the government’s future funding assistance for
Northern Rock.

While European Union rules permit rescue aid for up to six months,
plus restructuring aid if a recovery plan is approved by the EU,
none of the six to eight parties believed to be interested in
Northern Rock is believed to have funding to repay the central bank
in full before the existing loan facility comes to an end in

Media reports have suggested that Apollo Management, Lone Star and
Cerberus have varying degrees of interest in Northern Rock, in
addition to Virgin, private equity house JC Flowers and investment
firm Olivant, which have publicly confirmed their interest.

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HSBC targets Korean insurance market

HSBC is to acquire a 50 percent less one share stake in South
Korean insurer Hana Life for KRW53 billion ($58 million), as it
continues its pursuit of growing the percentage contribution that
insurance makes to group profits from the current 10 percent to 20
percent over the next five years.

The deal will allow the bank to extend its growing Asian insurance
business to South Korea, the second-largest insurance market in
Asia, following recent insurance acquisitions in growth markets
such as India, China, Vietnam, Taiwan and the Middle East (see
RBI 579).

Hana Life was established in 2003 to underwrite and distribute life
insurance products for personal and corporate customers and has
about 113,000 policies in force, with premium income of KRW207
billion for the year ending 31 March 2007.

LCL to offer gas and electricity deals

LCL, a retail banking subsidiary of France’s largest
financial services group, Crédit Agricole, has teamed up with
French energy supplier Gaz de France (GDF) to sell one-year and
two-year fixed-price gas and electricity contracts to its
customers. The bank will receive a one-time fixed payment from GDF
for each deal.

LCL will initially have 272 sales staff in 52 branches selling the
GDF contracts, termed DolceVita 2 énergies offers, and will help to
promote the sale of electricity generated from renewable sources.
Energy diagnosis services will also be available at the
participating branches.

Contactless payments
Banks, vendors trial mobile contactless solution in

Six major French banks (BNP Paribas, Crédit Agricole and LCL,
Crédit Mutuel-CIC, Groupe Caisse d’Epargne, La Banque Postale and
Société Générale) as well as four mobile phone operators (Bouygues
Telecom, NRJ Mobile, Orange and SFR) have teamed up with card
associations MasterCard and Visa to launch a mobile contactless
payments trial with 1,000 customers at 200 sales outlets located in
the cities of Caen and Strasbourg.

The initiative, termed Payez Mobile, is based on a payment
application embedded in the customer’s mobile phone’s SIM card and
on near field communication (NFC) technology.

The trial evaluates users’ interest in this new payment solution
and tests the interoperability among solutions provided by
different suppliers: LG, Motorola and Sagem (mobile phones),
Ingenico and Sagem Monetel (payment terminals), Gemalto and
Oberthur Card Systems (SIM cards and secured application
management), and Inside Contactless (NFC components).

The test is also geared towards standardisation within the future
Single Euro Payments Area by contributing to the emergence of a
mobile contactless payment standard.

Mergers and
SEB expands in Ukraine

Skandinaviska Enskilda Banken (SEB), Sweden’s second-largest bank
by assets, has expanded its presence in Eastern Europe by acquiring
97.25 percent of Ukraine’s Factorial Bank for around $116

SEB said the purchase is in line with its strategy to grow its
presence in the region through organic growth and add-on

By acquiring the 53-branch Factorial Bank, SEB will strengthen its
regional presence in the eastern part of Ukraine and the city of

SEB was the first Nordic bank to enter Ukraine in 2004 when it
acquired Bank Agio, which it rebranded as SEB Ukraine.

Following its latest acquisition, which is subject to regulatory
approvals, SEB will have about 13,000 corporate customers and
100,000 private clients in the country. Integration of Factorial
Bank, including rebranding, will commence during 2008.

Mergers and
ING teams up with Thailand’s TMB

ING is to acquire a stake of 25.1 percent in Thailand’s TMB Bank
and a further 4.9 percent either in voting shares or in non-voting
shares, for around €460 million ($674 million), after the
loss-making Thai bank rejected a rival bid from Singapore’s DBS

Under the agreement with TMB, ING can increase its holding to 35
percent over the next two years.

After recapitalisation, the Thai government is expected to keep its
holding at 26.11 percent by subscribing to the issue of new

Established in 1957 as the Thai Military Bank – it rebranded as TMB
in 2005 – ING’s new Thai partner has approximately €14 billion in
total assets, more than 5 million customers and 472 branches.

“This transaction provides ING with a unique opportunity to enter a
major growth market in Asia. The partnership leverages our
expertise in retail banking and TMB’s superior distribution
platform, thereby greatly enhancing the quality of service and
breadth of financial products offered to TMB’s customers,” said Eli
Leenaars, executive board member responsible for ING’s global
retail banking.

UniCredit eyes further Central Asian growth

UniCredit, Italy’s largest bank, has set its sights on further
expansion into Central Asia following its acquisition of ATF Bank,
Kazakhstan’s fifth-largest bank, earlier this year.

According to a report in the Financial Times, the ATF purchase –
the biggest international investment to date in Kazakhstan outside
the oil sector – would provide “a hub” for UniCredit to advance
deep into central Asia. “We want to be number one – why not?”
Alexander Picker, ATF’s new chief executive, told the

ATF has already expanded overseas, buying banks in the Central
Asian republics of Kyrgyzstan and Tajikistan. ATF plans to open 100
new branches over the next year to add to its existing 150-strong
Kazakh network.

Bid to establish third pan-European card payment

A group of six European card payment schemes has set
up a Brussels-based company in a bid to establish a third
pan-European card scheme to rival MasterCard and Visa. The Euro
Alliance of Payment Schemes (EAPS) has been formed by Germany’s
EPCS, Spain’s Euro 6000, Portugal’s Multibanco, the UK’s Link
network, Italy’s PagoBancomat and Bancomat schemes, and European
card payment processor Eufiserv.

The company, which is a co-operative and could make profit, will
look to link national European debit card schemes, and has been set
up after a series of successful pilot transactions. The service
will start in the countries of the partners on 1 January 2008, in
time for the deadline for the first-wave of implementation of the
Single Euro Payments Area. In a statement, the consortium said EAPS
will facilitate pan-European transactions and generate more choice
in the market in line with requests from the European Central Bank
for a third European card payment scheme. The system would allow
cardholders to use their cards at locations throughout Europe,
while retailers would gain more opportunities for card

Crédit Agricole’s 2010 Italian banking plans

Crédit Agricole (CA), France’s largest financial
services group, has detailed three-year plans for its Italian
banking operation, the Cariparma Friuladria Group. The group was
formed when CA bought the spin-off entities resulting from the
Intesa Sanpaolo merger last year (see RBI 561).

Synergies for the banks will total €198 million ($289
million) in 2010, up €43 million from the €155 million initially
estimated in November 2006.The Cariparma Friuladria Group will
manage to generate €55 million in additional synergies relating to
CA’s ‘product factories’, lifting total synergies to €253 million
in 2010. The group’s results are expected to include 7.7 percent
average CAGR in revenue to €2 billion in 2010 and 12.9 percent CAGR
in gross operating income to €1 billion in 2010. The cost-income
ratio will drop 6.5 percentage points to 43 percent by 2010.

The three-year growth strategy for 2007 to 2010 is based on three
main growth paths: building up its position in high-potential
client segments, optimising the network’s geographical coverage of
the regions it operates in and developing synergies with CA’s
product factories. CA will look to boost branch numbers in 2008,
with around half of the openings scheduled for 2009 now taking
place during 2008: 100 new branches, seven corporate centres, seven
company centres and 12 private banking centres.

Synergies with CA’s product factories will result in major
competitive advantages, said the bank. An acceleration is projected
in life insurance business, with 9 percent average annual growth
and premiums totalling €1.8 billion by 2010.

ING, Public Bank in bancassurance deal

Following its distribution deal with Greece’s Piraeus Bank (see
RBI 580),
ING, the Dutch insurance giant, has reached a
similar ten-year alliance agreement with Public Bank, Malaysia’s
second-largest banking group, to distribute insurance products in
Malaysia and Hong Kong.

ING’s insurance products will be sold at the bank’s nearly
300-strong branch network through insurance advisers, telemarketers
and corporate clients. The alliance will make ING and Public Bank a
top-three player in Malaysia’s bancassurance sector, said ING,
adding that the two also plan to explore additional growth
opportunities in the wider Asia-Pacific region as Public Bank

ING said the agreement was part of a strategy to enhance its
distribution capabilities. Investment-linked plans, employee
benefits and credit life and traditional life products will be
offered exclusively to Public Bank customers.

Mergers and

Emirates NBD has big M&A expansion

The chairman of Emirates NBD, the recently formed largest bank in
the United Arab Emirates, has said his bank plans to expand through
cross-border acquisitions in Gulf Co-operation Council member
countries and the Middle East. Ahmad Humaid Al Tayer said the bank
will target organic growth and branch expansion through

“I think the time has come for bank mergers. With large assets and
equity base, we are looking at regional expansion. If there are
good opportunities, we are open to regional acquisitions,” he

Emirates NBD was created after the merger of the two largest banks
in Dubai, Emirates Bank International (EBI) and National Bank of
Dubai (NBD), in September. Al Tayer, former chairman of EBI, said
similar strategies had been considered in the past, but had been
hampered because most central banks in the region had been opposed
to the move.

Emirates Bank Group recorded a net profit of AED1.78 billion ($484
million) for the first nine months of 2007. Total assets reached
AED133 billion, an increase of 27 percent from December 2006.

German banks top EU client satisfaction

German banks have come out on top in a report on customer
satisfaction levels at European banks. In a survey conducted by US
research group Forrester, 37 percent of German banking customers
give their banks a strong rating.

Dutch banks including ABN AMRO, ING Postbank and Rabobank improved
from 29 percent to 35 percent between 2006 and 2007. French banks
lost ground, with the number of satisfied French consumers falling
to 27 percent from 31 percent last year. In Italy, only 15 percent
of consumers said they thought their bank acted in their interest,
with big banks such as Banca Intesa and UniCredit receiving poor

Overall, the survey, which questioned 10,377 adults about 37 banks,
found that more than two-thirds of consumers believe their bank
puts profits before service. Only 27 percent of Western European
consumers said their bank does what is best for them rather than
what is best for bank profits.

Mergers and

ING Direct acquires US online brokerage

ING Direct is buying US online discount broker
ShareBuilder for $220 million as it grows its US business empire.
Last month ING Direct took on $1.4 billion of the deposits of
failed US online bank NetBank (see RBI 580).

The purchase of ShareBuilder allows ING Direct to instantly
diversify its business lines away from its core savings-and-loans
model. ShareBuilder is a privately held Seattle-based brokerage
company with a low-cost, direct business model targeting early
stage investors through a set of simple and high-value investment
products including stocks, exchange-traded funds, options and
automatic investment plans.

Dick Harryvan, CEO of ING Direct, said: “This acquisition is in
line with ING Direct’s aim to become the world’s most preferred
consumer bank by expanding geographically and developing its
product range, while focusing on growing its mortgage business and
investment services.”

Via the incorporation of ShareBuilder’s 661,000 clients, ING’s
customer numbers will exceed 20 million worldwide.


BofA rolls out first retirement ad campaign and new tag line

Bank of America (BofA) has launched its first
retirement advertising campaign, with the aim of promoting its
individual retirement accounts (IRAs). The $35 million ad campaign
will run from 9 November until the start of the second quarter of
2008 and will utilise national and local print publications as well
as online spend.

Boston-based advertising agency Hill Holliday, which already works
with BofA’s investment management arm, Columbia Management, and its
wealth management division, US Trust, helped to develop the new
ads. According to the bank, the IRA campaign will lead to a
large-scale product awareness-building and branding campaign next
year, focused on the bank’s broader capabilities for the retirement
sector, such as 401(k) retirement savings.

The campaign comes at a time when BofA is upping its marketing
strike in the US market. On 15 November the bank introduced a new
online banking microsite,,
which features characters from the bank’s range of TV ads leading
visitors through interactive demonstrations of the bank’s online
and m-banking products.

The initiative also features a new tag line: ‘Bank the way you
live. Mobile. Online. Anytime. Anywhere’.

Corporate Social
ICICI Foundation set up to target inclusion

ICICI, India’s largest privately owned bank, has established the
ICICI Foundation as a vehicle to foster socio-economic development
and target greater inclusion of disadvantaged people into India’s
economic mainstream.

According to the bank, the new body will integrate, consolidate and
scale up ICICI’s existing initiatives in the area of philanthropy
and development, and expand into new areas, with the objective of
accelerating social and economic inclusion.

In a statement, the bank said that such an aim requires not only
financial capital but also technological and managerial expertise
as well as entrepreneurial talent, to which ICICI will

The foundation, to be led by the bank’s former deputy managing
director, Nachiket Mor, will begin with a grant from the bank.
ICICI and its subsidiaries plan to donate 1 percent of future
profits to the body.


Swedbank agrees new naming rights deal

Swedbank, Sweden’s fourth-largest bank by assets, has agreed a
16-year naming rights deal worth a reputed SEK153 million ($24.2
million) for the Nordic region’s biggest arena, which is being
built in Solna, north of Stockholm, at a total cost of SEK1.8

The bank says that the new stadium, to be called the Swedbank
Arena, will be one of Europe’s most modern and environmentally
friendly arenas for sport, culture and business. When the stadium
is completed in 2011/2012, it will have a capacity for football
matches of 50,000 spectators and for concerts of more than 60,000.
The venue will host games for the Swedish national football team as
well as club side AIK.

In July, rival club side Malmo sold the naming rights to Swedbank
for the new Swedbank Stadion, which will open in 2009.


Co-op launches Live Life Better

UK-based ethical bank the Co-operative Bank and its insurance
division, Co-operative Insurance, have launched a new marketing
campaign called Live Life Better. The aim is to provide customers
with what the bank terms “ethical financial guidance at key stages
throughout their life”.

A direct marketing initiative has been designed to equip people
with relevant ethical financial guidance at each major milestone in
life, from graduating and career planning, to starting a family
and, finally, retirement. Backing up the campaign is an online
interactive financial planner,,
which includes a link to the social networking website


RBC tees off golf sponsorship deal

RBC Royal Bank (RBC), Canada’s largest bank, has become the title
sponsor of the country’s premier golf tournament, the Canada Open,
from 2008 until 2012. The Open is the only Canada-based tournament
sanctioned by the US Professional Golfers Association (PGA).

“This gives us an ideal platform and an exceptional opportunity to
reach our target markets in Canada and build the RBC brand in the
US and internationally. We are committed to ensuring the RBC
Canadian Open is a premier stop on the PGA Tour,” said Jim Little,
chief brand and communications officer at RBC.

Promotion of the RBC brand outside Canada has taken on increased
significance following the bank’s recent buying spree, such as the
$2.2 billion purchase of Caribbean-based RBTT in October, its ninth
international acquisition this year (see RBI 580).


Chase to pick up tab

Chase, the retail banking arm of JPMorgan Chase, has launched a
promotional campaign called Chase Picks up the Tab, which it
predicts will enable 50,000 purchases to be made for free by its
debit cardholders.

The bank will pick up the cost of every 500th purchase charged to a
Chase debit card without using a PIN during November and December,
up to a maximum value of $500.

“It’s a great holiday treat for our customers and a great reason
for them to use their Chase debit card,” said Ryan McInerney, head
of marketing of Chase’s consumer bank.

Chase has flagged the promotion to its 10 million current account
customers with an integrated marketing campaign, including online,
print and ATM ads as well as statement inserts.

Citi launches nationwide cards

Citi, the US’s largest banking group, has launched a national
advertising campaign promoting its cards division. The move is an
extension of Citi’s first global brand campaign in a decade, which
kicked off in May and introduced the bank’s new tag line ‘Let’s Get
it Done’.

The new TV and print ads make strong use of Citi’s symbolic red arc
and have been designed, said the bank, to illustrate how Citi cards
“enable people to create the stories of their lives by providing
the financial power to fund life experiences”. The first spot
features a father and son who celebrate the father’s 60th birthday
by using a Citi card to travel together to the land of their
ancestors. “This new campaign adds further dimension to Citi’s
global brand campaign. It’s designed to provide a strong
communications platform to support our best in class credit card
products,” said Lisa Caputo, Citi’s chief marketing officer.

Media agency Publicis developed the campaign idea, which centres on
the question ‘What’s your story?’. Its brief was to create new TV
and print advertising that aimed to connect consumers with Citi
cards on an emotional level. TV ads are running on network and
cable programmes such as NFL, ABC College Football, ESPN,
Grey’s Anatomy, CSI and Dancing with the Stars. Print ads are
scheduled for publications including Sports Illustrated, Time,
Vogue and In Style.


Joint venture
Cisco and IBM aim to ‘transform’ retail banking with new

Two of the biggest names in global corporate IT, Cisco and IBM,
have announced new joint front office solutions specifically aimed
at the retail banking market.

The two boast they are “poised to transform the retail banking
experience” by enhancing customer interaction and collaboration
across all types of delivery channels, such as branches, contact
centres and self-service kiosks.

The IBM and Cisco Front Office Solution For Retail Banks package
attempts to let banks pool resources across the world and deliver
them at local branches by using new media such as video linkups,
which the companies say is part of the widespread move towards a
multi-channel environment.

Components of the new solution set include an integrated wireless
network to accommodate voice over internet protocol, video and
data, in addition to a single interface that integrates voice,
video, web conferencing, mobile internet protocol phones and
voicemail to spread staff expertise across the bank’s channels
anywhere in the world.

“Sustainable organic growth can only happen if banks are willing to
innovate and take advantage of all available channels to better
connect with their customers,” said Sunny Banerjea, global
solutions executive, IBM Banking Industry.


Citi completes i-flex roll-out after seven

In what has turned into a seven-year programme, Citi has completed
the implementation of i-flex Solutions’ Flexcube core banking
system across some 67 countries within Citi’s markets and banking
division. The initiative is part of a worldwide move by the US
giant to modernise its technology and infrastructure by
standardising systems on a common platform. According to analysts
at research group Celent, the move could mean $110 million of
savings per year to the banking group in reduced maintenance costs
and more rapid development times.

Flexcube, a multi-currency system capable of centralising data from
multiple locations, has the ability to ‘talk’ to other applications
designed for niche banking operations.

According to the bank, the product will help Citi manage Demand
Deposit Account, loans, treasury, cash and liquidity management
products, and supports the bank’s operations in the US, Europe,
Africa, Asia-Pacific and Latin America.

i-flex CIO Steve Randitch said: “Replacing a core banking system
across 67 countries around the world is an unparalleled achievement
in scope and impact.”


Fiserv teams up with Digital China

Fiserv CBS Worldwide has signed a deal with Digital
China to provide its international core banking system, ICBS, to
the Chinese financial services industry. Digital China, the largest
IT products distributor and systems integrator in China, will
provide local staff and regional banking knowledge to implement and
support the product.

ICBS is a retail banking engine that can be used in multinational,
multilingual environments for straight-through processing and
automated management of financial relationships.

Fiserv CBS Worldwide, which delivers end-to-end business and
technology solutions to retail financial organisations, consumer
finance institutions and credit unions, says it now has more than
18,000 clients in 66 countries.

Card marketing
Serverside Group gets European patent

UK-based Serverside Group, one of the leading players in the card
personalisation game, has been granted a patent on its core card
customisation architecture by the European Patents Office. The
technology provider has applied for a number of patents in recent
years to cover the design, marketing and production of its
customised financial transaction cards.

Serverside Group says it is now looking for licensees to implement
the technology. The company has two flagship products, All-AboutMe
and Virtual Portfolio. All-AboutMe is a web-based application that
allows cardholders to design their own unique payment card. Virtual
Portfolio is a web-based management tool that enables issuers to
rapidly launch card campaigns of any size.

Serverside says it now has 52 clients in 19 countries, covering
more than 200 card programmes globally.


Misys in partnership with India’s HCL

UK banking systems vendor Misys says it is targeting the
high-growth emerging markets of India, Singapore and Malaysia
through a joint marketing deal with Indian outsourcing company HCL
Technologies. Under the deal, Misys will be the Indian vendor’s
preferred banking software partner. The two companies will jointly
market the vendor’s products in all three countries. The firms will
also partner to build a centre in India to house professionals and
technical tools for upgrading clients to the latest versions of
Misys software.

Misys is midway through a turnaround programme that has so far
included the creation of an open source division headed by former
IBM executive Bob Barthelmes and a marketing agreement with German
software supplier SAP (see RBI 580).


FIS looks to raise its profile in

US-based Fidelity National Information Services (FIS), ranked the
biggest fintech player in the latest Financial Insights global
ranking (see page 21), has announced plans to introduce its range
of retail banking and card processing solutions in Portugal after
sealing an agreement with local player Audaxys.

Audaxys specialises in developing applications for the financial
sector, including leasing, long-term rental and consumer credit.
Under the agreement, Audaxys and FIS will work together to offer
FIS’s core processing applications Profile and Corebank, which
power the business of some of the world’s top banks.

They will also offer FIS’s next-generation card processing suite of
mainframe card issuing and acquiring software, BASE2000. The
companies already have a long-standing partnership in the
auto-finance market.

FIS says it is the largest provider of banking software in Europe
and helps support the operations of more than 10,000 financial
institutions around the world.

Mobile banking collaboration effort

Leading technology and wireless companies have joined forces to
develop Android, a new mobile banking and payments platform.
Thirty-four companies including some of the giants of the IT and
internet world such as Google, T-Mobile, Intel, HTC and Motorola
have formed the Open Handset Alliance (OHA) to collaborate on the
development of the Android system.

According to Google, Android is “the first truly open and
comprehensive platform for mobile devices” and aims to “foster
innovation”. It will give consumers a better user experience than
is possible on today’s platforms, the OHA added. The platform
should allow developers to work more