BANKING NEWS FLASH 19th August 2013
Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 7 Technology .......................................................................................................................... 10 Strategy .............................................................................................................................. 14
2|Sutherland Insights Banking News Flash 19082013
Sales & Marketing BofA to formally merge Merrill Lynch operations 19 August, 2013 | BBR http://assetmanagement.banking-business-review.com/news/bofa-to-formally-merge-merrilllynch-operations-190813 Bank of America (BofA) will complete the integration of Merrill Lynch into its own parent operations, which will help the company to simplify its corporate structure and boost operational efficiency. In a regulatory filing to the US Securities And Exchange Commission (SEC) dated 2 August 2013, BofA said that it plans to merge Merrill Lynch operations by the fourth quarter. The completion of the integration would mark the end of the global investment bank as a legal entity that was set up 40 years ago and acquired by BofA during the financial crisis of 2008. Under the proposed plans, the bank will maintain the Merrill Lynch brand name for its retail brokerage and investment banking business, the company based in Charlotte. Commenting on the plan, a BofA spokesperson said, "This will have no impact on how we serve our customers and clients and will have no impact on the Merrill Lynch branded businesses." Following the integration, BofA will take on all of Merrill Lynch's obligations, including all US and foreign debt securities issued by the bank. Post amalgamation of Merrill Lynch, which was established in 1940, BofA will not be required to file separate financial statements with US securities regulatory agencies. "As part of Bank of America's efforts to streamline its organisational structure and reduce complexity and costs, it has reduced and intends to continue to reduce the number of its subsidiaries, including through intercompany mergers," the bank said in a regulatory filing. Operating in more than 40 nations across the globe, Bank of America serves nearly 52 million consumer and small business relationships with about 5,400 retail banking offices and approximately 16,300 ATMs online banking with 30 million active users
3|Sutherland Insights Banking News Flash 19082013
Abu Dhabi Commercial Bank implements Polaris’ Intellect loan management platform 14 August, 2013 | BBR http://bankingtechnology.banking-business-review.com/news/abu-dhabi-commercial-bankimplements-polaris-intellect-loan-management-platform-140813 Abu Dhabi Commercial Bank (ADCB) has deployed Polaris’ Intellect Loan Management System (LMS), which will offer its customers lending product portfolio and act as a one-stop lending portfolio lifecycle management. ADCB, which is 58.08% owned by the Abu Dhabi Government, said that the new configurable Intellect LMS manages the complete loan servicing and allows it to deliver improved customer experience across consumer loan products. Equipped with parameterized product definition and modular system, the support features collateral management, structured repayment and automated delinquency tracking. Compatible with the bank's existing eco-system, the loan management platform caters the power to "click and launch" new lending products to fulfill the growing market requirements. Polaris Financial Technology Middle East and Africa (IMEA) Indian Subcontinent executive vice president K Srinivasan said that the system will lessen the complexities faced by the bank, enhancing its customer servicing levels. "Mortgage financing along with the other lines of consumer loan business are now initiated on Polaris' LMS, helping the bank achieve their objective of using a single window LMS," Srinivasan added. The platform performs loan creation, disbursal, maintenance, repayment schedule tracking, accounting, prepayment processing, delinquency and charge off processing. Established in 1985, ADCB serves more than 480,000 retail customers and about 38,000 corporate and SME clients and delivers retail banking, wealth management, private banking, corporate banking, commercial banking, cash management services
Android flaw leaves bitcoin wallets open to theft 12 August, 2013 | Finextra http://www.finextra.com/news/fullstory.aspx?newsitemid=25108 The Bitcoin Foundation is warning users that a security vulnerability is leaving any currency stored in Android wallets open to theft.
4|Sutherland Insights Banking News Flash 19082013
In a post on its site, the foundation says that a "component of Android responsible for generating secure random numbers contains critical weaknesses, that render all Android wallets generated to date vulnerable to theft". Updates are being prepared for several wallet apps, including Bitcoin Wallet, BitcoinSpinner, Mycelium Wallet, and blockchain.info, to address the issue. In the meantime, users are being urged to make sure they carry out 'key rotation' - generating a new address with a repaired random number generator and then sending all the money in the wallet back to themselves. Meanwhile, the regulatory heat continues to be turned up on bitcoin, with the Wall Street Journal reporting that the New York Department of Financial Services issuing subpoenas to several companies connected to the crypto-currency - including BitInstant, Coinsetter - asking questions related to money laundering, investment strategies, and consumer protections
Isis moves beyond NFC with AmEx Serve tie-up 09 August, 2013 | Finextra http://www.finextra.com/news/fullstory.aspx?newsitemid=25104 Isis has moved to extend its upcoming mobile wallet beyond NFC payments by striking a deal with American Express to integrate the card giant's Serve platform. Last year AmEx agreed to add several of its cards, including Serve, to the Isis wallet, enabling users to make mobile NFC payments from their accounts. The new deal means that when Isis launches across the US later this year, all customers will be offered an integrated AmEx Serve account, enabling them to also pay bills online and make person to person payments. Dan Schulman, group president, enterprise growth, AmEx: "Linking the platforms will allow millions of people to conveniently and inexpensively manage and move their money. From the palm of your hand, consumers including those without access to traditional bank accounts or credit can have access to everyday financial services." Michael Abbott, CEO, Isis, adds: "By adding American Express Serve to the Isis Wallet, we can immediately provide millions of consumers the opportunity to participate in mobile commerce as we continue to enrich the consumer experience."
5|Sutherland Insights Banking News Flash 19082013
What Obama's GSE Speech Means for Housing Finance Reform 07 August, 2013 | National Mortgage News http://www.nationalmortgagenews.com/features/Obama-GSE-Speech-Housing-Finance-Reform1038037-1.html President Obama ended his administration's self-imposed blackout regarding housing finance reform on Tuesday, finally endorsing a specific approach after effectively punting on the issue more than two years ago
6|Sutherland Insights Banking News Flash 19082013
Finance ING Sells $1.6B of Performing CRE Loans to Wells Fargo 16 August, 2013 | National Mortgage News http://www.nationalmortgagenews.com/dailybriefing/ING-Sells-Performing-CRE-Loans-WellsFargo-1038229-1.html ING Real Estate Finance (USA) LLC has agreed to sell 29 commercial real estate loans with an outstanding balance of $1.6 billion to Wells Fargo Bank NA. Other terms of the deal were not disclosed. However, a press release from ING said “the attractive terms reflect the quality of the portfolio, which consists entirely of performing loans.” ING added this is approximately half of its total U.S. loan portfolio. ING Real Estate Finance will be focusing its activity on its core markets, the release continued. "This divestment is a result of the successful execution of our strategy to capitalize on current robust U.S. market conditions to generate strong interest in the loan portfolio among a high-quality pool of potential buyers," said Michael Shields, managing director and head of ING Real Estate Finance Western Europe, U.K., U.S. and structured products. "As ING sharpens the focus of its real estate finance business, we will continue to deliver tailored real estate financing solutions in our other real estate finance markets." From Wells Fargo’s perspective, a benefit of this purchase is that “many of our existing customers have loans in this portfolio as well, and we look forward to meeting the needs of those customers while strengthening our commercial real estate business through this acquisition,” according to Mark Myers, head of CRE
Independent Mortgage Banker Production Rises 11 Percent Quarterly 14 August, 2013 | National Mortgage Professional Magazine http://nationalmortgageprofessional.com/news41962/Independent-Mortgage-BankerProduction-Rises-11-Percent-Quarterly Richey May & Co. has released its 2013 second quarter trend report for independent mortgage bankers. The quarterly benchmarking survey was created using Richey May Select, an analytical technology providing benchmarking information derived exclusively from independent mortgage bankers. Overall production among independent mortgage bankers increased 11 percent from the first to the second quarter of 2013. Among this quarter’s findings are: •
Profitability rose among independent mortgage bankers. Net income margins increased from the first to the second quarter of 2013.
7|Sutherland Insights Banking News Flash 19082013
•
Net worth for independent mortgage bankers continues to climb, and increased roughly 20 percent during the second quarter of 2013. This is a continuing trend with capital increasing approximately 34 percent from the year ending December 31, 2012.
•
Commissions have been on the decline since their four-month high in the fourth quarter of 2012, when they reached approximately 82 basis points. They averaged roughly 78 basis points in the second quarter of 2013, with four-month average commissions at approximately 80 basis points of total production.
“Independent mortgage bankers face different business challenges than the big banks do, particularly when it comes to profitability and fiscal spending,” said Ken Richey, managing partner of Richey May. “There are a lot of otherwise healthy companies that are suffering undetected losses and missed revenue opportunities. Those are financial leaks a company could easily begin to uncover with a tool like Richey May Select.” Richey May Select allows users to gauge their businesses against those of their true peers, rather than solely on the market as a whole. It utilizes much of the same information that its confidential independent mortgage banker sources provide to the GSEs each quarter via the Mortgage Bankers’ Financial Reporting Form (MBFRF). The technology enables users to quickly and easily access current, relevant, and actionable peer-to-peer benchmarking information on various aspects of their financial, production, employment, warehousing and servicing operations. Users can tailor results to fit their specific needs, selecting the data that’s analyzed according to loan production volume; their primary operating model – whether retail, wholesale or direct-to-consumer; small, medium or large production platforms; and other unique characteristics and requirements
30-Year Fixed Rates Rise for Third Consecutive Week 13 August, 2013 | National Mortgage Professional Magazine http://nationalmortgageprofessional.com/news41925/30-Year-Fixed-Rates-Rise-ThirdConsecutive-Week The 30-year fixed mortgage rate on Zillow Mortgage Marketplace is currently 4.31 percent, up three basis points from 4.28 percent at this time last week. The 30-year fixed mortgage rate hovered between 4.2 and 4.27 percent early last week before rising to the current rate this morning. “Rates remained steady for the second week in a row, alleviating some concerns that they would continue the upward surge that began early this summer,” said Erin Lantz, director of Zillow Mortgage Marketplace. “This week, although we expect continued volatility, we expect rates will remain fairly steady until a clearer picture emerges about the strength of the U.S. economic recovery.” Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgage Marketplace site, and reflect the most recent changes in the market. These are not marketing rates, or a weekly survey.
8|Sutherland Insights Banking News Flash 19082013
The rate for a 15-year fixed home loan is currently 3.32 percent, while the rate for a 5-1 adjustablerate mortgage (ARM) is 3.16 percent
New York Foreclosures Up 39% from Year Ago 13 August, 2013 | National Mortgage News http://www.nationalmortgagenews.com/dailybriefing/New-York-Foreclosures-Up-from-Year-Ago1038160-1.html After an encouraging first quarter, New York City foreclosure activity is starting to pick up again
US SEC fines UBS $50m for misleading CDO investors 07 August, 2013 | BBR http://assetmanagement.banking-business-review.com/news/us-sec-fines-ubs-50m-formisleading-cdo-investors-070813 The US Securities and Exchange Commission (SEC) has imposed a penalty of $50m against the UBS Securities, for violating securities laws while structuring and marketing a collateralized debt obligation (CDO). In mid-2007, UBS structured the ACA ABS 2007-2 CDO that mainly included CDS on subprime residential mortgage-backed securities (RMBS), for which ACA Management was serving as collateral manager, as per the SEC's order instituting settled administrative proceedings. The market watchdog alleged that the company failed to reveal that it has retained millions of dollars in upfront cash, which sums up nearly $23.6m it received during the course of purchasing collateral for the CDO. Instead of transmitting this cash to the CDO when the collateral was transferred, UBS kept the entire amount of upfront payments in addition to its disclosed fee of $10.8m, the US securities regulator said. SEC enforcement division co-director George Canellos said, "UBS kept $23.6 million that under the terms of the deal should have gone to the CDO for the benefit of its investors. "In doing so, UBS misrepresented the nature of the CDO's collateral and rendered false the disclosures about how that collateral was acquired." UBS has agreed to reimburse disgorgement of the $23.6m in upfront payments as well as the disclosed fee of about $10.8m as well as prejudgement interest of around $9.7m and a penalty of $5.7m to settle the charges
9|Sutherland Insights Banking News Flash 19082013
Technology Wedbush to deploy FolioDynamix Wealth Management platform 16 August, 2013 | BBR http://www.banking-business-review.com/news/wedbush-to-deploy-foliodynamix-wealthmanagement-platform-160813 US-based investment firm Wedbush Securities has tapped the FolioDynamix wealth management platform for deployment to its advisors to support fee-based advisory programs. As part of the Wedbush managed account offerings, the asset manager will implement FolioDynamix technology for proposal generation, research, investment model management, trade order management and performance reporting. Wedbush Securities executive vice president and private client services head Wesley Long said that the technology was selected due to its integrated wealth management technology capabilities and configurability of the platform. FolioDynamix president and CEO Joseph Mrak said that the FolioDynamix has emerged as the unified wealth management platform option due to its ability to address the full wealth management lifecycle across the enterprise with a single integrated, scalable platform. FolioDynamix delivers the complete web-based technology platform for managing the full wealth advisory lifecycle, including proposal and onboarding, research, model management, portfolio accounting, trade order management, operations, reporting, and performance analytics across all account types. Registered investment advisors, broker-dealers, banks, custodians and service providers can attract and retain top advisors, accelerate client acquisition and gain end-to-end visibility into all assets under management through the new platform. Formed in 1955, Wedbush Securities caters brokerage, clearing, investment banking, equity research, public finance, fixed income sales and trading, and asset management to individual, institutional and issuing clients
10 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 1 9 0 8 2 0 1 3
PSI-Pay taps MasterCard's PayPass technology to offer contactless functionality 15 August, 2013 | BBR http://cards.banking-business-review.com/news/psi-pay-taps-mastercards-paypass-technologyto-offer-contactless-functionality-150813 PSI-Pay Ltd, an e-wallet and payment card issuer, has introduced a new functionality, which will allow users to make contactless payments with its cards in conjunction with MasterCard's PayPass functionality. The PayPass offering enables holders of PSI-Pay's payment cards to carry out purchases for ÂŁ20 and under by tapping the MasterCard or Maestro-enabled card or device over a reader. The PayPass technology has been combined with layers of protection to assist prevent unauthorized, purchases, while contactless payments can be made through cards, and enabled wristbands and watches. In order to secure data and safeguard privacy, contactless payments are made using a unique encrypted code and there is also in place to bill only one in case a user taps their card or device more than once by mistake. PSI-Pay managing director Phil Davies said contactless payments is an evolving technology that possesses numerous opportunities for retailers, advertisers and marketers alike. "As awareness increases amongst consumers we expect adoption to fall inline with the predictions from analyst firm Gartner which expects to see contactless payments reach $22bn by the end of 2016," Davies added. PSI-Pay operates as an FCA regulated company and delivers an instant, secure and private means for individuals and businesses to send and receive money globally
Chase Paymentech introduces mobile checkout for merchant payment 15 August, 2013 | BBR http://onlinebanking.banking-business-review.com/news/chase-paymentech-introduces-mobilecheckout-for-merchant-payment-150813 Global merchant acquirer, payment processor Chase Paymentech has rolled out its new services, dubbed as Chase Checkout, to assist merchants to seamlessly accept payments. Using the Chase Mobile Checkout application and encrypted card reader, the merchants can now securely and efficiently accept card payments from their smartphones, claims the company.
11 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 1 9 0 8 2 0 1 3
Chase Paymentech president Dan Charron said, "Chase Checkout is a 'one-stop shop' for smallbusiness owners: one agreement, one system, one statement and one trusted merchant services' relationship to manage." The new application enables the traders to accept debit and credit card payments effectively and securely, whether a card is swiped on a merchant's Apple or Android enabled smartphone, entered online or provided at a retail location. Chase Checkout provides merchants the convenience of working with one trusted provider, with integrated reporting, 24/7 live US based customer support and a commitment to security- when accepting payments through mobile checkout, retail checkout and online checkout. Chase Paymentech provides e-commerce merchants, and merchants who accept telephone orders, a suite of PCI-compliant and easy-to-use web-based payment processing options accessible with a merchant's existing computer. Chase Mobile Checkout is suitable for traders who are interested in growing their business by taking payments wherever their business takes them. Chase operates as the US consumer and commercial banking business of JP Morgan Chase & Co, a global financial services firm with assets of $2.4trn and operations in more than 60 nations
Swiff Chip & PIN approved by Visa Ready programme 08 August, 2013 | Finextra http://www.finextra.com/news/announcement.aspx?pressreleaseid=51095 Swiff, SCCP Group's innovative mobility payment solution, has received approval for its Chip & PIN solution for use with Visa payments through the Visa Ready Program. The Swiff mobile payment Chip & PIN terminals will alleviate payment barriers for merchants, acquirers and customers by displacing cash and checks with mobile payment acceptance. This new step in the partnership between Swiff and Visa follows the announcement by Visa Inc. on June 5th, that Swiff had been selected as one of the leading mobile point-of-sale (mPOS) providers to join the Visa Ready Program. The program is designed to provide innovators with an easy way to collaborate with Visa and gives merchants and consumers the peace-of-mind they need when transacting with a mobile phone. "We believe that the approval by Visa rewards the level of security and flexibility of our Chip & PIN solution," comments Etienne van den Bogaert, Swiff Chief Technology Officer. "Both Swiff's hardware and software have been approved by Visa to ensure the solution meets all quality and security metrics for mobile payment acceptance."
12 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 1 9 0 8 2 0 1 3
As mobile acceptance continues to increase at exponential rates, particularly among micro and small merchants, it is essential to arm these merchants and acquirers with technologies that meet Visa's high standards of security and reliability. In the last year, the number of mPOS terminals increased 111 percent, and is expected to grow over 300 per cent by 20171. "As a member of the Visa Ready Program, Swiff is now operating under the guidance and best practices of Visa. To couple Visa's tools and value-added services and Swiff's ironclad authentication and security system marks a critical breakthrough in mobile payment offerings for both merchants and acquirers," concludes Jerome Cle, Swiff founder and CEO
GBC International Bank chooses Fiserv's suite of banking technology 07 August, 2013 | BBR http://bankingtechnology.banking-business-review.com/news/gbc-international-bank-choosesfiservs-suite-of-banking-technology-070813 California-based GBC International Bank (GBCIB) has chosen Fiserv’s Precision bank platform, outsourced processing, together with a complete assortment of additional technologies to enhance reporting capabilities and back-office efficiencies with integrated services. GBC International Bank chief financial officer Richard Holmes said that the implementation of the new technologies will enable the lender to continue with growth and profitability, despite an increasingly competitive financial environment. Fiserv bank solutions president Teri Carstensen said, "GBC International Bank's choice of Fiserv and the Precision bank platform supports the bank's commercial banking focus and plans for continued growth." The lender has selected other Fiserv products and services, which comprise Business Analytics, the Prologue financial accounting suite, Accel payments network, Retail Online and Business Online for online banking, Business Process Manager for new account and process management. Additional technologies include EnFact for debit fraud protection, CheckFree RXP and CheckFreeSmall Business for bill payment, Director for electronic content management, Integrated Teller for real-time customer and account information, WireXchange for wire transfers, and solutions for ATM and debit card processing. Headquartered in Los Angeles, the $456m GBCIB offers international trade, commercial real estate financing, business and personal banking services
13 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 1 9 0 8 2 0 1 3
Strategy Builders Turning Bullish on Housing Market 15 August, 2013 | National Mortgage News http://www.nationalmortgagenews.com/dailybriefing/Builders-Turning-Bullish-Housing-Market1038200-1.html Rising demand for new homes has driven a builder confidence index to its highest level since 2005
Barclays plans to dispose of UAE retail banking operations 14 August, 2013 | BBR http://retailbanking.banking-business-review.com/news/barclays-plans-to-dispose-of-uae-retailbanking-operations-140813 UK-based lender Barclays is seriously considering divesting its retail banking operations in the United Arab Emirates (UAE), as part of a strategic review of its operation in the country. Sources familiar with the matter were quoted by Reuters as saying that the bank may slash 3,700 employees, implement payment curbs on senior bankers and shut non-core operations across the globe to deal with the growing regulatory pressure. The retail banking operations in the UAE, which is under scrutiny, comprises personal banking, lending, mortgage services, and a credit card business, with a work force of nearly 500 and 1,000 people, the new agency reported. The internal review, which is currently in its introductory stage, does not guarantee that it will result in the sale of the business, and no consultants or financial advisers have been appointed yet to find potential buyers, the sources said. "You would expect the local banks to be the most likely buyers of retail banking business in the region. We have seen that in the past and most of them are in an expansion mode," the source told the news portal. Under the leadership of its chief executive Anthony Jenkins, who joined in August 2012, the bank has stopped speculative trading in agricultural commodities and closed a profitable tax advisory business. Managing operations in 50 nations with the help of 140,000 staff, Barclays offers personal banking, credit cards, corporate and investment banking and wealth and investment management services in Europe, the Americas, Africa and Asia
14 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 1 9 0 8 2 0 1 3
Mizuho eyes ANZ’s $570m stake in Bank Panin 13 August, 2013 | BBR http://retailbanking.banking-business-review.com/news/mizuho-eyes-anzs-570m-stake-in-bankpanin-130813 Japan’s Mizuho Financial Group has shown interest to acquire 39.2% stake in PT Bank Pan Indonesia Tbk (Panin) from Australia and New Zealand Banking Group (ANZ), as part of its Southeast Asian expansion plans. Sources familiar with the matter were quoted by Reuters as saying that the shareholding was valued nearly $570m and the move was still in the preliminary stage. ANZ chief executive Mike Smith had earlier signalled the group's willingness to divest certain minority holdings in Asian banks amid new capital rules proposed by Australian regulators, reported the news agency. The Australian bank had invested in 15 Asian countries ranging from Malaysia to China. It acquired a minority stake in Panin in 1998. If the deal finalises, Mizuho will join other Japanese lenders such as Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group in boosting presence in Thailand and Indonesia
EU banks shut down nearly 5,500 branches across Europe in 2012 12 August, 2013 | BBR http://retailbanking.banking-business-review.com/news/eu-banks-shut-down-nearly-5500branches-across-europe-in-2012-120813 Banks operating across the European Union (EU) have closed approximately 5,500 branches in the region during 2012, in a move to trim down operational cost and shore up required capital, as demanded by the financial regulators. Following the latest branch closures, which represents almost 2.5% of the total offices, nearly 218,687 branches, or one for every 2,300 people, are currently operating across the region, as reported by Reuters. During the financial year 2011, the financial industry witnessed closure of almost 7,200 bank offices, as per the data analyzed by the news agency from European Central Bank statistics. From the emergence of the financial crisis of 2008 to until 2012, the banking industry closed nearly 20,000 offices in the region, representing 8% of the total.
15 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 1 9 0 8 2 0 1 3
Besides regulatory pressure as well as efforts to increase the profitability of the operations, the implementation of the new online and telephone banking services, has fuelled the trend of reducing the physical presence of the branches. Greece witnessed 5.7% closure of branches, Spain slashed about 4.9% of its outlets, and Ireland also curtailed its branch network by 3.3%, whereas Italy's banking network stood at 3.1% lesser by the end of the year
Affordable Housing Will Be Key Challenge in GSE Reform Debate 08 August, 2013 | National Mortgage News http://www.nationalmortgagenews.com/features/Affordable-Housing-Key-Challenge-GSEReform-Debate-1038062-1.html Fannie Mae and Freddie Mac, which policymakers are trying to unwind, have operated with explicit affordable housing goals for more than 20 years
16 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 1 9 0 8 2 0 1 3