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January 20, 2010updated 30 Nov 2022 5:01pm

News Digest

Santander has begun the rebranding of more than 1,000 Abbey and Bradford & Bingley branches and said it aims to complete the exercise by the end of January. The bank also said plans to rebadge around 300 Alliance & Leicester branches later this year remain on schedule.

By Verdict Staff

Marketing

Santander kicks off  UK rebranding

Santander has begun the rebranding of more than 1,000 Abbey and Bradford & Bingley branches and said it aims to complete the exercise by the end of January.

The bank also said plans to rebadge around 300 Alliance & Leicester branches later this year remain on schedule.

In an upbeat statement at a press conference to mark the passing of the Abbey and Bradford & Bingley brands, Santander chairman Emilio Botin said it aims to be the UK’s top bank, suggesting it may look to snap up more assets from weakened rivals such as Royal Bank of Scotland (RBS), Lloyds Banking Group and Northern Rock.

Botin said Santander had plenty of scope to pursue organic growth in the UK but would look to grab further opportunities “as they come up”.

In terms of branches, Santander ranks fifth in the UK, behind Lloyds, RBS, Barclays and HSBC, but punches above its weight in terms of total retail deposits, with a 10 percent market share, ranking third behind Lloyds and RBS.

UK CEO Antonio Horta-Osorio said the rebranding and associated marketing campaign fronted by Formula 1 racing driver Lewis Hamilton would cost around £30 million ($49.1 million).

“The success of our UK business has given us the confidence to move to the Santander name now and with it deliver the next phase of our transformation programme and make 1,300 branches available to our 25 million customers in the UK,” said Horta-Osorio.

Products

China’s Alipay to top PayPal transactions

China’s leading payment platform Alipay is expected to top US payment provider PayPal by transaction value in two years, becoming the world’s leading e-payment service, according to Alipay president Polo Shao.

Alipay, a unit of Alibaba Group, says it handles more than CNY1billion ($146.5 million) in transactions daily, and will reach an annual transaction volume of CNY1 trillion in two years, topping PayPal and becoming the world’s largest e-payment firm.

In July 2009, the firm reported that the total number of users – as opposed to just ‘active’ users – reached the 200 million user milestone, compared with PayPal’s 180 million users in 190 countries and territories.

Alibaba also operates Taobao, China’s largest online retail website.

STRATEGY

Tesco reports strong market share gains

Tesco Bank, the UK-based financial services unit of the world’s fourth-biggest retailer, has kicked off the New Year by reporting strong products sales growth.

It said its credit cards in issue are up 10 percent compared with a year ago with 1 in 10 credit card transactions in the UK made with one of its cards.

A Tesco spokeswoman told RBI the company has also enjoyed strong sales growth for its savings account and loan products, up 30 percent and 19 percent respectively, compared with a year ago.

The recently rebranded Tesco Bank, which already has around 6 million customers in the UK and plans to open 30 in-store branches in 2010, continues to target the launch of mortgage products and a current account in the next year.

Last year, Tesco teamed up with Fiserv as its principle IT partner to supply its core banking platform. In a presentation to analysts on 20 November, Tesco said its financial services division, which incorporates banking, insurance and telecoms, would seek to more than double its annual profit to £1 billion ($1.7 billion) over the next few years (see RBI 623).

STRATEGY

Erste study reveals cautious optimism

Austrian banking is set to continue its steady recovery this year, according to a study from the country’s second-largest retail bank, Erste.

The report forecasts an increase in credit volume of around 3 percent over the next 5 years and a growth rate for deposits of around 5 percent per year.

The study also highlighted Austrians’ continued savings appetite. The savings ratio – the ratio between disposable income and money that goes into savings – is 12 percent in the country, compared to the eurozone average of around 9.3 percent and an average for the EU27 group of countries of 6.2 percent.

“For a long time, international banks condescendingly smiled at the concept of a savings bank, but now it is quite modern again,” said Elisabeth Bleyleben-Koren, CEO of Erste Bank der oesterreichischen Sparkassen.

She said deposits at Erste’s Austrian-based unit grew from €50.4 billion ($72.46 billion) at the end of 2008 to €51.2 billion at the end of the third quarter, though total sector savings shrunk during the period from €276 billion to €268 billion.

“We acquired 35,000 new customers alone in the first three quarters of 2009,” Bleyleben-Koren added.

“Our business model is resistant to crises and our group is growing – not at a revolutionary pace, but evolutionary.”

RESULTS

QNB beats forecasts with 15% rise in annual earnings

Qatar National Bank (QNB), the Gulf State’s biggest bank by assets, has posted an increase in net earnings for fiscal 2009 of 15 percent to QAR4.2 billion ($1.1 billion), ahead of analyst forecasts, boosted by a rise of almost one-third in net interest income.

The bank also reported strong asset growth, up by 18 percent to QAR179.3 billion, while deposits rose by 20.7 percent to QAR125.9 billion.

QNB group CEO, Ali Shareef Al-Emadi, said: “The outstanding financial results for 2009 clearly reflect the bank’s success in achieving a strong growth across all activities, while at the same time effectively managing risks.”

He added that QNB had little exposure to troubled Dubai World compared to a number of its rival banks in the region.

Strategy

ICBC prepares to ramp up customer service

Industrial and Commercial Bank of China (ICBC), the country’s largest bank by assets, has announced that 2010 will mark the beginning of a customer service programme in which the bank will use “all available tools at its disposal” to improve quality of service, with new channels and new products in the pipeline.

ICBC has selected 10 business areas on which it will focus its attention: outlet services, electronic banking services, floor services, service supply, service details, service standard, monitoring of customer satisfaction, internal service commitment and staff training.

Over the past few years, ICBC stated it has already renovated and restructured 56 percent of its branch outlets, and has made strong progress in resolving excess waiting times for customers at its busiest branches.

But similar improvements are also scheduled for the bank’s other channels: ICBC says it now has over 56,000 ATM and self-service terminals across the country, with 10 million transactions being performed every day and almost 50 percent of overall banking transactions now processed away from the counter.

Strategy

Virgin buys UK bank, prepares consumer push

Virgin Money has begun a full-scale push into the UK retail banking sphere with the acquisition of Church House Trust, a regional bank offering mortgage and deposit products in the south west of England.

The acquisition gives Virgin Money a UK banking license and will, the firm said in a statement, “provide the platform from which Virgin Money will develop a retail banking business in the country – offering a full range of products to consumers under the ‘Virgin Money’ brand. The nature of that offering is still under consideration, but could involve Virgin establishing Virgin Money ‘shops’ across the country.

“Virgin Money will provide a better, different form of banking to its customers, increasing competition in the sector,” said Jayne Anne Gadhia, chief executive of Virgin Money.

“Our aim is to make ‘everyone better off’ in the way we do business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a growing profit to shareholders.”

The business is widely considered to be the frontrunner to acquire the ‘good’ parts of Northern Rock, the nationalised lender spilt into two units at the beginning of January. The ‘good’ arm, still currently government-owned, constitutes £19 billion ($30 billion) in savings and £10 billion in mortgages.

Marketing

Central Bank of India signs up to sponsor Commonwealth Games

State-owned lender Central Bank of India (CBI) has become the official banking partner for the Commonwealth Games to be held in Delhi in 2010 and plans to launch a number of promotions in conjunction with the event.

The bank’s 3,500-strong branch network will sell tickets and merchandise for the games, due to start on 3 October, and will also set up a branch in the Commonwealth Games headquarters. CBI said the worldwide reach of the games will help aid it in becoming a global bank and attracting business from non-resident Indians.

[The deal] is in keeping with Central Bank of India’s wonderful track record of supporting sport in India,” said Suresh Kalmadi, organising committee chairman for the 2010 games.

“The bank has associated itself with many events including the 1982 Asian Games, many tennis tournaments and veterans` hockey series.”

Strategy

China Construction Bank, Santander discuss rural alliance

China Construction Bank (CCB) and Spain’s largest bank, Santander, are planning to set up a joint financial holding company and open 100 village banks in the country over the next three years, according to an article in China Daily.

The joint venture is likely to be set up with registered capital of CNY3 billion ($439.3 million) according to the paper, with CCB investing CNY1.8 billion and holding a 60 percent stake.

The CCB proposal would create the first financial holding company in the country, and “a new model to develop rural finance..[but] is yet to be approved by the State Council”.

Regulation

Royal Bank of Scotland begins branch divestment process

The UK’s Royal Bank of Scotland (RBS), forced to divest over 300 branches by the European Commission following its acceptance of state aid from the UK government, has begun the process by issuing a tender document for the proposed sale.

RBS is understood to have set a deadline of the end of January for registering interest in the network, comprised of 312 RBS-branded branches in England and Wales and six Natwest branches in Scotland.

The bank has also continued to dispose of other assets, including part of its asset management business to Aberdeen Asset Management for £84.7 million ($137.6 million) in January. RBS is also thought to be close to finalising the sale of its 51 percent stake in commodities joint venture RBS Sempra, a stake which is thought to be worth $4 billion.

Marketing

Barclaycard unveils Waterslide follow-up

The UK’s Barclaycard has announced the follow-up to its groundbreaking ‘Waterslide’ advertising campaign of 2009, a huge success on television, the internet and the Apple iPhone (see RBI 620).

Again designed to communicate the ease of using contactless payments, the advert sees a commuter travel from home to the office via a high-rise rollercoaster.

Filmed in New York and Hollywood, the advert will air on UK television from 24 January, and will be launched on YouTube and Barclaycard’s Facebook page on 22 January.

Barclays expects to reach over 10 million people through its Facebook page, which will act as a hub for information about the commercial.

“The success of our Waterslide advert was absolutely fantastic and we have built upon that with Rollercoaster which is another great metaphor for how Barclaycard makes payment so simple for our customers,” said Paul Troy, head of advertising and content at Barclaycard.

“It again breaks boundaries for Barclaycard and is the most technically advanced commercial we have ever filmed.”

Mergers and acquisitions

FirstRand looks to Nigeria, registers interest in acquisitions

FirstRand, South Africa’s second largest bank by assets, has confirmed that it is interested in establishing a retail banking business in Nigeria – with both organic and inorganic growth on the cards.

A spokeswoman for the bank told RBI that FirstRand had made no secret of its desire to set up a retail bank in the country, and confirmed that it had registered its interest with the Nigerian Central Bank as the prospect looms of foreign players acquiring troubled Nigerian lenders.

“Retail is the big opportunity in Nigeria over the longer term. It depends what asset you buy, but certainly we are interested in investment banking, corporate banking and retail banking,” the spokeswoman said.

“We think all of those markets are interesting.”

Around 10 Nigerian banks are up for sale after all failed a central bank audit in 2009, and FirstRand rival Standard Bank is also thought to have registered interest in the distressed institutions with a view to tapping the country’s heavily unbanked market.

Results

SocGen issues profits warning on risky assets

France’s Société Générale (SocGen) has issued a profits warning for the fourth quarter of 2009, indicating that it will only achieve “slight profit” as a result of a €1.4 billion ($2 billion) hit on collateralised debt obligations (CDOs).

Citing the “resilience” of the international retail banking networks in Central Europe and the Mediterranean Basin and “solid activity levels” in the French Networks, as well as a new management team, the bank said it was “in a favourable position to go into 2010 with confidence”.

“Regarding assets at risk, and taking into account the contrasted signals coming from the US residential real estate market in the fourth quarter, the group has decided to subject much stricter assessment to the valuation assumptions of CDOs of RMBS [residential mortgage-backed securities],” SocGen said in a statement.

Distribution

PNC launches P2P payment service

PNC, the fifth-largest bank in the US by assets, is blazing a trail with new m-payments technology that enables customers to transfer money to anyone with a bank account in the US using only an email address or mobile phone number.

The service, developed in conjunction with m-payments vendor CashEdge, is free for all PNC customers and available as part of the bank’s existing online banking system which enables money to be sent without customers sharing account information.

The CashEdge programme, known as POPmoney, is an upgrade of the firm’s existing money movement platform. According to the vendor, it processed almost $50 billion in online fund transfers for “most of the largest banks” in the US in 2008.

Payment notices are sent to an email address or mobile phone, with customers of participating banks able to claim their money through their online banking service with other customers able to claim at www.popmoney.com.

First Hawaiian Bank, part of BNP Paribas’s BancWest subsidiary, is currently the only other US lender offering the POPmoney service, though CashEdge said five more financial institutions have signed up to launch the service early this year.

RESULTS

Banesto reports 28% drop in yearly profits

Spain’s fourth-largest bank by market capitalisation, Santander-controlled Banesto, has kicked off the European reporting season with a 28 percent drop in full-year profits to €559.8 million ($804.8 million), following a 27 percent rise in loan-loss provisions to €382 million.

Fourth-quarter profits slumped by more than 95 percent to €6 million as the bank continued to set aside more funds to cover future loan losses.

Bad loans rose to 2.94 percent in fiscal 2009 of its total loan portfolio of €75.93 billion at the year-end, compared with a past-due loan ratio of 1.62 percent a year ago.

Excluding provisions, Banesto said 2009 net profits were flat at €824 million. The bank’s core Tier 1 capital ratio rose to 7.7 percent of risk-weighted assets from 7.2 per cent at the end of 2008.

A further highlight was a successful cost-cutting drive which helped reduce its cost-income ratio by 160 basis points to 38.9 percent at the end of the fourth quarter.

“It has been a complicated year,” said Banesto chair-woman Ana Botin, but, she added, “there are good opportunities for growth.”

In a note to clients, investment bank Keefe, Bruyette & Woods said: “We believe Banesto merits a more neutral position than domestic peers as it looks well placed in terms of asset quality and efficiency, allowing it to more easily cope with the deteriorating market conditions.”

Strategy

Aiful reschedules debt to aid restructuring

Japanese consumer finance lender Aiful has announced that its creditors have agreed to reschedule its debt payments, helping it stave off the threat of bankruptcy and enabling it to implement a comprehensive restructuring plan.

Stung by new regulations limiting both the interest rate and the amount of money consumer finance companies can lend to consumers, Aiful will now pay back a cumulative ¥280 billion ($3.1 billion) in debt from September 2010 onwards.

As part of its restructuring, Aiful will drastically scale back its branch network, targeting 28 staffed branches and 647 unstaffed branches by the end of January, compared with 96 staffed branches and 819 unstaffed branches it maintained in September last year.

All 11 of the firm’s subsidiary ‘Life’ branches will close, and its 15 Life Card branches will be reduced to two, though Aiful said it would make broader use of the Life brand.

Products

HSBC commences annual product sale

The UK’s HSBC has launched its annual product and service promotion for customers in the country, the sixth successive year in which the bank has sought to kick-start its annual performance by cutting interest rates and fees.

Running from 4 January to 14 February, the sale offers a 2.29 percent discount mortgage for customers who have a deposit equivalent to 40 percent of the value of their property, while some fees on tracker mortgages have been cut by 50 percent.

The bank is also offering reductions on current accounts, savings, insurance and investment funds.

Customers who switch to a HSBC current account before 14 February will receive £50 ($81) cashback, while customers who move from another bank to HSBC Premier will receive £100 cashback.

Savers, meanwhile, are being offered annual interest rates of up to 4.25 percent via high interest bonds.

Distribution

Citi launches Thai m-banking venture

Citigroup has made the next step in its ambitious worldwide campaign to roll out mobile banking services across its consumer banking markets with the implementation of an m-banking solution in Thailand.

In what the bank described as a first from an international bank in the country, customers are able to view account balances, transfer money and make payments, with the service available on any network carrier and accessible in both English and Thai.

Citi, which now offers mobile banking to customers across a number of regions including the US, Hong Kong, Singapore and the Philippines, is offering the first 5,000 Citi Mobile customers in Thailand either 250 points on its Citi Rewards loyalty programme or a cash equivalent.

“We are confident Citibank customers will quickly adopt the use of Citi Mobile services as the number of our internet banking customers has more than doubled in two years,” said Yuenyong Ken Songsiridej, country marketing director at Citibank.

“The extension of the service from internet banking to mobile banking will be well received.”

Strategy

UniCredit announces rights issue terms, proposes reorganisation

UniCredit, Italy’s largest bank by assets, kicked off the new year with two major announcements: it has set out details of an internal restructuring of its current divisional model designed “in light of the new economic and financial environment” and released details of its €4 billion ($5.8 billion) capital raising.

The ‘Together For Our Clients’ initiative will involve the ‘possible definition’ of four business segments – families (dedicated to retail customers); small and medium-sized enterprises; corporate banking; and private banking – within UniCredit’s three principal markets (Italy, Germany and Austria).

The bank will issue a more detailed restructuring proposal later in the year with a view to commencing implementation in November 2010.

UniCredit’s rights issue, meanwhile, will see it issue three ordinary shares for every 20 ordinary or saving shares held and will close by 29 January. The bank said the issue will boost its core Tier 1 capital ratio to 8.39 percent.

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