|Mergers: Citigroup buys Egg, Greek ATE into Serbia; GE into Vietnam
|Note: Just after scaling back its consumer finance in Japan, due to tightening of consumer protection laws, Citigroup announced a propose purchase of what it calls the largest online bank, Egg. Also below, a Greek bank buying into Serbia -- at a discount, it seems clear, due to recent Kosovo status proposal release. And many banks trying to get into Vietnam, including the ubiquitous GE Money. This last is attributed to Vietnam's duties after joining the World Trade Organization. Banking is being globalized, but not yet consumer protection... -Matthew
Matthew Lee, Esq., InnerCityPress.com
NCRC board member; NCRC blog = www.fairlending.org
USA Tel: 718-716-3540 E for this: GlobalCRC@gmail.com
AFX - Asia
January 29, 2007 Monday 9:58 PM GMT
LENGTH: 807 words
HEADLINE: Citigroup to buy Prudential's Egg bank
NEW YORK (AFX) - Citigroup Inc. announced Monday that it was buying the world's largest stand-alone online bank, London-based Egg Banking PLC, to expand its financial operations in Britain and its Internet expertise worldwide.
Citigroup, which is headquartered in New York, said it would pay British insurer Prudential PLC $1.13 billion in cash for the bank. The deal is subject to regulatory approval and is expected to close by the end of April.
The combination of Egg and Citigroup's British consumer banking and finance operations will create a financial services provider with over 4 million customers and more than quadruple Citigroup's 800,000 British credit card base.
The move is in line with two recent trends at Citigroup, the largest bank by assets in the United States.
Chief Executive Charles Prince has eschewed blockbuster deals and, instead, focused on targeted and strategic acquisitions such as the Egg Banking purchase. In December, Citigroup announced it was buying Quilter, a wealth management unit in the United Kingdom, from Morgan Stanley; at the same time, it bought a Central American banking company in a stock-and-cash deal.
Citigroup also has been moving in recent years to expand its online banking presence. Its U.S. retail banking arm launched Citibank Direct in March 2006 to offer high-yield savings accounts to compete with similar offerings from other Internet banks and to attract more people to its online banking and bill paying services.
Ajay Banga, chairman of Citigroup Global Consumer Group - International, said that Citi hoped to capitalize on Egg's reputation for a consumer-friendly Web site and strong brand recognition.
He said that Egg's strength has been its 'ability to deal with online customers in a way that makes them happy and sells them other products as well.'
Citi, he said, can bring its expertise to improve Egg's less-than-impressive lending record and to provide new products, including checking accounts and investments such as mutual funds.
At the same time, Banga said, Citi could apply what it learns from the Egg model to its Internet operations in other countries.
'I would like to take to as many places as I can whatever I can learn from them,' he said.
The transaction, which is worth 575 million British pounds, will probably boost earnings in the first year, Citigroup said in a statement.
Egg was founded in 1998, and it currently has more than 3 million customers. Its products and services including online bill paying, credit cards, personal loans, savings accounts, mortgages and insurance.
Citigroup's British consumer business now serves more than 1 million customers, primarily in the wealth management and near prime lending markets, and offers current, savings, and foreign currency accounts, credit cards, investments, offshore banking, personal loans, and mortgages.
Citi currently has just five retail bank branches and 100 consumer finance branches in Britain. Banga said that the increased online customer base that comes with Egg means 'you'll see me building a few more branches there.'
Prudential said the sale will enhance its earnings per share this year and the proceeds will be used to reduce net debt.
Prudential also said it has reached a preliminary agreement with Citigroup on providing life and pensions products to Egg's customer base for a five-year period.
'The sale of Egg to Citigroup realizes greater value for our shareholders than retaining the business within the group,' Prudential Chief Executive Mark Tucker said in a statement. 'Citigroup is the largest credit card issuer in the world and sees enormous opportunities to develop Egg's business in the U.K.'
Prudential PLC is not affiliated with Prudential Financial Inc. of Newark, N.J.
Shares in Prudential rose 1.6 percent to 713.5 pence ($13.98) on the London Stock Exchange.
Citigroup shares slipped 67 cents, or 1.2 percent, to $54 in afternoon trading on the New York Stock Exchange.
Citigroup's purchase of Egg comes as online banks are boosting interest rates to attract deposits from people who are getting year-end bonuses or expect tax refunds.
HSBC Bank USA said Sunday it was raising the interest rate of its online savings account to 6 percent -- topping its competitors. UnitedBank of Miami Lakes, Fla., offers a 5.35 percent annual percentage yield, while Citibank Direct is at 5 percent.
Egg pays 5.25 percent interest on its online savings accounts, said a company spokeswoman. ING offers an annual equivalent rate of 4.75 percent in Britain, according to its Web site.
Egg charges British credit card customers an annual interest rate of 16.9 percent. That compares with the 15.9 percent charged by MBNA Corp. of the U.S. and Britain's Lloyds TSB Group PLC.
Greek ATE Bank buys 20 percent of AIK Banka 5 February 2007 | 12:52 | Source: Economist Magazine
BELGRADE -- The National Bank of Serbia granted Greek ATE Bank permission to purchase 20 percent of AIK Banka equity.
Greek ATE Bank has accumulated 19,99 percent of AIK Banka shares after buying shares on the Belgrade stock market last week.
The price per AIK Banka share has been on a steady rise for the last twelve months, earning the status of top liquidity at the Belgrade Stock Exchange.
Prices began to shoot up at the end of October 2006 when one share rose by 13 percent in only two days, topping 5,106 dinars. A single AIK Banka share stood at 3,100 dinars one year ago, and reached 6,313 dinars last Thursday. The maximum price of 6,450 per share was reached on January 19.
Belgrade Company Irva ltd. owns 13,96 percent of AIK Banka shares, scoring second behind ATE Bank. East Capital Asset Management Investment Fund is the third stakeholder.
Copyright 2007 Toan Viet Limited Co
Vietnam News Briefs
January 18, 2007 Thursday
LENGTH: 202 words
HEADLINE: BANKING & FINANCE FOREIGN BANKS EYE SETTING UP BRANCHES IN VIETNAM
from the VIETNAM NEWS BRIEFS, January 18, 2007 Foreign banks are seeking licenses to set up wholly-owned units in Vietnam, the Market Watch quoted a Vietnamese central bank official as saying
The State Bank of Vietnam, or central bank, has received ten applications for setting up new banks or branches of foreign institutions. Of the applications, three ask for setting up new banks and seven for forming branches, the official said
GE Money, a financial services unit of the US's General Electric Co. (GE), and the Commonwealth Bank of Australia (CBA) are among the applicants seeking to open their own banks in Vietnam
The foreign credit institutions are keen to take advantage of new rules, after Vietnam officially joined the World Trade Organization (WTO) earlier this month, that opened up the fast-expanding banking market to them
Under WTO commitments, Vietnam will allow the establishment of banks that are 100% foreign-owned from April. Foreign banks are required to have assets of at least $10 billion if they want to establish units in the country
Vietnam now has 43 banks, plus 31 branches of foreign banks and five foreign joint venture banks
(Market Watch Jan 16) Copyright 2007 Vietnam News Briefs
LOAD-DATE: January 19, 2007
||NCRC - Matthew Lee
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