Strategy
SocGen sets up latest consumer finance unit in high-growth
Turkey

French bank Société Générale (SocGen) is to set up a
consumer finance business in Turkey – the latest in a string of
foreign financial groups to set up operations in the country. The
group is creating a business called Credi¬Ver, through its SG
Istanbul subsidiary, which will offer a range of consumer credit
products. SocGen said it will use expertise it has gained through
its international consumer finance group to develop the
business.

Société Générale Consumer Finance, its specialist consumer
finance subsidiary, has around 17,000 employees and now manages
subsidiaries in 24 countries – including France, Italy, Germany,
Morocco and Russia – with €22 billion ($32 billion) outstanding.
Over the past 18 months, the bank has targeted Central and Eastern
European markets, launching in Hungary, Greece and Bulgaria, among
others.
The bank did not reveal which services it will offer in the Turkish
market. Its services in other countries include financing of
consumer goods and vehicles, direct financing solutions to
individuals, and management services to retail banking partners.
SocGen says Turkey has a population of 72.9 million, a fast-growing
economy and high rates of consumption.

Strategy
Standard Chartered issues upbeat trading statement for
2007

Standard Chartered (StanChart), the UK-based bank that makes most
of its profit in Asia, issued a bullish trading update despite
banks in the US and Europe continuing to bear the brunt of the
global credit crunch.

The bank has managed to avoid the worst of the subprime-related
problems because of its focus on emerging markets. Peter Sands, the
group’s chief executive, reported the bank has been performing
strongly since it issued its half-year results in June. It has been
accelerating investment in the second half of the year but still
expects “very good” double-digit growth.

He said: “It’s been another year of delivery. Our operating
performance is strong and our markets remain full of
opportunity.”

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By GlobalData

The CEO added the bank’s liquidity remained stable, with a 90
percent loan to deposit ratio. He expects Tier 1 capital, a key
measure of strength, to be above target ratings.

He said there were three main items that would affect the group’s
results: taking its structured investment vehicle (Whistlejacket)
onto its balance sheet, new accounting regulations in Korea and a
delay in the sale of its Indian fund business.

Separately, in an interview with Reuters in early
December, Sands stated that while Asia is not insulated from the US
subprime crisis, the region is well placed to withstand it. “I
don’t think anybody should assume that any one country is totally
immune to the turmoil in the global financial markets. But that
said, I think Asia is in very good shape.”

Strategy
More subprime woes for BofA as it considers selling Chinese
stake

Bank of America (BofA) upped its expectations of fourth quarter
writedowns by $300 million to $3.3 billion, but still expects to
post a profit for 2007. Speaking at a Goldman Sachs conference,
chief executive Ken Lewis admitted fourth-quarter results were
likely to be “quite disappointing”. The update comes a month after
the bank estimated writedowns of $3 billion, although BofA, the
US’s largest retail player, said it would not know the true extent
of the writedowns until the end of the quarter.

Lewis added that BofA would look at selling some of its stake in
China Construction Bank, China’s second-largest bank – a stake
currently worth around $30 billion. The bank invested $3 billion
two years ago for an 8.5 percent share of the Chinese lender, and
has an option to increase its share of the business to 19.9
percent.

BofA has said it would record a gain of $16 billion on the sale of
part of the stake in the fourth quarter, although the figure will
not run through the profit and loss account. Analysts predicted
earnings per share would fall 41 percent, or $0.70 a share
year-on-year.

Distribution
HSBC opens Japanese retail branches

HSBC, Europe’s largest banking group, is planning to open its first
seven retail branches in Japan in 2008. The bank is aiming to build
a network of 50 outlets within the next five to ten years,
targeting the mass affluent segment under its HSBC Premier service
line. It wants to serve individuals with at least ¥10 million
($90,200) in liquid assets.

In January, the bank will open two branches in Tokyo and Osaka,
where it believes 6.3 million people will be eligible for the
service. It then plans to open another five in Tokyo and one more
in Osaka by the end of 2008, pending regulatory approval.

HSBC Premier currently has around 2 million customers in 35
different countries.

Strategy
WaMu restructures to cope with subprime
hit

Leading US mortgage lender Washington Mutual (WaMu) will
discontinue subprime lending, cut 3,150 jobs and look to raise $2.5
billion in additional capital to address “unprecedented challenges”
in the US lending market. The bank’s share price has fallen by
around 60 percent over the course of 2007, making it one of the
worst performers in the US market.

The drastic measures came as WaMu took a $1.5 billion provision for
loan losses in the fourth quarter. It said the figure was about
twice the level of expected charge-offs. It added loan loss
provisions were likely to be between $1.8 billion and $2 billion in
the first quarter of 2008, again well ahead of the expected
charge-offs.

The bank will close around 190 of its 336 home loan centres and
sales offices, and nine processing and call centres. It will shed
2,600 home loan jobs – 22 percent of the section’s staff – and cut
550 corporate and other support positions. It will close WaMu
Capital, its institutional broker-dealer, and its mortgage banker
finance warehouse service.

The bank said the expense reduction programme will result in around
$140 million in additional expenses in the fourth quarter. WaMu
added it would tighten its focus on mortgage lending to customers
through its retail branch network.

Strategy
Deutsche Postbank sets out 2010 profit
targets

In a strategy presentation in early December, Deutsche Postbank’s
chairman, Wolfgang Klein, said a focus on costs, product innovation
and service will help the bank increase pre-tax profit by one-third
by 2010.

Germany’s largest commercial retail bank has targeted profit of
between €1.4 billion and €1.45 billion, in contrast to a 2006
figure of €941 million. The bank will offer an improved retail
product range and additional services for repeat customers in a bid
to improve customer retention. Around 4.6 million of its 14.5
million customers already use Postbank as their primary bank,
accounting for 75 percent of its income.

The aim is to cut Postbank’s cost-income ratio to below 58 percent,
from a current figure of around 65 percent. Klein added that for
2008, the bank is expecting pre-tax profit of €1.1 billion to €1.2
billion, and a cost-income ratio of below 63 percent.

Products
E-bill customers more profitable and loyal

Retail banking customers who use online billing and e-payment
services are more profitable and loyal to their financial
institutions, says US bank SunTrust.

A study by the $180 billion-asset bank, which analysed data
collected from households for a 13-month period between February
2006 and 2007, revealed a “clear link”, according to the bank,
between electronic billing and payment habits and higher account
balances, customer loyalty and profitability.

Customers who received and paid at least three e-bills per month at
the SunTrust website were 86 percent more profitable, had a 78
percent lower average attrition rate and carried 121 percent higher
deposit balances than the average customer. They were also twice as
likely to have a mortgage and 60 percent more likely to have
savings account than other SunTrust customers.

Strategy
Axa to expand retail banking programme

Axa, Europe’s second-biggest insurer, has created Axa Bank Europe
to make it easier to expand its retail banking operations across
Europe. The group’s retail banking business, which currently
operates in Belgium, France, Germany and Hungary, will be
reorganised to make moves into other countries possible. Axa has
said it wants to complement its insurance products by offering a
range of retail banking products.

An Axa spokesperson told RBI: “This is very much in the
preliminary stages. We don’t do any banking for corporate or small
businesses – we only offer very simple retail banking products.
This entity will put together best banking practices on the
existing platform so we could move into other countries where we
offer insurance products.”

Axa Bank Europe will use Belgium as its headquarters, with the
other banks to operate as subsidiaries or branches. It will be
managed by Hervé Hatt, CEO of Axa Banque in France.

Strategy
Discover: no more goodwill for Goldfish

Discover Financial Services is to write down up to
$422 million of assets in its Goldfish UK credit card business
because of difficult trading conditions in the UK. The US-based
credit card business said the non-cash impairment charge would be
equal to “all or substantially all” of the goodwill and other
intangible assets of its Goldfish business.

David Nelms, CEO of Discover, said: “We have concluded that
continued disruption in the UK financial markets, higher interest
rates and our decision to reduce our loan exposure to the UK market
have negatively affected the book value of our Goldfish
business.”

Morgan Stanley, which sold Discover earlier this year, acquired
Goldfish in February 2006 for $1.6 billion.

Strategy
BCP chairman leaves with parting shot

Jorge Jardim Gonçalves has announced his resignation as chairman of
Portugal’s largest commercial bank, Millennium BCP, saying a lack
of boardroom cohesion contributed to his departure. Gonçalves had
been involved in a power struggle with former CEO Paulo Tierra
Pinto, who left at the end of August over serious doubts concerning
the strategic focus for BCP after a disastrous merger attempt with
local rival BPI (see RBI 581).

In a letter posted on the bank’s website, Gonçalves said: “Despite
the expectation that there could be cohesion within the executive
board of directors, which turned out not to be possible, I am
certain that the bank has… the skills, desire and interest needed
to continue with the Millennium project, preserving strategic
independence and long term sustainability.”

Gonçalves, who had two roles – as president of the supervisory
board and president of the senior board – will be replaced by
respective vice-presidents Gijsbert Swalef and Antonio Gonçalves.
They were appointed by current CEO Filipe Pinhal, who took on his
role in September after Pinto’s departure.

Distribution
Australia’s CBA opens late for festive
season

More than 100 Commonwealth Bank of Australia (CBA) branches will
open late in December to cater for more demand for financial
products in the run-up to Christmas. Extended trading is being
offered in 108 branches, up from 65 in 2006; the majority will be
open until 7pm local time.

Ross McEwan, the banks’ retail banking services executive, said:
“Strong traffic levels during December last year have encouraged
the bank to provide even more convenient trading hours for our
customers this year.”

The bank, Australia’s largest, said the move was prompted after it
received positive feedback from customers on its recently
introduced selected Sunday opening programme.

Strategy
Wells Fargo tightens focus on cross-selling

The US’s fifth-largest retail bank, Wells Fargo, which has so far
suffered less than other mortgage players in the US subprime slide,
will still be hit if there is a steeper and more prolonged decline
in US residential real estate, said CFO Howard Atkins.

But Atkins added the bank had fared well compared to its rivals,
having avoided some of the main problem areas including making
markets in subprime mortgage securities and exposure to hedge
funds. A diversified business model meant it had more opportunities
for growth and cross-selling, as well as less risk, Atkins
said.

“I believe we do have the best model out there to outperform in the
longer term,” he said.

For its third-quarter figures, Wells Fargo said its consumer
cross-sell ratio was now 5.5 products per customer, while credit
card purchase volumes were up 20 percent year-on-year. Sales of its
bundled account, Wells Fargo Packages, were up 13 percent.

Atkins said Wells Fargo would take a provision for credit losses of
$1.4 billion in the fourth quarter, but its overall performance was
good. In the third quarter, earnings per share increased 6 percent,
net income was up 4 percent and revenue up 10 percent. Revenue
growth was driven by growth in loans, core deposits and fee
income.

Strategy
ANZ aims to double profits and targets Asia-Pacific
growth

ANZ, Australia’s third-largest banking group by assets, is aiming
to derive 20 percent of its earnings from Asia-Pacific by 2012, up
from 7 percent currently; this forms an integral part of its target
to double group profits to more than A$8 billion ($6.88 billion) in
the next five years.

While ANZ has been the most enthusiastic of Australia’s Big Four
banks in expanding overseas – such as investing in its priority
markets of China, India, Indonesia, Malaysia, Vietnam, Philippines
and Thailand – it said organic growth supplemented with in-fill
mergers and acquisitions would drive Asia-Pacific growth. Speaking
at the bank’s AGM on 18 December, ANZ chief executive Michael Smith
said: “Our aspiration is that over the next five years we can
develop Asia to a size where it is as big as our New Zealand
business.”

ANZ currently derives 22 percent of its group profits in New
Zealand, which is expected to drop to 20 percent by 2012, while its
domestic Australian market will account for 60 percent, currently
69 percent.

MARKETING NEWS DIGEST

Sports sponsorship
ANZ agrees Australia’s biggest naming rights sponsorship
deal

ANZ, Australia’s third-largest bank by assets, has signed a seven-
year A$31.5 million ($27 million) naming rights deal for Sydney’s
Olympic stadium, currently known as the Telstra Stadium. From
January 2008, the venue will be renamed ANZ Stadium in a deal
which, according to the bank, represents Australia’s biggest naming
rights sponsorship.

The stadium will host home games of four rugby league teams – the
Bulldogs, St George Illawarra, South Sydney and the Wests Tigers –
and will feature Australian football internationals as well as
outdoor concerts.

ANZ previously sponsored a sports stadium in Brisbane. The current
Queensland Sport and Athletics Centre was known as the ANZ Stadium
from 1993 to 2003.

Advertising
Banco Sabadell trials advertisements on mobile
phones

Spain’s Banco Sabadell is running a marketing campaign delivering
promotional videos on customers’ mobile telephones. The bank is
initially running the ads to promote its Hipoteca Joven mortgage
product, which is aimed at the under-30s.

The promotion is one of the first marketing initiatives arising
from the bank’s decision to team up with Spanish telecoms giant
Telefonica. The CEOs of the two companies signed a €57.5 million
($83 million), five-year contract in May to share commercial
initiatives, including loyalty schemes, and product integration.
For instance, Telefonica’s digital TV, telephone and internet home
packages may in the future be offered alongside Sabadell’s mortgage
loans.

“Our first goal is to open new communication channels with our
clients, using interactive TV, digital signature and other
technologies. Above all, to make services more agile, reducing
waiting times for our clients,” said Pol Navarro, Sabadell’s
director for innovations, told RBI in an interview (see RBI
574).

Sponsorship
Rabo signs €6m horticulture deal

Dutch co-operative Rabobank has agreed a €6 million
deal to become the founder sponsor of the Floriade World
Horticulture Fair, to be held in the Dutch town of Venlo from April
to October 2012. The fair, organised by the Netherlands
Horticulture Council and held every ten years, dates to 1851 and is
expected to attract over 2 million visitors to the 2012
event.

The sponsorship is regarded by the bank as a natural fit, given
Rabobank’s international efforts to target the food and
agricultural banking sectors of the market. “One could say that
it’s self-evident for us to be involved as founder in Floriade,”
said Rabobank director Rob ten Heggeler.

Product
innovation

TD becomes the latest major banking group to offer green
mortgages

Fresh evidence of the recent rise of the green mortgage becoming a
global phenomenon has been provided by the launch in Canada of two
ethical mortgages by Toronto-Dominion (TD), the country’s
third-largest bank.

According to the bank, its Canada Trust Green Mortgage and TD
Canada Trust Green Home Equity Line of Credit have been introduced
to offer a lower interest rate and rebates on certain
purchases.

For the bank’s five-year fixed-rate green mortgage, for example, TD
will provide a cash rebate of up to 1 percent of the mortgage funds
advanced when the customer purchases qualifying energy efficient
products for heating, cooling and ventilation.

TD will also make a donation of C$100 ($100) to environmental group
Friends of the Environment Foundation for each green mortgage it
sells.

Sports
sponsorship

Alonso Formula One team change gets mixed
reception

Hot on the heels of reporting an upbeat assessment of the first
year of its global branding deal with the Renault Formula One (F1)
team (see RBI 583), ING has greeted with enthusiasm the
news that former F1 world champion Fernando Alonso is to return to
the Renault F1 team.

“We’re especially pleased to see a double world champion, in
Fernando Alonso, return to help support ING’s successful activation
of our three-year sponsorship,” said ING’s head of group marketing,
Isabelle Conner.

Following the departure of Alonso from the McLaren F1 team, Spanish
insurance company Mutua Madrileña tore up its two-year sponsorship
deal with the McLaren team after the first year.

Cards marketing
France’s Caisses d’Epargne reveals winning card
design

The Caisses d’Epargne, the association of French savings banks, has
unveiled the winner of its charge card design competition, which
ran on its Ecureuil.fr website.

Visitors to the website were invited to create an original visual
suitable for a charge card and to register the design on the site,
in a competition that ran from February until November this year.
According to the bank, it received over 15,000 entries, with a
total of 385,960 votes recorded during the promotion.

The bank will now use the winning card design for 100,000 of the
Carte Bleue Visa cards it issues to customers aged 26 or less.

Card
marketing

Card personalisation available in
Slovakia

Slovakia’s Slovenská Sporitel’ňa, the country’s largest bank by
assets, has become the latest European bank to offer its customers
the option of having personal images on their credit or debit
cards.

The bank unveiled the customisation service, supplied by
UK-headquartered Serverside Group, for its debit card range,
specifically its Visa Electron, Visa Classic, Maestro and
MasterCard Mass cards, on 1 December. It will extend the offering,
which it is marketing as My Own Card, to its credit card portfolio
from the second quarter of 2008.

“We believe this new service will go down really well with our
existing cardholders and are confident it will attract new
customers too,” said Martin Dubecký, the bank’s product manager,
cards product department.

Branding
Bullish Regions launches new look

Regions Bank, the Alabama-based bank that entered the top ten
biggest US banks as a result of its merger with AmSouth, which it
completed in November, has introduced a new logo and corporate
image.

According to Regions, its new corporate colour is called ‘life
green’ and is the result of combining the green from Regions’ old
logo and the blue from the AmSouth logo.

Release of the new corporate image, which it is rolling out at its
2,000 branches, coincided with an upbeat assessment of cost savings
the bank is targeting following the merger. The bank is now
projecting savings of at least $300 million for 2007, twice the
original target.