All GLG News Analyses Filed Under: Commercial & Retail Banking

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Impending Changing Capital Structure at Banks - Challanges for Accountants

September 7, 2009

Analysis of:G20 Calls for Better Capital Buffers at Banks | www.ft.com

The G20 meeting has agreed that banks need to be properly capitalized with equity instruments as compared to hybrid debt-equity. A number of other changes in the capitalization of banks is also proposed. This would mean that debt instruments with characteristics of equity would have a bleak future in the capital structure of banks. In this analysis I highlight some of  the issues involved in this conundrum.

Private Equity the Problem...or the Solution? Regulators Quietly Change Tune

September 4, 2009

Analysis by: GLG Expert Contributor

Analysis of:Regulators shut banks in Calif, Md, Minn in US? | news.yahoo.com

The FDIC decision to change the capitalization ratio for private investors in troubled banks from 15% to 10% is an important admission. Private investors were sometimes castigated as a problem in the past, given their short-term desires for profits. However, as the FDIC implicitly acknowledged, they are actually the key element of any real solution to the problem of troubled banks and other financial institutions.

CACB Shareholders: For Whom the Bell Tolls

September 4, 2009

Analysis by: GLG Expert Contributor

Analysis of:Cascade Bancorp enters into agreement with FDIC | www.bizjournals.com

The FDIC's issuance of a cease and desist order does not bode well for already battered shareholders of Cascade Bancorp. A "C&D" order, one of the most powerful tools that bank regulators have, is an injunctive-type order issued when a banking organization is or has engaged in an unsafe or unsound banking practice, or a violation of law, and the organization is required to follow the proscriptions set out in the order. Such orders are often a precursor to more drastic actions.

Bank Acquisition Strategies Could be in Jeopardy

August 31, 2009

Analysis by: GLG Expert Contributor

Analysis of:Bids For Failed Banks: A State Secret? | www.iddmagazine.com

With so many small banks finding it hard to survive in this market, it would seem the governing agency would do all within its power to find potential buyers for those unable to make the grade. With the recent change in valuation methods to a multiple calculation, comparable data is imperative in providing confidence to the bidding firm.

Indian ATM Sharing Reminiscent of Earlier US Pattern

August 27, 2009

Analysis by: GLG Expert Contributor

Analysis of:RBI limits free use of inter-bank ATMs to 5 times a month | economictimes.indiatimes.com

A recent article reports that the Reserve Bank of India will permit Indian banks to charge usage fees when “foreign” bank customers use their ATM’s more than 5  times in a month. Henry Polmer, the author of this analysis and former general counsel to the Cirrus ATM System, compares the development of the ATM industries in India and the US and concludes that India could fairly rapidly expand to half a million or more ATM’s from its current 40,000 if the RBI broadens its current liberalization.

Royal Bank of Scotland To be Spot Checked - Who Cares?

August 21, 2009

Analysis by: GLG Expert Contributor

Analysis of:City regulator 'spot-checking' bankers' pay deals | business.timesonline.co.uk

As and when the FSA is abolished by the next Conservative government, who are likely to win the next election, the only people who will mourn its passing will be those in the financial services industry whose interests it has protected since its creation.

Credit Card Reward Generosity: Declining and Heading South

August 20, 2009

Analysis by: GLG Expert Contributor

Analysis of:There Goes The Prize: Credit Card Companies Step Up the Swipe Quota For Rewards Programs | www.washingtonpost.com

The generosity of reward programs with many issuers has declined as banks struggle for ways to cut costs. Major banks will trial an assortment of formulas - including a variety of annual fees, reduced flexibility, additional costs to redeem and higher point thresholds. We will also see new and “innovative” use of penalties to deplete rewards balances. Opportunities exist for smaller and non-traditional banks to take share. Expect massive rewards overhaul if interchange legislation passes.

Royal Bank of Scotland Under Investigation

August 17, 2009

Analysis by: GLG Expert Contributor

Analysis of:Taxpayers take 70% of Royal Bank of Scotland | business.timesonline.co.uk

The timing of the FSA investigation into the Royal Bank of Scotland is "interesting", to say the least, coming as it does hot on the heels of a class action by local government pension funds who are trying to sue RBS. Could it be that the FSA investigation is a whitewash?

Duncan MacDonaldConsultantDuncan McDonald

Bank stocks will crumble in the coming months

August 14, 2009

Analysis of:Stocks Slip as Banks Pull Back | online.wsj.com

The WSJ article suggests a modest, temporary pullback for banking stocks amidst all the recent glowing reports that the Great Recession is over. It is not over. It is going to get much worse, precisely because of a crisis that is about to erupt for the bankcard industry.

Consumer Business Continues to Drag Down HSBC Profits

August 6, 2009

Analysis by: GLG Expert Contributor

Analysis of:HSBC profit halves to £3 bln | uk.reuters.com

HSBC first half pretax profit fell to $5.02 billion from $10.2 billion a year earlier.  Investment banking  profits grew to $6.3 billion from $2.7 billion.  However, profits in the personal finance businesses turned from a $2.3 billion profit to a $1.25 billion loss.  The main driver is increases in loan impairment charges from $3.9 billion to $13.93 billion.  HSBC management is cautiously optimistic about prospects for economic recovery.

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