Temenos seeds Core Banking Cloud in Mexico

Temenos (SIX: TEMN), the market-leading provider of mission-critical solutions to the financial services industry, today announces the expansion of its cloud-based services in Mexico with the launch of the T24 country Model Bank for Mexico in the Microsoft Azure cloud.

Temenos has been working with Microsoft Azure since 2011, when together they were first providers to put core banking in the cloud. There are two early adopters for the service In Mexico, namely Servicios y Financiamiento Agrícola, S.A. de C.V. (SeFia); and Sociedad Financiera Campesina S.A. de C.V. (Soficam).

By offering core banking in the cloud, Temenos is enabling financial organisations to operate with lower costs and more flexibility and, by extension, help them to provide under-served communities with access to financial services.

By deploying a Mexico-specific modern core banking solution as a service on the Microsoft Azure platform, Temenos can offer the functionality to address local service needs, including assistance with regulation and compliance requirements, while removing the high cost, lengthy timeline and inherent risk of building or licensing a fully-functional, compliant technology platform in-house.

SeFia, one of two early adopters, was established in 2005 in Mexico and has a presence in the states of Chihuahua, Coahuila, Durango, Guanajuato and Queretaro. SeFia helps its customers finance the purchase of machinery and equipment in the agricultural sector. Their product portfolio is designed to facilitate farmers, cattle ranchers and builders in obtaining loans that allow them to expand their businesses and generate a positive impact on the local economy.

SeFia COO, Luis Fernando Rosado, said:

“We have in T24 a comprehensive solution for our loan portfolio administration, the software is quick and easy to use and the information it provides is of high quality.”

Soficam, another early adopter, was established in 2008 in Mexico and has a presence in 19 states. Soficam grew out of a strategic alliance between agricultural and banking sectors, offering loans to small producers in the Mexican agricultural and fishing industries. Soficam is related to the Confederacion Nacional Campesina, an organization formed by 2.5 million affiliates classified in 17 agricultural productive branches across Mexico.

Soficam CIO, Alejandro Hatchett Cruz, said:

“Accessing T24 in the cloud allows us to deliver financial services to our clients without the complexity and expense of in-house IT systems.”

Enrique O’Reilly, Regional Director, Temenos Latin America, said:

“We are delighted to kick off 2015 with the launch of our award-winning core banking solution in the cloud for Mexico. Deploying banking technology from a cloud-based platform solves significant issues for our clients by allowing them to launch quickly, to turn fixed into variable costs and to operate profitability at much lower levels of scale. The work we are doing in Mexico with Microsoft builds on our experience in other countries around the world such as Nigeria, Kenya and Myanmar.”

Ernesto Neve, Solutions Director for Financial Services, Microsoft, commented:

“We are very excited to bring Financial Institutions in México the best cloud platform available. Our cloud platform offers the best in IaaS, PaaS and SaaS, as well as compliance with the Mexican banking regulator CNBV’s requirements for institutions working with cloud services. Our security, privacy and integrity model enables Financial Institutions to feel confident when moving to our Azure platform.“

Source: Finextra 12.03.2015

Filed under: Banking, Mexico, Banking System, Mexico, Temenos

Avaloq positioned as a ‘Leader’ in Magic Quadrant for International Retail Core Banking

The Avaloq group, a leader in integrated and comprehensive banking solutions, is proud to announce it has been positioned in the ‘Leaders’ quadrant by Gartner in the recently released ‘Magic Quadrant for International Retail Core Banking (IRCB) 2013’ report. Avaloq sees this as recognition of its strong community work and ability to deliver a full-service BPO option to its customers.

For Avaloq being positioned in the Magic Quadrant is a confirmation of its success in the retail segment and its market vision. “We are convinced that our unique community including client banks, universities, associations and partners gives us that extra edge by gaining important market knowledge. The feedback coupled with our own vision and insights from our BPO centres ensure that we stay ahead of trends and develop product capabilities accordingly”, says Francisco Fernandez, CEO of Avaloq. Pascal Foehn, Head of Marketing and Sales HQ Avaloq, adds: “After having been named ‘best selling private banking solution in the world’ by IBS, we are proud of Gartner’s recognition as a leader that is able to address present and future needs of retail banks.”

In the report, Gartner positioned vendors based on two parameters: ‘completeness of vision’ and ‘ability to execute’. To be included in the IRCB 2013 report vendors had to demonstrate market traction and momentum as well as product capabilities in international retail core banking.

Gartner’s Magic Quadrant on international retail core banking (IRCB) software assesses vendors on the multi-currency products they offer in support of the bank’s financial transaction management in the retail banking market. Avaloq provides a fully integrated front to back banking solution and has a worldwide customer base of more than 100 banks, including tier one banks in the most demanding financial centres.

¹Gartner, Magic Quadrant for International Retail Core Banking, Don Free, Ethan Wong, October 8, 2013.

Source: Avaloq, 17.10.2013

Filed under: Banking, News, Wealth Management, Avaloq, Banking System, Private Banking, Retail Banking

VAM: Vietnam Market Analysis August 2013

Admist concerns on capital outflows due to U.S Fed tapering and fear of Syria war, the market retreated quite badly in August with foreign net selling of USD 41.8mn across the 2 bourses. By the month-end, VN Index lost 3.7% to close at 472.7 whilst VN30 tumbled 1.72%. HNX was the best performer of the 3 indices when it only edged down 0.49%, closing at 61.19.

Read full analysis VAM Monthly Newsletter – August 2013.

Buoyant FDI continues to support recovery

As of 20^th August, registered FDI reached USD 12.6bn, soaring 19.5% from a year earlier.Thiswas backed by 768 new projects mostly focusing on the manufacturing sector. Meanwhile, the FDI disbursement edged up 3.8% y-o-y to USD 7.6bn and became a key factor contributing to the marked improvements in production activities. Indeed, while the employment index for the manufacturing sector in SOEs and private sector showed a negative growth, that in FDI sector still increased 5.6% y-o-y. Besides, FDI enterprises continued to be the main driving force to push export as they are contributing more than 60% of export and USD 2.7bn of trade surplus. YTD export turnovers advanced 14.7% y-o-y as of end August, however the YTD trade balance still suffers little deficit of USD 577mn due to a higher pace of import growth.

CPI accelerates but is still under control

The August general consumer price index edged up 0.83% m-o-m compared to previous month. Consequently, the year on year headline CPI was lifted up to 7.5% y-o-y, from 7.29% y-o-y in July. While aggregate demand was still weak, cost push effect became the primary reason for the return of inflation, in which electricity and gasoline price was adjusted up 5% and 2%, respectively. The healthcare basket, which was adjusted up remarkably in Hanoi, clearly produced the strongest effect. Fortunately, it only contributed little effect to the month-on-month CPI growth. The government’s inflation target of 7-8% would likely be met provided that there is no significant shock of gasoline price in the rest of this year.

Fast tracking VAMC

Sector-wide NPL figure at the end of 1H2013 was announced at 4.65%. This figure was indeed encouraging as NPL has fallen sharply from 8% by the end of 2012. 30 credit institutions that had NPL higher than 3% will be forced to bring down NPL level to 3% by selling bad debts to VAMC. In a recent interview, VAMC’s CEO said that in the next 2 months VAMC will issue bonds to swap for VND 10 trillion worth of bad debts of 10 banks. Banks with highest NPL will be given priority to sell bad debt to VAMC. The speedy execution of VAMC hopefully would help to clean up sector-wide bad debt more swiftly by year end.

More banking resolution to restructure banking system comprehensively

The PM signed a Resolution that allows SBV to assign financially strong banks or SBV itself, if there is no appropriate bank, to purchase stakes in weak banks which were unable to increase their capital or restructure themselves. Strong banks are requested to assist weak banks in both finance and management until their conditions come back to normal or acquired by other parties. This supportive resolution, together with VAMC formation, has clearly demonstrated the government’s determination to restructurethe banking system and tackle the NPL issue.

 More details on raising foreign ownership limit (FOL) plan available

According to the HOSE, the proposal on issuing Non-Voting Depository Receipts (NVDRs) was submitted to MoF. With the same model as Thailand NVDRs, an SBV subsidiary will buy and hold 10% of total outstanding shares of listed companies and issue equivalent NVDRs to foreign investors. Foreign investors holding NVDRs will be fully entitled to company financial benefit, but not voting rights. NVDRs will be converted to normal shares when foreign room is open. This NVDRs model will be applied to all companies. However, we do not think it will happen soon this year due to the amount of preparation required.

 Our View – 8 months of the year has passed and the economy has started showing some modest improvements. Inflation is under control and the government’s target would be likely to be met.  More affordable borrowing cost is supporting production activities and making business environment more attractive.  In addition, gold market has been gradually stabilized as the gap between domestic and global prices has been falling to half of previous high level. These improvements in economic conditions have prompted us to believe that the economy seems right on track for a gradual recovery.  Furthermore, the government’s serious effort in restructuring the banking sector and the future lifting of foreign ownership limit gave us reasons to be (cautiously) optimistic about the market despite recent pullbacks due to external factors, which actually revealed buying opportunities for some good stocks we have been watching.

Source: VAM, 11.09.2013

 

Filed under: Services, Vietnam, Banking System, FX Foreign Exchange, HaSTC Hanoi Stock Exchange, HOSE Ho Chi Ming Stock Exchange, Inflation, Market Analysis, Performance Report, VAM Vietnam Asset Management, Vietnam

Avaloq announces going live of Avaloq Banking System at Moroccan investment bank CFG Group

The Avaloq Group, the international reference for integrated and comprehensive banking solutions, together with its partner Orbium, announces the launch of the Avaloq Banking System at CFG Group in Morocco. Twenty months after choosing this innovative solution, the bank draws positive conclusions regarding the implementation.

CFG Group has chosen all modules of Avaloq’s universal front-to-back banking platform, which ensures in particular the seamless integration of the securities modules with the cash modules. “Avaloq’s excellence in private banking as well as numerous references from its community dispelled any doubts we might have had about our choice. Moreover, we had already tried out the solution’s adaptability that enables us to customise and develop new operational business models. This further confirmed that we made the right decision”, says Younès Benjelloun, CEO of the CFG Group.

Based in Casablanca, CFG Group is an independent investment bank providing the full spectrum of investment banking services: corporate financing, capital market transactions, portfolio management, and venture capital. It aims to offer a wide range of value-added services to its private clients.

This demanding project was managed by Avaloq’s Premium Implementation Partner Orbium and brought about a genuine revolution within the bank. CFG Group replaced every IT system across all its business processes with the Avaloq Banking System, from accounting to finance operations, payment transactions, credits and the entire securities value chain, one of Avaloq’s areas of special expertise. All online stock exchange transactions are processed via the e-banking platform “e-services” by Avaloq’s partner Swisscom IT Services.

In addition, the implementation of the multi-entity capable Avaloq platform has enabled reorganisation measures at CFG Group by consolidating banking activities and distribution services for private clients within the CFG Group bank.

Source, Avaloq 10.07.2013

Filed under: Banking, Wealth Management, Africa, Avaloq, Banking System, Morocco, Private Banking, Wealth Management

Avaloq the Swiss Wealth Management Solution provider opens office in Australia

The Avaloq Group, the international reference for integrated and comprehensive banking solutions, is pleased to announce the opening of its first branch office in Australia.

As part of its continuous internationalisation strategy and aim to extend its presence in the most demanding financial markets globally, Avaloq has opened an office in Australia end of last year. The expansion to Australia – a new continent for Avaloq – comes after the company successfully established local offices in various regions in recent years.

Avaloq signed its first customer on the Australian continent – one of the reasons why the company decided to further extend its international presence and open a branch in Sydney. The Australian market bears a great potential for wealth management platforms such as the Avaloq Banking System. The fully integrated solution offers the entire field of investment products and additionally covers local tax and superannuation requirements. Combined with a team of experts, equipped with substantial know-how and experience regarding the Australian financial market, Avaloq significantly improves its local position.

“Opening an office in Australia is yet another important step in our internationalisation strategy and an additional milestone in Avaloq’s remarkable company history. Building up a local presence in the most demanding financial centres worldwide ensures that we are close to the markets and companies we work with. This allows us to cater towards our client’s needs and requirements without having to work around different time zones”, says a delighted Francisco Fernandez, CEO Avaloq. “The Australian market has immense potential, with demand for wealth management platforms increasing. Being present in Australia is the logical move for the company”, Fernandez continues.

The new Avaloq branch in Australia will significantly profit from the vast experience of the regional headquarters in Singapore, which was established in 2007. The Singapore branch has seen strong expansion in recent years under the management of Martin Frick, Managing Director Asia Pacific.

Source: Avaloq, 12.02.2013

Filed under: Australia, Banking, Singapore, Wealth Management, Australia, Avaloq, Banking System, Private Banking, Retail Banking, Singapore, Switzerland, Wealth Management

China’s banking sector Serious Problem with Bad Loans

Professor Pettis at Peking University explains that“in China, even if you believe that all the NPLs currently in the banking system have been correctly identified (a claim which few Chinese bankers believe), no one doubts we are about to see a surge in NPLs thanks to the out-of-control lending expansion of the past two years.  But things are even worse than the nominal numbers imply.  As I discussed in my April 6 entry, when we are trying to estimate the cost of a banking crisis we need to think about more than simply the ability of borrowers to meet current obligations.

This is because, as in the case of the Japanese government obligations, when borrowers are able to benefit from artificially low interest rates, the effect is of hidden debt forgiveness which must be paid for by the net lenders, who are, as in the case of Japan, the beleaguered households.  In other words, if you want to know how much real bad debt there is out there that must be cleaned up, you need to calculate what share of the loans would go bad if interest rates were raised by at least 300-400 basis points, the minimum needed to bring Chinese interest rates in line with an appropriate rate.  This suggests that the Chinese banks, if obligations were correctly counted, might have much larger amounts of bad debt than any of us realize, and this needs directly or indirectly to be cleaned up.”

Here are some recent reports from financial press sources regarding the health China’s banking sector:

-”SHANGHAI -(Dow Jones)- The non-performing loan ratio in China’s banking industry declined to 1.58% by the end of 2009, 0.84 percentage point lower than the figure at the beginning of 2009, China’s banking regulator said Saturday.”(1)

-”BEIJING: Chinese financial institutions’ non-performing loans (NPL) ratio edged down 0.1 percentage points to 1.48 percent in January, the China Banking Regulatory Commission (CBRC) said Friday.”(2)

-”BEIJING, Apr 14, 2010 (SinoCast Daily Business Beat via COMTEX) — Non-performing loan (NPL) ratio of China Development Bank, a policy bank, had reached 0.85% by the end of March”(3)

I don’t believe those reported percentages are accurate.

For context, here is an analysis of China’s non performing loan issue from 2002:

“Standard and Poor’s (S&P), which rates China as investment grade, said on Thursday it would take Chinese banks 10 to 20 years to cut average non-performing loans (NPLs) ratio to a manageable five per cent.

It estimates the Chinese banking sector’s average NPL ratio is atleast 50 per cent, higher than the 30 per cent estimate of China’s central bank governor Dai Xianglong.

“The cost of necessary write-offs could be equivalent to $518 billion or almost half of China’s estimated gross domestic product of $1.1 trillion for 2001,” Mr Terry Chan, a S&P director in Hong Kong said.

The agency said China would be unlikely to cut NPLs in its banking sector to 15 per cent within five years, as its central bank wishes, given the current operating performance of the sector.”

I seriously doubt that the problem identified in 2002 has been resolved yet.  There is an analysis here that supports my assertion.

Source:SinoRock, 07.07.2010

Filed under: Banking, China, News, Risk Management, Banking System, Black Swan, Capital Markets, China 中国, Credit Crisis, Currency Crisis, Economic Crisis, FX Foreign Exchange, NPL Non Performing Loan, Retail Banking, Risk Management, SinoRock, SSE Shanghai Stock Exchange

China Property Market Beginning Collapse That May Hit Banks, Rogoff says

July 6 (Bloomberg) — China’s property market is beginning a “collapse” that will hit the nation’s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.

As China’s economy develops, “especially at the speed it’s growing, it’s going to have bumps,” said Rogoff, speaking in an interview with Bloomberg Television in Hong Kong. He also said that while recoveries across the global economy are “very slow,” the danger of a return to recession isn’t “elevated.”

Rogoff’s concern echoes that of investors, who sent China’s benchmark stock index to its worst loss in more than a year last week. China’s data have been a focus because the nation has led the global recovery from the worst postwar recession.

Chinese authorities have this year been trying to cool the economy as it expanded at an 11.9 percent annual pace in the first quarter, and to reduce property-market speculation. The central bank has told lenders to set aside more money as reserves, and targeted a 22 percent cut in credit growth at banks this year, to 7.5 trillion yuan ($1.1 trillion).

The efforts have contributed to a slump in real-estate sales, while prices continue to climb. The value of property sales dropped 25 percent in May from the previous month.

“You’re starting to see that collapse in property and it’s going to hit the banking system,” Rogoff said today. “They have a lot of tools and some very competent management, but it’s not easy.”

Growth Outlook
Goldman Sachs last week cut its growth forecast for China this year to 10.1 percent from 11.4 percent because of the government’s monetary tightening measures.
Rogoff also said it’s unrealistic to expect China to continue growing its exports to the rest of the world “at the pace it’s been doing.”

“It’s impossible. At some point they have to redirect their strategy” for economic growth, he said.

For your info:
1) About one third of the total bank lending (about 40 trillion) is in real estate sector in China.
2) Most of the bank lending has used land and real estate properties as collateral.

Source: Bloomberg, 06.07.2010

Filed under: China, News, Risk Management, Services, Wealth Management, Asia, Banking System, Black Swan, China 中国, Confidence Crisis, Credit Crisis, Hong Kong, Investment Bank, Real Estate, Retail Banking

Actinver selects Misys BankFusion Universal Banking to support its aim to be the best financial services company in Mexico

Misys plc ( the global application software and services company, today announces that Actinver has chosen Misys BankFusion Universal Banking to underpin its expanding banking operations.

Actinver provides a wide range of services to corporate and institutional clients as well as retail customers. To help it to realise its strategic goals, the business was looking for the most technically advanced universal banking solution and a platform upon which to base all future growth.

The decision to choose Misys BankFusion Universal Banking was taken after a rigorous selection process, which led it to evaluate all major local and international suppliers. Misys was chosen for its revolutionary process-oriented approach to building banking applications. This approach will provide Actinver with the power to model business processes accurately within the solution, ensuring maximum flexibility and speed to market for new products and services.

“The agility that BankFusion Universal Banking brings to Actinver means we can focus on providing our customers with a unique service,” states Alvaro Madero Rivero, CEO Actinver. “We saw a brand new approach in the offering from Misys that we could not find anywhere else. This innovative solution will enable us to maximise the value we give our customers as our business grows over the coming years.”

Guy Warren, EVP and General Manager, comments, “Actinver has built a great reputation for providing its customers with innovative products and a rapid response to their needs. We believe that BankFusion Universal Banking stands out in the market as the only solution that can give it the control it needs to define and manage how the business operates without being constrained by the underlying technology.”

Key to Actinver’s decision was being able to meet the complex regulatory reporting requirements on a local and international level. Through its close collaboration with Soluciones Bajaware, Misys was able to ensure that BankFusion Universal Banking complies fully with Banxico and CNBV’s requirements.

Alvaro Madero Rivero adds, “In the current economic climate, the pressures on financial institutions from a number of different angles are unrelenting. With increasing regulation, more competition and an escalating pace of change in the industry, we are confident that Misys BankFusion Universal Banking will fulfill our business needs now and in the future.”

Source: Bobsguide, 26.01.2010

Filed under: Banking, Data Management, Mexico, Services, Actinver, Banixco, Banking System, Mexico, Retail Banking

Industry Briefing & Survey: Harnessing Data for Better Valuations – November 2009 A-TEAM

A new industry briefing and survey report from A-Team Group and GoldenSource

A-Team Group, a publishing and research company specialising in financial information technology, was commissioned by enterprise data management specialist GoldenSource to conduct research into the challenges of managing pricing and valuations data.

Throughout the course of October 2009, A-Team Group researchers interviewed senior-level specialists closely aligned to market data or valuations. Several spanned multiple responsibilities including oversight of client data, product information, and trading risk.

The interview sample was spread across asset managers (52%), Tier-1 and Tier-2 banks (32%), broker/dealers (11%) and custodians (5%).

Geographically, participants were dispersed across the United Kingdom (47%), Europe (21%), and the United States ((32%). Over half of the respondents had global responsibility within their organizations.

Source: A-TEAM, 19.11.2009

Filed under: Data Management, Data Vendor, Library, Market Data, News, Reference Data, Risk Management, A-TEAM, Asset Manager, Banking System, Brokerage Firms, Data Management, Data Strategy, Data Vendors, Market Data, Reference Data, Risk Management, Standards

Brazil: Bank update-Loans to individuals improving – IXE/BANIF

The Central Bank published data on credit relating to September showing increases of 1.5% MoM and 16.9% YoY, a flat in relation to the August growth rate. Once again public banks showed the stronger growth rate increasing portfolio by 1.9%% MoM, while private banks’ loan portfolio increased by 1.5% MoM (an improvement to the 1.3% growth last month) and foreign banks showed a mere of 0.6% MoM expansion (also improving over Augusts’ 0.3% growth). Delinquency ratios, continued flat MoM at 4.4% of total loan portfolio with provisions down by 10 bps to 7.2% of total portfolio, from the adjusted 7.3% in the previous month. In September, delinquency ratios coming from individuals continued decreasing to 8.2% from 8.4% in August while the ones coming from corporate moved up to 4.0% from 3.9%. Private Banks decreased provisions, to 8.5% from 8.6% in August, while public banks decreased provisions from 6.1% to 5.9%.  The trend continues positive with individual delinquency ratios improving, but still causes some concern as delinquency ratios at corporate continued showing a small rise. The problem is that it is still unclear if corporate can renegotiate debts or if delinquencies will lead to shut downs and consequent layoffs, which would once again result in an increase in default levels coming from loans given to individuals. Brazil: Banks – Sector Update – 10282009

Breakdown

Loans to individuals increased 1.4% MoM and 17.1% YoY. Corporate loans showed a 1.2% increase MoM, with loans using domestic resources increasing by 2.8% MoM and those with external resources reducing by 8.0% MoM.

Amongst earmarked loans, the largest increase this month was in farming loans to coops (+11.1% MoM) followed by BNDES pass through (+3.8% MoM) and with BNDES direct loans dropping by 0.6%.

Loans for vehicle purchases increased 1.9% MoM, improvement to Augusts’ 1.3% growth. Leasing increased by 0.5% MoM in August, while direct financing was up 1.3% MoM.

Total credit increased its participation in GDP to 45.7% in September, from 45.2% in July, with GDP up by 0.65% MoM.

According to Central Bank data, the average spread charged by banks in September continued moving down, to 26.0% from 26.3% in August and is now lower than one year ago when it reached 26.4%. Loans to individuals had the largest decrease in spreads, down to 33.4% in August from 34.3% in August, while spreads on corporate loans were down another 10 bps to 17.7%, from 17.8% in August.

Default

Default levels were flat at end of September at 4.4%, still much higher than the 2.8% of the previous year. Public banks saw a decrease in default levels to 2.6% of loan portfolio reducing provisions flat to 5.9%. Private Banks decreased provisions for the first time in the last 12 months to 8.5% from 8.6% in August, even though default levels increased to 5.7%.

D-H classified loans decreased to 9.4% of total from 9.6% in August.

Conclusion

We believe that the larger banks are the bigger winners this month. This is because we saw most of the growth in vehicle financing and mortgages. Although some small banks operate in the vehicle segment, they do not operate in the mortgage market. However, in addition to not expect continued growth in vehicle financing, we believe that the share price of most banks capture the growths of September. Thus, our top pick remains Itau-Unibanco that will still show synergy gains.

Source: Banif – IXE, 28.10.2009

Filed under: Banking, Brazil, Latin America, News, Services, Banif, Banking System, Brazil, Itaú Unibanco, IXE, Loan, Market Analysis, Private Banking, Retail Banking

Banamex – Citigroup forced sales on the table of Mexican Court

Citigroup’s dismal financial state doesn’t grant its chief, Vikram Pandit, much leverage in negotiations these days.

He conceded defeat to Washington on Phibro, deciding that it was simpler to sell the profitable commodities trading unit rather than argue for keeping a risk-taking, capital intensive business that pays megabonuses. But Mr. Pandit has no reason to cave so easily if Citi’s ownership of the Mexican bank Banamex is threatened.

For now, that’s just a possibility. Mexico’s high court is set to decide this week whether to hear a case brought by a contingent of Mexican senators that Citi must offload Banamex because a foreign government owns more than 10 percent of its stock. They want the court to decide whether the finance ministry had the constitutional right to decree in March that the United States government’s 34 percent slice of Citi was acceptable because it was intended to be short term.

FiNETIK Note: The Banamex- Citi cases could also extend to other banks with foreign government holdings like AIG, Bank of America, Bank of New York Mellon, Royal Bank of Scotland. However the strong nationalist sentiments about Banamex do set it above the others.

So Citi is hardly up against a wall just yet — and it reckons any decision to force a sale would breach the North American Free Trade Agreement anyway. But if push comes to shove, the bank should be prepared to put up more of a fight than it did for Phibro.

For starters, Banamex is a full-service bank, not just a trading operation, so Citi has a stronger claim for keeping it. Second, it turns a pretty handy profit. It earned about $750 million in the first half of the year, about half of Citi’s profits from Latin America. As a whole, Citi lost money in the first six months of 2009, omitting one-time items.

And Banamex’s relative success as a retail, commercial and investment bank has turned it into a celebrity within the bank’s corridors of power. At last year’s investor day, Mr. Pandit held the Mexican unit up as an example for how the rest of Citi ought to look.

That makes it a powerful business worth holding on to. And Citi, in large part because of $45 billion in United States taxpayer aid, no longer has to sell profitable businesses just to bolster its balance sheet. Should decisions in Mexico start going against it, the bank has every reason to hunker down for a standoff.

An Alternative View

Just because Banamex is good for Citi doesn’t necessarily mean ownership by Citi is great for Banamex. The United States bank doesn’t help Banamex’s financing costs much, and non-United States ownership could help it attract previously reluctant customers.

Banks in emerging markets can benefit from foreign ownership through lower financing costs, access to an international network and the adoption of proven and trusted processes and technology. It’s not obvious how any of these apply to Banamex.

Its obligations receive no guarantee from the Citi parent company, and its access to financing could even suffer as a result of Citi’s troubles. Moreover, as the second largest bank in Mexico, it is big enough in its own right to get access to international services and acquire the staff and technology needed to be at least as up to date as Citi.

Mexico is a big enough market that its bigger banks are fully competitive, even internationally, without needing help from multinational groups as banks in smaller markets often do. The country is also intensely nationalist, particularly in relation to its neighbor to the north.

Hence, while an independent Banamex might see little difference in relationships with large and sophisticated Mexican companies, it could well benefit from having greater appeal to small businesses, consumers and, from time to time, the Mexican government.

There would be other advantages to Banamex from independence. As a stand-alone bank, it could decide its own strategic goals, organizational priorities and structure. That would most likely be an improvement on fitting in with Citi’s plans, which are currently heavily influenced by its recent losses and government bailouts. Its senior management would have more independence, which might help in attracting the best people.

A ruling forcing Citi to divest Banamex would be hugely disruptive for the bank, but it’s still a possibility. It is in Citi’s interest to object, and there’s a risk any new Banamex owner might not develop the franchise properly. Even so, for Banamex independence could offer attractions.

Source: New York Times, 19.10.2009

Filed under: Latin America, Mexico, News, Risk Management, Services, AIG, Banamex, Banking System, BoA-Merrill, Citigroup, Mexican Bank Assets, Mexico, RBS Royal Bank od Scotland, Regulation, Retail Banking, Risk Management

Is Latin America the future of offshore banking?

The Climate Of Greater Transparency And Stricter Regulation Is Forcing Great Changes In The Offshore BankingWorld; Latin America’s Industry Is Poised and Ready For The Future. Offshore Banking. Latin America 2009 combines interviews, analysis and expert opinions on all the most important factors shaping the industry in the region today.

Register for free at www.alternativelatininvestor.com to download full report.

Source: Alternative Latin Investor, September 2009

Filed under: Argentina, Banking, Brazil, Central America, Chile, Latin America, Mexico, News, Services, Wealth Management, Alternative Latin Investor, Argentina, Banking System, Brazil, Chile, Hedge Fund, HNWI High Net Worth Individuals, Investment, Latin America, Panama, Private Banking, Regulation, Retail Banking, Retail Investors, Wealth Management

DBS Hong Kong rolls out the Avaloq Banking System

Singapore-based DBS, the biggest bank in Southeast Asia, successfully rolled out on July 6, 2009 the Avaloq Banking System for its Private Banking Unit in Hong Kong. This is the first time that an Asian bank has opted for the “made in Switzerland” Avaloq Banking System. The roll-out at DBS sets an important milestone for Avaloq as it affirms its presence in Asia.

Hong Kong, August 27, 2009 – For DBS, implementing the banking software represents a key step in gearing itself up fully for the challenges of the future. The regional bank is deploying the fully-integrated Avaloq Banking System for its Private Banking Unit in Hong Kong, replacing a number of legacy systems and providing the bank with operational efficiencies from the front to the back office. By rolling out the Avaloq Banking System, DBS can take comfort in the fact that the platform will help them  offer their customers even better service, boost its internal efficiency and gain a competitive edge on the banking market.

Amy Yip, CEO of DBS (Hong Kong) Ltd and Head of DBS Wealth Management Group said: “We have evaluated various options that are used by many global financial institutions and have chosen Avaloq for its relevant functionalities and scalable potentials for our private banking business.  This system has the flexibility of customising for local needs, and yet at the same time allow us to standardise our processes across several locations in the region.  The Avaloq system is thus a compelling system to partner DBS as we grow and strengthen our private banking business in Asia. “

Francisco Fernandez, CEO of Avaloq Evolution AG, is delighted to have a new live customer: “The Avaloq Banking System is one of the most innovative systems around when it comes to banking software. Implementing the software at DBS shows that we can also strike a chord with banks outside of Europe and know how to map processes to best effect. We’ve now established a bridgehead in the growing Asian market and will continue to pursue this track.”

Avaloq is the Swiss market leader for standard banking software. It has its head office in Zurich and branch offices in Luxembourg and Singapore, from where 25 in-house staff and an “implementation force” consisting of more than a hundred Avaloq specialists and partners are responsible for serving the attractive Asian market.

Source: Avaloq, 27.08.2009

Filed under: Asia, Hong Kong, News, Services, Singapore, Wealth Management, Avaloq, Banking System, DBS, Hong Kong, Private Banking, Singapore, Wealth Management

Strategist warns of fiscal stimulus side-effects in China

Beware of asset price bubbles and a spike in non-performing loans, says RBC Capital Market’s Brian Jackson.

China’s fiscal stimulus package has boosted growth, but excessive liquidity risks major side-effects, including asset price bubbles and a spike in non-performing loans, according to Brian Jackson, senior emerging markets strategist at investment bank RBC Capital Markets, which is part of the Royal Bank of Canada.

“Strong stimulus has supported growth and eased concerns about a protracted economic slowdown, but now other concerns are building,” says Jackson. “The surge in bank lending has several potential side-effects that threaten the sustainability of China’s recovery and that could force a sharp reversal in the policy stance. The accelerator is working well, but at some stage Beijing will need to apply the brake.”

The risk, Jackson says, is that excessive liquidity in the economy may require the brake to be used sooner and more forcefully than policymakers and investors would prefer.

The potential side-effects of China’s policy stimulus reflect the size and speed of the lending surge, Jackson notes. With so much financing made available so quickly, it is almost inevitable that there will not be enough shovel-ready investment opportunities available to absorb these funds. This implies that much of the new lending will be used for other purposes. And even among those investment projects that can be started quickly, it is very likely that many of them will prove to be ill-advised, eventually putting the borrower under severe stress.

Rising asset prices provide strong circumstantial evidence that a significant proportion of new bank lending is being used for speculative purposes, Jackson adds. Chinese equity markets, in particular, have recorded massive gains, with the main Shanghai index up almost 90% year-to-date. These gains have prompted renewed retail interest. Property markets in major cities have also rebounded in recent months. With growth still below trend and the outlook for corporate earnings still weak, these sharp moves in asset prices clearly raise concerns that a new bubble is forming.

China is among the most favoured markets of fund managers investing in Asia, largely because of the Rmb4 trillion ($586 billion) stimulus package announced in November, which is aimed at combating the most serious economic threat to the mainland since the Asian financial crisis in 1997. Before the stimulus package was announced, China was riddled with worries over the impact of the global financial crisis on both domestic consumption and exports.

The stimulus package, with a life span that extends until 2010, covers key areas including affordable housing, rural infrastructure, railways, power grids, post-earthquake rebuilding in Sichuan, and social welfare to raise incomes. It also includes reforming the value-added-tax system to encourage investment in new technologies.

With foreign reserves and a budget surplus amounting to around $2 trillion, investors are generally confident that China has the capacity to further stimulate the economy if needed. There are those, however, who believe that too much faith has been placed on China’s growth prospects and, as it stands, the market could be over-crowded and valuations stretched.

Source: AsianInvestor.net, 05.08.2009

Filed under: Asia, Banking, China, Exchanges, News, Risk Management, Services, Asia, Banking System, China 中国, Confidence Crisis, Credit Crisis, Currency, Economic Crisis, Exchanges, FX Foreign Exchange, Risk Management, SSE Shanghai Stock Exchange, SZSE Shenzhen Stock Exchange

How Latin American banks are performing well in the crisis

Latin American economies have felt the effects of the financial crisis, brought on by a global downturn in both demand and capital from the major world economies. The impact for many banks in the region, however, hasn’t been as direct as it has been in other places, in part because they implemented international standards for banking regulation and followed conservative strategies after the regional financial crises of the 1980s and ’90s. McKinsey analyses of the banking sectors in Brazil, Mexico, and Colombia show that these policies should allow them to remain profitable and well capitalized.

Although the economic slowdown has indirectly affected the region’s banks, they will probably remain profitable and well capitalized.

Banks in Latin America are no longer immune to the global credit crisis. True, it’s had little direct impact on them, because they made only limited investments in US and European mortgage-backed securities. Still, a high dependence on exports and commodity prices pushed Latin American economies into recession after consumer spending and industrial production fell in Europe and the United States. As a result, the rate of growth in lending has begun to decline, nonperforming loans are on the rise, and profitability is down.

Nonetheless, McKinsey analyses of the banking sectors of Brazil, Mexico, and Colombia¹ show that strong starting capitalization, liquidity, and capital should allow their banks to remain profitable and well capitalized. Before the crisis, foreign securitized assets ranged from 0 to 5 percent of total banking assets in Brazil, Mexico, and Colombia, and domestic issuance of securitized assets was far below that of the United States and the United Kingdom. As a consequence, Latin America was relatively unscathed when the value of these assets dropped precipitously.

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Source: McKinsey, 31.07.2009

Filed under: Banking, Brazil, Colombia, Latin America, Mexico, News, Risk Management, Services, Banking System, Brazil, Colombia, Economic Crisis, Financial Crisis, Latin America, Mexico, Retail Banking, Risk Management