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Global Industry Trends - Commercial Banking - September 2015

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Global Industry Trends is a snapshot report, which helps its readers identify key trends shaping the industry. All the major activities in the industry are analyzed and summarized in a concise manner — making it easier for readers to comprehend them in the least time.

Global Industry Trends in focused toward executives, who are required to be aware about their industry, but do not have time to track it on a regular basis.

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Global Industry Trends - Commercial Banking - September 2015

  1. 1. Commercial Banking September 2015 GLOBALINDUSTRYTRENDS
  2. 2. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 1 About Global Industry Trends Global Industry Trends is a snapshot report, which helps its readers identify key trends shaping the industry. All the major activities in the industry are analyzed and summarized in a concise manner — making it easier for readers to comprehend them in the least time. Global Industry Trends in focused toward executives, who are required to be aware about their industry, but do not have time to track it on a regular basis.
  3. 3. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 2 Trends in Global Commercial Banking Global banking industry witnessing mergers and acquisitions Goldman Sachs is acquiring GE Capital’s US online-banking business, along with US$16 billion in online savings accounts and other deposits. The deal is a win–win for both the parties. It is expected to help Goldman Sachs transform into a conventional bank, which has been its strategy post the 2008 financial crisis. On the other hand, the deal will also help General Electric implement its strategy of moving out of its banking and finance business, and focus on the industrial businesses. Portugal’s central bank, Bank of Portugal is expected to sell Novo Banco to China’s Anbang Insurance Group. Novo Banco was created in 2014 out of failed Portuguese bank Banco Espírito Santo SA. The bank continues to hold Banco Espírito Santo’s operations — including branches, deposits and loans — in Cape Verde, Venezuela, Mozambique and a 9.9% stake in Angolan bank Banco Economico.
  4. 4. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 3 India–based public sector bank State Bank of India has put the process of merging its associate banks on hold for the time being. The bank is postponing the process, as it has accessed upcoming competition from new banks and transition to the digital platform as high priority challenges. As per the bank, the merger will not impact its balance sheet and valuation, and hence can be postponed. F.N.B. Corporation is acquiring Harrisburg, Pennsylvania– based Metro Bancorp, Inc. — which is the holding company for Metro Bank. F.N.B. — the holding company for First National Bank of Pennsylvania — is expected to pay US$474 million or US$32.72 per share for Metro, and complete the transaction in the first quarter of 2016. The acquisition is expected to get F.N.B. approximately US$3.0 billion in total assets. It includes US$2.4 billion in total deposits, US$2.1 billion in total loans and 32 banking offices. Fairmont, West Virginia–based MVB Bank — a subsidiary of MVB Financial Corp — has completed the acquisition of two Susquehanna Bank branches in Martinsburg and Inwood, Berkeley County. The acquisition has helped the bank acquire approximately US$69 million worth of deposits and $17 million in loans. Susquehanna Bank is a division of Branch Banking and Trust Co.
  5. 5. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 4 Woodbridge, New Jersey–based Northfield Bancorp, Inc. has acquired Hopewell Valley Community Bank in a US$54.9 million deal. As per the deal, both the companies will merge into a 40–branch bank with estimated assets of US$3.6 billion, deposits of US$2.4 billion and US$2.6 billion in loans. Further, Hopewell Valley bank stockholders will be compensated in a combination of stock and cash valued at US$54.9 million. North Carolina–based BB&T Corporation has completed its acquisition of Lancaster, Pennsylvania–based Susquehanna Bank. The deal has helped BB&T add US$13.8 billion in deposits, US$18.7 billion in total assets, along with 240 branches in the mid–Atlantic region. Further, each share of Susquehanna common stock has been offered 0.253 shares of BB&T common stock and US$4.05 in cash. Nigeria–based Heritage Bank Limited is merging with Enterprise Bank Limited. Heritage Bank, which acquired Enterprise Bank in October 2014, will now be among the top seven banks of Nigeria with approximately 200 branches, 177 ATMs, 57 Cash Centers and 2,000 POS terminals in 26 states across Nigeria.
  6. 6. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 5 The Government of the United Kingdom has reduced its stake in Lloyds Banking Group to below 13%, from 43% in September 2013. The government has been reducing its stake in the bank, and has plans to privatize the remaining stake. The UK Government is also selling its stake in the Royal bank of Scotland. In the initial tranche, the government will sell approximately GBP2 billion worth of shares — representing a stake of approximately 5%. The sale is expected to reduce the taxpayers’ shareholding to around 73% once the initial tranche is sold off. Indian banks cashing–in on mobile banking State Bank of India has launched its mobile wallet — SBI Buddy. The wallet will be accessible to State Bank of India’s customers as well as other subscribers. It will also tie–up with other merchants, and will help them with mobile commerce. Mobile payments wallets is one of the major trends in the Indian retail banking space. While banks such as HDFC Bank and ICICI Bank have come up with PayZapp and Pocket respectively, others such as Axis Bank and YES Bank are also expected to launch their mobile wallets.
  7. 7. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 6 Another bank, Indian Bank has launched a mobile app, IndPay. The app — compatible with Android, Windows and iOS mobile operating systems — helps customers with smooth mobile banking transactions. Several companies in India are also launching their non– lending payments banks. After the Reserve Bank of India’s approval to allow Payments bank licenses, more than 40 companies have applied for the same. The license permits companies to collect deposits (initially up to INR100,000 per individual), offer Internet banking and money transfers, as well as sell insurance and mutual funds. The initial 'in-principle' approval granted by the Reserve Bank is valid for a period of 18 months, during which the applicants are required to comply with all the necessary regulatory guidelines.
  8. 8. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 7 Regulatory Changes in Indian banking system India’s banking regulator — Reserve Bank of India (RBI) — has disclosed that four foreign banks have filed applications to set up wholly–owned subsidiaries in India. There has been an increase in applications, after the bank released final guidelines for foreign lenders to convert their India branches into subsidiaries. RBI has already permitted Singapore-based DBS Bank and SBM Bank to convert their branches into subsidiaries. Reserve Bank of India has also made a regulatory move to shift, merge or close branches in urban areas without seeking its prior permission. Further, the banks will be allowed to open new mobile branches, automated teller machines (ATMs) or call centers, without informing the RBI. However, RBI mandates banks to share the details with its Department of Banking Statistics. Also, the new regulations do not apply to branches in rural and semi–urban areas.
  9. 9. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 8 Banks going for operational changes and expansions French bank Societe Generale is planning cost–cutting measures of EUR850 million. The measures are done to compensate for the higher regulatory costs, and include a new provision of EUR200 million for litigation, taking the total provision to EUR1.3 billion. Other measures include simplification of the organizational structure and improvement of efficiency, reinforcement of controls on externalized costs, and review of transactions — and are expected to generate EUR850 million in additional savings by 2017. China Cinda Asset Management is planning to acquire Nanyang Commercial Bank, in order to get banking licenses in both Hong Kong and China. Cinda’s subsidiary Cinda Financial Holdings has made a bid on Nanyang Commercial Bank, which is being sold by Bank of China (Hong Kong) for an asking price of HK$68 billion. Cinda has been planning to pick up financial licenses across different jurisdictions, in anticipation of China’s financial regulations — that might allow banks to get into other businesses.
  10. 10. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 9 India–based ICICI Bank has launched mortgage guarantee–backed home loans offering tenure of up to 7 years of age, and additional borrowing power of 5–20%. Typically, banks in India do not allow home loan tenures beyond 60 years of age. With the new loans, the bank will charge a fee of 1–2% on the additional borrowing. ICICI Bank has also introduced fully–automated digital lockers. The lockers, named Smart Vault, will have multi– layer security system, including biometric and PIN authentication, and will be available to customers even on weekends and post banking hours. The bank is providing lockers of two sizes at present.
  11. 11. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 10 Organizations Mentioned in the Report Anbang Insurance Group Axis Bank Banco Espírito Santo SA Bank of Portugal BB&T Corporation Branch Banking and Trust Co. China Cinda Asset Management DBS Bank Enterprise Bank Limited F.N.B. Corporation GE Capital Goldman Sachs HDFC Bank Heritage Bank Limited Hopewell Valley Community Bank ICICI Bank Indian Bank Lloyds Banking Group Metro Bancorp, Inc. Metro Bank. F.N.B. MVB Bank MVB Financial Corp Nanyang Commercial Bank Northfield Bancorp, Inc. Novo Banco Reserve Bank of India Royal bank of Scotland SBM Bank Societe Generale State Bank of India State Bank of India Susquehanna Bank YES Bank
  12. 12. GLOBAL INDUSTRY TRENDS — COMMERCIAL BANKING agmaa.com info@agmaa.com 11 Get a copy of Global Industry Trends — Commercial Banking in your inbox every month. Visit: http://agmaa.com/global-industry-trends-commercial- banking/ Disclaimer No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Indalytics Advisors Private Limited. The information contained in this report is of a general nature and is not intended to address any particular individual or entity’s circumstances. Although proper care has been taken to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. The publisher should not be held liable for any discrepancy in the information. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Publication Volume: GIT-15-CBK-09 Publication Date – September 2015 © 2015 Indalytics Advisors Private Limited For further information, please contact info@insightsed.com

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