All GLG News Analyses Filed Under: Commercial & Retail Banking
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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Bank of America Asia Moves Forward
June 22, 2009
Bank of America Has ‘Considerable’ Savings in Asia | www.bloomberg.com
Execution and speed of merger results in significant savings. Addition of personnel indicates preference to accelerate earnings. BofA will be a major player in the Asian theater.
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June 19, 2009
Bank of America Has ‘Considerable’ Savings in Asia | www.bloomberg.com
It is very clear that a couple of months back when all the right sizing and rationalization was attempted at BofA and others, there were not many options available to the bank globally. In that ensuing melee what has happened is that BofA has sold off many profitable businesses from the bank in China and Asia becaue they were the only one getting buyers and also yet, there was no visibility to the Global HQ of any work being done at these businesses in 'far away' asia. Thus these so called savings are also attrition of some good and potentially high market share businesses like China banking and Indian Investment banking footprint. The so called merger was not really smooth and many of the best and the brightest at Merrill in Asia have left for new careers as mentioned. "The biggest U.S. lender has raised almost all of the $33.9 billion demanded by regulators after last month’s stress tests .." Unfortunately, the businesses that have attrited in Asia may be difficult to buy again
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June 15, 2009
Capital One Looks to Adapt to Credit Card Laws | www.washingtonpost.com
Credit card issuers and specialist providers have to live with reduced incomes per card account. A very simple way to control the related company level portfolio would be to manage defaults and thus manage the card application process so that the same results in a significant reduction in operational losses. Today COF defaults worldwide are increasing and those in the US are well in Double digits. This signifies that there has been a short term deterioration in credit quality because of the market and there is a residual weakness in credit issuance that needs to be addressed. The new CARD Act of 2009 does not allow much leeway in its terms and conditions and the spirit of the legislation is very clear in direction. The interest is capped at 18%, rate changes have to be notified and rate offers and fees have to be reasonable and valid for a minimum period of six months These are not reductions in income esp to a quality issuer like COF except in low quality, high default grade cards
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Greg FlemmingSenior Vice PresidentLIGHTSPEED ONLINE RESEARCH, INC.
Capital One Takes Unique Path in Response to CARD Act
June 12, 2009
Capital One Looks to Adapt to Credit Card Laws | www.washingtonpost.com
Capital One's reaction to pending legislative changes reflects a long-term strategy that diverges from the approach taken by most competitors. Like nearly all top card issuers, Capital One has notified cardholders of APR and fee changes in anticipation of regulatory changes, but Capital One's unique approach is tailored to appease consumers' price-sensitivity in the current economic climate by imposing deferred pricing increases -- a form of "price protection" -- in their notifications to customers. In the current economy, price-sensitive consumers are bound to look especially closely at what they are paying in finance charges and notifications of an increase in their APR may impact card usage.
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Capital One Will Drive Credit Card Industry Reinvention
June 12, 2009
Capital One Looks to Adapt to Credit Card Laws | www.washingtonpost.com
Capital One's industry success has been driven by superior analytics and appropriately targeted marketing. Identifying the right products for the right consumers has long been a strength of the organization. The CARD Act of 2009 is going to hamper those issuers who are less adept at product definition and mass customization, forcing them to rely on "one size fits all" tactics. The inability of many card industry competitors to thoroughly understand customer behavioral attributes and purchase patterns will support Capital One's continued investment into leading analysis tools and techniques. The ongoing dominance in data management by Capital One will continue to drive change to the industry by appropriately re-defining its products and messages to meet the requirements of an ever demanding consumer population.
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Nathaniel FinkinManaging Partner and PrincipalFinkin Capital Advisors
Capital One will be pressured along several fronts in 2009
June 11, 2009
Capital One Looks to Adapt to Credit Card Laws | www.washingtonpost.com
1) The CARD act of 2009 will impair fee collection, and absent a new drive to assess annual fees to their better clients it will be challenging if not impossible to recoup those fees. 2) Capital One will be dealing with rising unemployment, which has and will continue to correlate directly to higher delinquency and higher charge offs 3) The response to these events from a risk management perspective will inhibit asset growth and thus compound the earnings issue
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June 10, 2009
Capital One Looks to Adapt to Credit Card Laws | www.washingtonpost.com
Capital One and other credit card companies will not be able to make up the lost fees directly from the new card act. This will be due in part to the stringent requirements on new fees implementation. While the new bill does address some much needed reforms in the industry, it does not address the issue of accrued interest and interest rates.
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David PottsFormer Finance DirectorLLOYDS T S B ASSET FINANCE DIVISION LTD
June 9, 2009
Lloyds Banking Group boosts Brown with £2.3bn bailout repayment | business.timesonline.co.uk
Is this a sign that the worst of the UK banking crisis is over, it is hard to imagine 3 month ago that a major UK bank could have raised equity in this way. Given that the markets now believe that the capital bases of the UK banks are strong, the banks themselves can continue their increase in lending and the support that they give to the UK and other economies
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Profit Squeezing and Liquidity Issues in the Banking Sector
June 2, 2009
Banks hike deposit interest rates on economic rebound expectation | www.thanhniennews.com
Greater competition among commercial banks coupled with commercial lending interest rate caps and rising deposit rates, is putting a lot of pressure on the health of the banking industry in Vietnam.
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Jack SayerManaging PartnerSayer Partners LLC
May 26, 2009
GMAC Says It Needs $1 Billion In Cost Cuts | online.wsj.com
Faced with a $11.5 billion equity hole in it's fight for long-term survival, GMAC, along with other auto lenders are seeing their profits shrink as average interest rates on new car purchases continue to plummet.
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