ESBG- The strength of a European Association
900 financial institutions
85,000 branches
1,000,000 staff 90,000 ATMs
2,500 billion € non-bank deposits
one third of the European retail banking market
The European voice of savings and retail banking The strength of our members illustrated ...
Hungary OTP Bank is a key player in Hungary and 8 countries of the region. It serves 10 million customers through 1,300 branches, agent networks and electronic channels.
Luxembourg BCEE (Banque et Caisse d'Epargne de l'Etat) was nominated in 2005 and 2006 "Bank of the Year" by the prestigious trade magazine The Banker. The strength of our members illustrated ...
Sweden Swedbank represents Sweden's largest branch network with 4.5 million customers - 50 % of Swedish population. United Kingdom Lloyds TSB posted a 24,8% return on equity in 2006. The company provides a full range of banking and financial services to 16 million people in the UK (26 % of population).
Austria 2 million Austrians (25 % of population) are client with an Austrian savings bank. The strength of our members illustrated ... Germany German savings banks represent the country's largest branch network with 16,000 branches and 24,300 ATMs. 30 million individuals have an account with the savings banks Spain With 23,456 branches, 33,187 ATMs and 124,139 employees Spanish savings banks constitute the largest retail banking network in Spain. France
26 million customers - 41% of French population - make Groupe Caisse d'Epargne the 3rd French banking network and the n° 1 bank for young people. January 2006 WSBI • October 2007 • ESBG The global voice of savings and retail banking NEWS & VIEWS
Pluralism and integration – A European approach
The creation of the European Union is a unique phenomenon. Our continent is growing together and the European idea has achieved political, cultural and economic dynamics beyond what could be hoped for when the first steps to unite Europe were taken. Regarding the economic development of IN THIS ISSUE Europe, there are no precedents for an undertaking like the introduction of the Euro or the integration of our markets. Consequently, there are no clear paths and no proven recipes to follow.
Much of the success of the European endeavour ultimately depends on the sound judgement of law makers. What we ESBG's main positions: also need, is independence of the mind. As Europeans we Heinrich Haasis, an overview should value our diversity, and strive for European solutions to ESBG President European challenges. page 3 The integration of our financial services industry is among the greatest of these challenges. The big gain for Europe lies in the establishment of a competitive and efficient financial environment, as well as in clarity of rules for market players and WSBI launches consumers throughout Europe. International Remittances Capability Agreement In order to succeed at all this, market regulation is necessary and we applaud the EU law makers for their efforts, and especially for recognizing that in order to achieve efficient integration we do not have to pay the price of losing the diversity of our page 7 financial system. > Pluralism and integration are not at odds. In fact, pluralistic integrated markets are the best outcome we could hope for.
The prospects are good. The integration of Europe’s financial services sector is ongoing. European law makers have constructed a legal framework creating equal business conditions for all market participants, and taking into account the diversity of Europe’s financial systems. As a result, European banks compete on a level playing field and same business conditions are guaranteed to all market players. > Clearly, competition among different business models is thriving. From the perspective of the customer, pluralism and the competition between different banking models lead to a wide range of products and services, better prices, and, as a rule, more bank branches and a more stable and continuous overall supply of financial services. Furthermore, in pluralistic markets, customers can freely choose the business model they identify with most closely and which meets their demands best. > Consumers profit from competition and variety. Editorial
Pluralism and integration – A European approach
This variety is increased by the fact that different banking models learn from each other. Products that had been the specialty of commercial banks have long been adopted by savings and cooperative banks. And business ideas developed by savings banks are being taken up by commercial banks. Variety of business models drives exchange and competition in product development, stimulating innovation and benefiting customers. > Pluralism implies dynamic financial sector development. Pluralism in business models also results in well balanced provision of financial services. Different types of banks identifying with different corporate and social values ensure that financial development is not single-minded or myopic. For example, in the case of savings banks the economic development of their regions of origin is part of their business plan. This includes guaranteeing access to finance for SME’s, and general access to financial services, without which economic development would come to a standstill. > Pluralism safeguards quality and continuity of the financial infrastructure. Pluralism thus clearly creates an additional dimension for competition and promotes economic development. There remains the question how in the future integration will be realised on our pluralistic markets. A specific answer to this question cannot be given as yet, since it is up to market forces to shape the European financial landscape.
In particular with respect to retail financial services, very much depends on how the demand for retail banking products develops. Nevertheless it is a fact that retail customers strongly value reputation, cultural background and geographic proximity of their bank. More so, anonymity and the absence of bank branches can be a true deterrent for customers, whose trust and confidence rest on close contact with and personal counsel from their bank. In order to deserve and keep this trust, banks have to be able to flexibly react to their customers’ needs. For these reasons, seeking to achieve integration by full harmonization and standardisation would be fruitless and potentially harmful. It is impossible to predict the consequences of forcing one restrictive set of rules onto a market, where many coexisting models already achieve great results. Instead of dogmatically interpreting integration in the narrowest way, we should concentrate on how to best achieve the beneficial outcomes for which the concept of integration stands.
Against this background it is of utmost importance for regulators to take into account the realities of the markets for retail financial services. Retail banking markets have already reached a high degree of integration and are demonstrating impressive efficiency and competitiveness. Should there be scope for further market integration, it could work through many channels. Of course consolidation is one of them, but alternatively organic growth and expansion would even further increase the choice of banking products for Europe’s consumers in line with the goals of integration.
The success of integration rightly is appraised in view of our pluralistic markets. As it has held true in the individual member countries as well as on a European level, pluralism will ensure intense competition and dynamic market interaction for the future, too. > Plurality is a key feature of the European banking system. If I were to prophesy, it is the variety of our business models that guarantees that market integration will hold its promises to consumers.
Heinrich Haasis ESBG President
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ESBG's main positions: an overview
A broad choice in terms The process is currently under review. Based of financial products and on our experience with the Lamfalussy providers is an essential process, it is our view that nothing would condition to create an justify modifying significantly the current efficient retail banking architecture. Instead, all interested parties market. In this respect, the should focus on identifying areas where plurality of banks, whatever concrete improvements can be made. This their business philosophy, is in fact the approach followed by the Inter- geographical outreach, size and legal structure – Institutional Monitoring Group, who in its be they limited stock, cooperatives, foundations, recently published final report put forward a public banks – reflects not only the plurality of series of concrete recommendations. The ESBG European businesses’ goals and priorities but looks forward to the interesting exchange of also of European consumers’ needs. As there is views to which this will give rise. not a single type of EU consumer, there should not be a standardised type of retail banking The capital requirements directive: focus on offer. ESBG member institutions, with their consolidation and practical implementation strong retail banking focus accompany their of rules clients in the local community, on a regional and national level and internationally, as the The clock is ticking before the real start of Basel II lives and businesses of their clients evolve. In in the European Union: as of 1 January 2008, all this respect, they play a very specific role in the the credit institutions and investment firms in the EU context, and are a crucial component of the EU will have to comply with the new prudential retail banking landscape. requirements.
The Lamfalussy process: the ESBG supports It took Europe a significant amount of time and the conclusions of the IIMG – as well as the efforts to arrive at this point. As a reminder, the practical approach proposed first discussions in Basel took place in 1999; the Basel II framework was adopted by the Basel The Lamfalussy process has been for a number Committee on Banking Supervision in June of years now the approach for drafting and 2004 and its European version - the Capital updating legislation in the financial services Requirements Directive - was published in the area. The ESBG has always been, and remains Official Journal two years later. In the EU, CEBS a supporter of this approach. In addition, it is (Committee of European Banking Supervisors) worth noting that in a number of important has played an instrumental role to ensure a aspects, such as consultation and transparency, smooth and coordinated implementation of the significant improvements have been registered. framework. To date, CEBS published 14 sets of Our assessment is therefore positive. guidelines, most of them directly related to the transposition of the Basel II in the EU. The next Admittedly, achieving perfect results in the question is: where do we go from here? financial services area is a challenging task, as there is a need to address objectives which can The ESBG is of the opinion that in the coming at times be contradictory. In particular, European years, the focus should be on consolidating legislation has to be neutral vis-à-vis all players, the new prudential environment. For the i.e. banks with local/regional roots and large Commission and CEBS, this means primarily cross-border players. In addition, it has to strike making sure that the introduction of the CRD the right balance between a principles-based takes place smoothly; this implies switching approach, with a view to limiting the burden priorities, from the design of rules and guidelines on regulated entities, and the objectives of level to their practical implementation throughout playing field and legal certainty. Importantly, the EU. legislation has to respect duly the principles of subsidiarity and proportionality. All in all, our On a limited number of issues, such as the view is that the Lamfalussy process has proven current EU Large Exposures framework, the its value in addressing these challenges. Commission is expected to propose changes.
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In these areas, the Commission should at of the business opportunities offered by MiFID; all times keep in mind the goal of not for the time being, the implementation of introducing new burdensome requirements, the Directive is mainly regarded as a (costly) especially for the smaller entities, which in recent compliance exercise. years have made significant efforts to adapt to the new environment, which now needs Consumer Policy: new legislation only if to be consolidated. Due consideration should benefits outweigh costs be given to the principle of proportionality, coupled with the “same business, same risks, The ESBG welcomes the recent initiatives of same rules” approach. The proposal, made by the Commission, aiming to revise some pieces some, to replace the existing rules on Large of European consumer legislation in order to Exposures by new requirements under the come to a coherent and consistent regulatory second Pillar of Basel II, would in our framework. We regard this approach as evidence view certainly not be a step in the right of the Commission´s commitment to the Better direction. Regulation principles.
It is sometimes argued, especially by some However, these Better Regulation principles internationally-active banks, that radical changes should also apply when introducing new to the EU supervisory architecture are needed. regulation. That is, a new piece of legislation The argument goes that the current architecture, should be introduced only if it can be based on a distribution of responsibility between demonstrated that its expected benefits Home and Host supervisors, does not match the will outweigh the implied costs. In addition, internal organisation of these banks. Whereas with respect to EU legislation in the consumer these concerns should be taken seriously, area, the European Commission should work on the ESBG would like to warn against focused legislation that sufficiently reflects the introducing wide-ranging changes without subsidiarity principle. The ESBG is therefore the necessary experience with the CRD in favour of targeted harmonization, i.e. and indeed with the modifications that full harmonization only of those key provisions it introduced. Notably, the proposal to apply which would facilitate further integration. In the consolidating supervisor mechanism to the more concrete terms, that means an assessment second pillar of Basel II should in our view only of the areas where harmonization is needed, be discussed as part of the review of the CRD, in and collaboration with stakeholders in order a few years time. to identify those key issues where a common approach would help deliver benefits for the Markets for Financial Instruments Directive Single Market. As such, striking the right has gone live - regulatory pause is now balance in terms of consumer protection is of needed paramount importance. By simply topping-up one-way measures only devoted to a so-called The kick-off date has finally arrived: MiFID protection of the consumer there will be no (Markets in Financial Instruments Directive) is real added value to the Internal Market in terms in effect since 1 November 2007. Although of improving legal certainty for business and it should have been transposed into national consumers alike. laws by January 2007, many Member States were lagging behind and some are in fact still With regard to consumer information, the ESBG struggling with the adoption of the relevant considers that in order to avoid information implementation rules. These delays have overload and gaps, efforts must be made to shortened the preparatory phase available to the decrease the information requirements and industry and in some cases, have made it even to enhance consistency across directives. In impossible to be MiFID compliant on time. line with this, the ESBG very much welcomes the Commission’s plans to conduct tests to However, having made great efforts, most ESBG examine the needs of consumers in terms of Member banks have succeeded to be ready. pre-contractual information. The tests should be They now urge the European institutions, conducted directly with consumers and should and in particular the European Commission, take as a reference an “average consumer”, to adhere to the promise of a regulatory defined as an adult citizen, who pursues his/her pause, as time is needed to integrate all the activities responsibly by taking his/her decisions changes brought forward by MiFID in the banks’ based on the relevant information acquired daily business practice. Likewise, several years beforehand. will be required to identify and take advantage
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On the relationship between information application of the Better Regulation Principles. and advice, a clear distinction must be made Furthermore, the ESBG has repeatedly between the two. The consumer should be emphasised that integration should not fully and appropriately informed, but the final occur through product standardisation. In decision to opt for a specific financial product general, alternatives to regulation should should be taken by the consumer based on his/ also be considered. her own needs and circumstances. Providing professional advice is a separate service and In recent years, several studies in the area of should remain a matter of choice for consumers. European Mortgage Market Integration have Making advice a compulsory obligation would been published. They all suggest that integration mean that all consumers would have to pay for in European mortgage markets will be driven by a service only requested by a minority. Moreover, the behaviour of firms who are willing to enter it is not possible to standardise advice as it needs new markets by establishing a physical presence to be defined on a case-by-case approach. in that market, rather than by pure cross-border trade. Moreover, the studies also show a strong The ESBG also discourages the introduction preference by consumers to shop for mortgages of standardized products or services through within their national market. This has further legislative measures as this is likely to been confirmed by the reports published by lead not only to market distortions but the Mortgage Industry and Consumer Experts also to cross subsidization and a decrease Group (MICD) and the Mortgage Funding in product innovation. Financial institutions Experts Group (MFEG). In addition, in the field should be free to design products in response of mortgage funding, the Experts Group argued to customer needs and the economic realities of that lenders should be free to choose the the market. most appropriate funding methods, and that regulation should not distort funding Finally, it is important to recognize the role of choices. This view is fully shared by the ESBG. financial education as part of developing an EU consumer policy in the area of financial We understand that when drafting its White services. Although it is the responsibility of the Paper on Mortgage Credit, the Commission Member States – in line with the principle of is giving consideration to both Experts Group subsidiarity - to educate the citizens of Europe, reports, as well as to its own economic analysis, financial institutions play an important role in which is in the process of being finalised. contributing to a variety of important financial The ESBG has been closely monitoring the literacy schemes. In this context, the efforts made developments in the area of mortgage credit, by the European Commission to encourage and contributing to the discussion and providing the give more visibility and recognition to ongoing Commission with its views, as the representative initiatives in the field of financial education are of one of the largest European retail banking of great importance. This being said, we do not networks. believe that the Commission should venture into developing too detailed guidance in this field, as Payments Market Structure: the removal of this could be detrimental to innovation. barriers should not come at the cost of a pluralistic payment services offer Mortgage credit: no integration through product standardisation On the path towards European integration the Commission generally expects competition to be While the original publication date of the White fostered through the removal of existing national Paper on Mortgage Credit was May 2007, the barriers. Whilst this may be a necessary step in Commission's Directorate General for Internal some instances it should not be considered as Market first postponed publication to November sufficient on its own. In this large emerging and finally to 19 December 2007. internal market, account holders and payment service users can only be better off Commissioner McCreevy has stressed that if a variety of offers remains available. This European legislation in the area of mortgage requires not only that the expected consolidation credit would be proposed only if it could be of service providers has as a parallel the demonstrated that it would bring benefits for genuine unbundling of payment schemes and the Internal Market. The ESBG supports the infrastructures, but also that direct access to Commissioner in his approach, as an expression infrastructure remains a viable proposition for all of the Commission’s commitment to the payment service providers.
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Indeed payment service providers compete in approach, avoiding too detailed implementing the retail market for the provision of services measures. to account holders and payment service users. Payment service providers may use their existing Legislation in the area of anti-money laundering, position as members of clearing and settlement which implements rules on the identification of infrastructures to on sell access and settlement customers, could possibly result in restrictions services to other payment service providers with on the cross-border mobility of clients. In which they actually compete in the retail market. order for the impact of these problems to be It goes without saying that the latter will be properly identified, the ESBG welcomes the faced with an upfront and lasting disadvantage recommendation made by the Expert Group on in the pricing of their own products as the costs Customer Mobility in Relation to Bank Accounts, of access and clearing settlement services will be that the Commission should further analyse featured in on a “cost plus” basis. Where payment the impact of anti-money laundering rules on service providers are in addition shareholders of customer mobility in the EU. payment and settlement infrastructures, other opportunities exist to influence access pricing Providing access to finance for SMEs: an so that on the surface indirect access becomes ongoing priority the only viable proposition for many of their competitors in the retail market. As decentralized financial institutions with local and regional ties, Europe’s retail and savings Clearly, consolidation cannot be the sole banks have a long-standing relationship as parameter to vouch for the welfare of partners of SMEs and micro enterprises. With European account holders and payment a locally rooted network, our member banks service users. On the contrary, in a market are proximity banks and their local presence where clearing and settlement are moving closer is one of the reasons why ESBG members to becoming a commodity, other parameters are the main providers of finance for SMEs including true scheme and infrastructure in many European countries. As partners of unbundling, as well as guaranteed service SMEs, the ESBG is committed to take an active levels for interconnected infrastructures, will be part in working towards a better business and determinant for the serenity of pluralistic choice financial environment for European SMEs. The in the European account and payments market. ESBG believes in the importance of pursuing a dialogue with SME representatives for improving The fight against money-laundering: mutual understanding of the credit decision an analysis of the impact on customer making procedure and moreover, the ESBG mobility is needed determinedly seeks to promote and facilitate SMEs’ access to finance. In the context of fighting money laundering and the financing of terrorism, the ESBG Microcredit: Both banks and non-banks believes that close cooperation between need to be involved the regulators and the banking industry is of utmost importance in order to create a On the issue of microcredit which is currently regulatory system, which can provide all calling the attention of policymakers at EU level, parties with an increased protection against the ESBG believes in aiming for achieving a financial crime. As regards the 3rd AML comprehensive approach to support microcredit directive specifically, the ESBG has focused on in Europe, including all actors involved. We certifying that the Directive and its implementing are convinced that banks and non-banks are measures are feasible, appropriate and not important players in achieving a broader and disproportionately prescriptive. Throughout the deeper microcredit outreach, and this is why process, the ESBG has supported the view that a we believe that any policy initiatives in this risk-based approach requires flexibility as regards field must ensure a level playing field for all its implementation by the credit institutions. market players involved. The ESBG aims to continue working towards an appropriate implementation of the risk-based Contact: [email protected]
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WSBI launches International Remittances Capability Agreement
With the approval of the 2007 Full transparency of all charges and fees General Assembly, WSBI launches (including where relevant the foreign exchange the International Remittances rate) to both remitter and beneficiary; Capability Agreement. This Transmission of full amount to the beneficiary; Agreement combines a standard Guaranteed execution time; legal and operational framework Redress procedure including reimbursement in with support in existing tech- case of non-execution. nology solutions and addressing access to market barriers. It will assist WSBI’s 109 The Agreement further recognizes the critical members in 92 countries to further strengthen importance of the “first and last mile” their 1,2 billion customer base by delivering “fair dimensions. These first and last miles are the value” remittance services. distance separating a potential provider of remittance services from migrants. The dense The International Remittances Capability regional branch network of WSBI members on Agreement builds on the leading position of WSBI the sending and the receiving side is a distinct members in the provision of access to finance to advantage; but this proximity is also an asset hundreds of millions of people. The thrust of to bridge cultural, commercial and technology the initiative is to foster members’ capacities gaps. In this field, the low threshold of WSBI to provide remittance services in the account- members bank branches is also a plus. to-account space, which alone can ensure that Finally, the Agreement promotes the use remittances ultimately contribute to economic of account-based services, which alone can development and help members integrate these ensure that remittances ultimately contribute to remittance services in their products and services economic development. offer. WSBI President José Antonio Olavarrieta declared: With the International Remittances Capability “Migrant remittances are essential to many Agreement, WSBI puts at the disposal of its families and communities around the globe, members a set of model agreements (Master and they represent one of the most significant Agreement, Service Level Agreement) as financial flows received by developing countries. foundation for their bilateral remittances By approving this Resolution and promoting the agreement with other WSBI members. International Remittances Capability Agreement, WSBI Members continue their mission of The Agreement rests on a “fair value proposition” providing trusted services to retail customers which will bring end-to-end transparency and where they are needed. By leveraging their certainty standards to the remittance market wide distribution network WSBI Members will for both cash and account-based transactions. further contribute to bringing a more significant Concretely, the a minima terms of this fair value portion of remittances flows into the formal proposition are: financial sector, thus ensuring greater certainty and transparency for remitters and beneficiaries Transparent information on remittance alike”. Mr. Olavarrieta concluded: “We do not transaction conditions to be made available to consider remittances as just a transaction. We remitters and beneficiaries prior to accepting want remittances to be one of the doors to an instruction; access to finance, and to financial education”.
Contact: [email protected]
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WSBI contributes actively to meetings on inclusive finance
WSBI is active in various microfinance policy WSBI members will be invited to contribute. The forums with the objective to discuss the global Central Bank of Malaysia will host the Asian agenda on inclusive finance, present Members’ Regional Conference in 2008 with the support role and specificity in this field, and advocate for of Government Savings Bank (GSB) of Thailand the pluralism of financial markets. and KSAHF Foundation, Pakistan. Two regional conferences are planned as well in Latin America Turning the recommendations of the 2005 and Eastern Europe Year of Microfinance into reality An action plan for inclusive finance in WSBI participates in the United Nations Advisors Africa. Group on Building Inclusive Financial Services (UN AG) as a strategic partner. The UN Advisors The WSBI carries the voice of African Savings Group was created as a follow-up of the 2005 and Postal Savings Banks and contributes to Year of Microcredit. It is an ad hoc group that shaping the inclusive finance policy agenda gathers high-level individuals with the specific in Africa, through a multi-stakeholder group mandate to advise the UN Secretary General in supported by UNCDF as a follow up to the Year carrying forward the recommendations of the of Microfinance (the Dakar Declaration Steering Year of Microcredit. Committee (DDSC).
The 4th UN Advisors Group meeting took 10th Inter-American Micro Enterprise Forum place on 27 to 28 July in Nairobi (Kenya). The brainstorms about future trends in the Latin participants agreed on 7 working streams for American and the Caribbean microfinance 2007/2008: sector
The Inter-American Development Bank (IADB) Align the UN system around financial inclusion held the 10th Inter-American Micro Enterprise as an important part of the global develop- Forum from October 3-5 in San Salvador. The ment agenda; Forum was organised by the IADB’s Multilateral Establish a sustainable framework to support Investment Fund and the Ministry of Economy data collection to measure financial access of El Salvador. WSBI and its member in El across countries over a multi-year period; Salvador FEDECRÉDITO as well as some 21 Engage the private sector in expanding access financial institutions from different parts of the to finance; world sponsored and actively participated in the Engage in regional multi-stakeholder dialogues event. to examine regional challenges and con- straints; Establish a sustainable knowledge manage- ment and knowledge sharing platform; Perform advocacy activities; Perform regular administrative functions to support UN AG activities.
WSBI is actively involved in the Advocacy/Policy Regulation Group and the Engaging the Private Sector group, where it promotes the essential role of proximity financial institutions in promoting financial inclusion in a global scale. It is already clear from past debates that financial This year the Forum focused on the progress institutions are most interested and influenced achieved over the past decade by the microfinance by examples of their peers. In particular, the industry and the steps it must take to massively experiences of savings and socially committed expand poor people’s access to financial services retail banks are a point of reference of innovative tailored to their needs. In Latin America and and effective microfinance actions. the Caribbean there are some 60 million micro Next steps include regional conferences, to which enterprises, which generate nearly half of the
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jobs in this region and which are therefore the The event brought together more than 1,200 main source of income for many people. people learning about the latest developments and best practices for the micro enterprise sector Panels were held during the conference on and networking with other organisations and such issues as presenting and reviewing new institutions. Participants included leaders from microfinance strategies which provide more financial institutions, NGOs and their networks, ‘Opportunities for the Majority’, new trends and government entities, chambers of commerce products in microfinancial services, microcredit and industry, service providers, multilateral operations funded through capital markets donors, academia, unions and associations of services and measures to create a favorable microenterprises. business environment and determine factors in the formalization process of micro enterprises. Contact: [email protected]
New Members WSBI counts 109 members in 92 countries!
The 2007 WSBI General Assembly welcomed 6 The National Bank for Agriculture and Ru- new members: ral Development (NABARD), India, a public financial institution mandated to facilitate ru- Wachovia from the United States, the second ral development, in particular through the pro- largest US bank in terms of number of branch- vision of credit facilities (http://www.nabard. es (http://www.wachovia.com); org);
Housing Finance Company (HFC), Ghana, a Banco de la Provincia de Buenos Aires universal banking institution with a strong fo- (BAPRO), Argentina, a leader in mortgage cus on home loan and retail banking (http:// and personal loans, which mainly finances the www.hfcbank-gh.com); acquisition of homes by low and moderate-in- come families (http://www.bapro.com.ar). Lesotho PostBank (LPB), established in 2005 with a mandate to serve the un-banked and Following a reorganisation of WSBI membership under-banked population of Lesotho (http:// in Portugal, the individual commitment www.lpb.co.ls). of Montepio and Caixa Económica da Misericórdia de Angra do Heroismo (CEMAH) the Korean Federation of Savings Banks to WSBI was confirmed. (KFSB), which brings together 110 mutual savings banks active on the Korean market (http://www.fsb.or.kr/08_en/index_en.asp); Contact: [email protected]
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Can you afford to be a retail banker ?
This was the theme of the first ESBG Summer Forum, organized in the beginning of September. 37 managers from eleven countries debated with peers and high level specialists - some of them from the non financial retail sector - on strategies, business models and new perspectives for the retail banking sector in full evolution.
The forum highlighted the current challenges experienced by the retail banking market stressing that pressure on pricing, decreasing profit margins and constitution of heavy dynamic offer under different brands and market players in an ever changing regulatory platforms. Multi channel distribution should be environment were expected to continue in the part of the retail banking offer, but participants short and medium term. agreed that efforts should be made to meet the customer in his or her own environment. From a strategic point of view, participants highlighted that savings banks’ corporate identity, Simultaneously, the simplification of internal values and, in particular, their involvement in operations and the increase of banks’ corporate, social and responsible activities, differentiation in the marketplace should be should be part of their corporate offer and enhanced as this would have a positive impact exploited as a business competitive advantage. on cost structures. From an operational angle, participants think Last but not least, participants highlighted some that there is still room for improvement in areas of potential cross-border cooperation such the area of customer segmentation and that as industrialization and customer segmentation. this should be supported by scientific market Opening minds to international affairs could be researches in order to develop a more flexible and encouraged through bilateral study visits, using the ESBG as a hub on European affairs and
INTERNATIONALINTERNATIONAL SUMMERSUMMER FORUMFORUM ONON facilitator between Member banks. BANKING MANAGEMENT In conclusion: the event “as a première” was INTERNATIONAL SUMMER FORUM ON considered as a success by all participants, BANKING MANAGEMENT speakers and sponsors. The ESBG (European Savings Banks Group) is an international banking association that represents one of the largest European retail banking networks, comprising about one third of the retail banking market in Europe, with total assets of € 5,215 billion (1 January 2006). It represents the interests of its members vis-à-vis the EU Institutions and generates, France, 1 - 4 September 2007 facilitates and manages high quality cross-border banking projects. With its sister company – the World Savings Banks Institute (WSBI) they represent savings and retail banks or associations thereof. These are often organised in decentralised networks and offer their services throughout their region. WSBI and ESBG member banks have reinvested With the support of Bain & Company responsibly in their region for many decades and are one distinct benchmark for corporate social responsibility activities Contact: [email protected] throughout Europe and the world.
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Rue Marie-Thérèse, 11 B-1000 Brussels Tel: +32 2 211 11 11 Fax: +32 2 211 11 99 [email protected] www.esbg.eu © ESBG June 2007
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SIBOS 2007 is excellent showcase for WSBI
From 1 to 5 October, WSBI was present at SIBOS, an international conference annex trade fair for financial institutions, suppliers and consultants, aimed primarily at payments and securities transaction services. Sibos is one of the biggest events in the field, and this year’s edition, in Boston, drew more than 7000 visitors, all experts at high street financial institutions.
The added value of WSBI’s presence at SIBOS was clear: we positioned ourselves as an important player in the field of interest representation, SIBOS CONFERENCES consultancy, payments in the SEPA context – and remittances, thanks to our expert knowledge SIBOS is not only a trade fair, it is also and to our international network. a conference, where top-level experts discuss the latest developments in the field WSBI was one of the few European financial of payments, securities, trade finance and organisations present and we had the opportunity foreign exchange. On the following pages, to explain our activities and priorities to a you will find an overview of the main topics. wide range of financial institutions and service providers and returned to the office with a lot of interesting contacts and opportunities. It was also very rewarding to notice how our PAYMENTS MARKET membership model, with a wide geographical and business diversity of members is attractive Regulatory drivers and concerns for a wide range of financial institutions and Regarding the Single Euro Payments Area (SEPA) associations. – again one of the major themes of this year’s SIBOS – the European Central Bank described The WSBI presence at SIBOS was also greatly the regulatory guidance as a “constructive enhanced thanks to the active participation of criticism” for the banking industry. The short- the Spanish Confederation of Savings Banks term benefits of SEPA may be measured in (CECA), the German Savings Banks Association volume cost reductions, whilst in the long- (DSGV), Erste Bank (Austria) and Groupe Caisse term it promises to revolutionise EU payments d’Epargne (France). These WSBI members, which services, making the area more competitive. The did not have a stand of their own, displayed their ECB emphasized that the coexistence of national logos at the WSBI stand and frequently used and pan-European infrastructures – even during the two meeting rooms that were available for a limited period of time – will be costly and bilateral meetings. encouraged endeavours for e-SEPA to ensure competitiveness. In clearing the ECB sees a trend SIBOS is an outstanding opportunity for towards bilateral bank partnerships and ACH WSBI and its members to position them on interconnectivity or consolidation – such as the a truly international and highly professional joint German and Dutch “Equens” – to achieve platform. The next edition of Sibos will take critical mass of over 10 billion transactions a place in September 2008, in Vienna (Austria). year. The ECB does not believe it would serve the We already invite now all members that industry to have a single ‘super-ACH’ - although are interested in setting up a joint project TARGET2 could serve as such. for the event, to contact the WSBI/ESBG joint office or to send a mail to dirk.smet@ SIBOS also witnessed intense discussions on savings-banks.com. regulation’s impact on market development. Five years after the implementation of the Sarbanes-Oxley regulations in the US, and before the implementation of the Markets in Financial Instruments Directive (MiFID) in Europe, experts
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SIBOS 2007
debate how to achieve a balance between eurozone and the EU), the need for banks to rules- and principles-based regulation. The re-evaluate their distribution models and value debate about the regulatory paradox is still propositions to clients, reconsider their sourcing ongoing – industry experts regularly point out practices and decide whether to support SEPA that regulatory action creates more challenges in-house or outsource the processing and/or than solutions. technology components. A further challenge is to balance cost expansion with revenue Europe – the SEPA kickoff and prospects growth and delivering value added products in an increasingly commoditised market, with The industry pointed out its lasting concerns accurate data management and reconciliation as to SEPA’s rationale: it is not viewed as a real for corporates. business case due to an uncertain return on investment. The complexity of implementation A substantial number of banks will be ready and lack of engagement of the public sector to both send and receive SEPA Credit Transfers (accounting for 20% of payment transactions) by 28 January 2008, while smaller banks may that should “communicate further on SEPA” first receive only but are expected to send in and be pioneer in the adoption are further the course of 2008. The SEPA Direct Debit will concerns. In addition banks need clarity in their be delayed until transposition of the Payment value proposition to customers, corporates are Services Directive into the national laws of uncertain about the services they can expect EU Member States by November 2009. With from 2008 on. the SEPA Direct Debit corporate clients would like to avoid renegotiating contracts with their customers and do not favour re-issuing mandates. Regarding SEPA for Cards, banks already issue debit and credit cards supporting the EMV and PIN standards.
Large multinational banks motivated by multinational corporate clients may have the greatest interest in SEPA. Banks with multilateral flows are likely to process via a pan-European ACH (such as EBA’s STEP2) rather than bilaterally, whilst national ACHs are seen as best equipped to handle local language and local business culture requirements and provide support services to banks that have either mostly domestic, low The top 100 European banks will spend over cross-border volumes and/or less automated EUR 3 billion for the SEPA project – this will bring connectivity infrastructures. increased competitive pressure for margins, and research predicts that eurozone banks can With SEPA driving standardisation and price lose over 60% of payments-related revenues compression across European regions a question following the introduction of SEPA. With is whether the same standardisation will spread bankers questioning whether payments can be a to the rest of the world. To most delegates profitable business, SEPA is expected to result in it seemed likely that internet and mobile payment institutions coming on board or banks phone technologies will drive standardization. opting out of the transaction business, banks making bilateral processing arrangements, and TARGET2 national ACHs consolidating or adjusting their business models. The convergence of high- and The new European RTGS system operated by the low-value payments processing is also expected European Central Bank will go live in November to alter existing business models. 2007. It will replace the current decentralised system with a single technical platform and Major challenges for the industry remain the provide users with a homogeneous payment wide scope of SEPA (i.e. countries outside the service throughout the EU.
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SIBOS 2007
TARGET began operations in January 1999 by around 8% each year. Banks have long when the Euro was launched, with a focus ignored this business and focused on high- on large-value payments related to monetary value payments and the cross-border payment policy and interbank operations. According to needs of corporates rather than migrant the ECB TARGET2 will give pan-European banks workers. Now banks recognize the importance the possibility to centralise their payments back- of the remittance market, yet many challenges offices and liquidity management. Economies remain to entry: settlement on a global scope, of scale and scope will lead to sizeable cost agreement on charging practices and currency reductions. The migration of country groups to conversion, speed and STP processes, regulatory TARGET2 will take place in 3 different windows compliance. in 2007-2008 (November, February and May) - a fourth window being held in reserve as a contingency measure.
Three Eurosystem central banks (Banca d’Italia, Banque de France and Deutsche Bundesbank) jointly provide the single technical infrastructure (Single Shared Platform or SSP). A TARGET2 directory will be downloadable from the ECB website from 16th of November.
US payment systems challenges met by a reform
The two main components of the US payments infrastructure – the US Federal Reserve (Fedwire and FedACH) and the clearing house (CHIPS) – Banco do Brasil presented how it captured a are in the process of migrating to IP technology. considerable share of the country’s remittance Experts believed that US experience with the market by offering competitive prices, speed of payments infrastructure reform could teach payment, and forging partnerships with other Europe lessons on ensuring end-user value-add selected banks and money transfer operators to and confidence. As a result of the migration, the provide more than 400,000 points of service to Federal Reserve is able to offer a variety of access remitters. solutions that provide direct, flexible, secure and reliable access to Federal Reserve information Boosting New World economies and critical payment services. In today’s global marketplace, emerging Most delegates and panellists agreed that markets in Asia, Latin America and Africa the biggest challenges facing US payment have become areas of significant interest for infrastructures are integration with other investors seeking to broaden their portfolios, payments infrastructures in the world, but risks are still high due to infrastructural responding to the global standardisation of shortcomings (telecommunication, controls, and US dollar transactions with other major money exchange) and political instability. Consolidation centres, and integrating between existing and standardization are key factors in building processes and infrastructures at home. That the investor confidence. US domestic payments infrastructure is now IP- based and highly resilient and reliable is seen as Some countries were said to feature a “major an advantage in this context. disconnect” between the capital market and the underlying ‘real’ economy. If emerging markets Remittances simply seek to replicate the capital markets of developed countries, the result may fail to Of the 200 million migrant workers in the support the domestic economy and fall short of world, around two-thirds regularly send money long-term benefits. In some countries classified home, in total some USD 375 billion increasing as ‘emerging’ on a GDP per capita criteria
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there may be a large, diversified underlying between the desire for greater consolidation on economy that would benefit from a strong one side and more competition between CSDs capital market designed to encourage foreign on the other. In the view of the ECB a central investor participation. South Africa and Malaysia platform will benefit competition amongst are two such examples. banks, brokers, custodians and CSDs.
TARGET2 Securities An independent consultant painted a picture of the post 2013 European exchanges infrastructure The ECB presented the need for an integrated landscape. In spite of recent moves towards securities settlement infrastructure in Europe consolidation through mergers and acquisitions to make cross-border settlement as cheap and and competition through MiFID, his conclusion efficient as domestic settlement as an industry was that in 2013 each country would still have consensus. The drivers highlighted were: the at least one stock exchange and its own CSD. insufficient level of integration of infrastructure Others expect mergers and acquisitions to result in Europe, the high number of cross-border non- in a small number of groups of exchanges interoperable CSDs. coalescing around the NYSE Euronext, NASDAQ, Deutsche Börse and London exchanges. Euroclear recalled that reforms required include the elimination of the 15 Giovannini Group barriers, harmonisation of market rules and practices, and the removal of fragmentation through greater consolidation of clearing and settlement infrastructures.
Despite consensus on end goals, the appropriate solution is not agreed by all stakeholders. Euroclear would integrate several settlement facilities around Europe. The ECB promotes TARGET2-Securities (T2S), a pan-European facility to settle euro-denominated securities in ECB money through the TARGET2 real-time gross settlement system. T2S has long been Corporate actions promoted by the European Commission and the Eurosystem to vastly reduce the cost of Corporates see that globalization has a Eurocentric cross-border processing by 2013. There is still focus, since harmonization tends to eliminate debate on whether a pan-European settlement problems caused by regional differences and system should be controlled by a commercial inconsistent market practices. The wide use of or non-commercial entity. According to the the SWIFT-led ISO 15022 messaging standards ECB a neutral, non-profit operator is the only facilitates data reconciliation in asset servicing. solution for avoiding a single operator to exploit Corporates call for increased automation, in monopoly power. Euroclear and Clearstream particular for issuers and servicing agents to have concerns about separating transaction introduce universal use of electronic facilities in settlement processing from asset servicing – T2S order to achieve STP. not providing the latter. Such needs are also described in the white Clearstream expressed doubts that cost reduction paper released by The Association of Global targets were achievable and voiced the concern Custodians in June, which highlights the costs that governance arrangements did not allow and handling problems encountered by banks sufficient CSD representation. They suggested when non-uniform or paper-based methods that standardising and harmonising collateral are used for corporate actions. The report management could deliver much more quickly urges “progressive change at every stage of the many of the supposed benefits of T2S. They communications stream”. Hedge funds are also fear losing the natural synergy between custody expanding and their assets under management and settlement in areas such as market claims (AUM) are increasing, with a crucial need for and entitlements, and that due to lack of standardization. interoperability CSDs may not be able to reduce fees even after outsourcing settlement to T2S. Another debate is the apparent contradiction Contact: [email protected]
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WSBI offers scholarships on Branch Management with the support of the Belgian Technical Cooperation
In 2007, the WSBI has created a new banking Cooperation is willing to promote and finance course, mainly targeted to branch managers the participation of other countries – where within the WSBI network. The course was WSBI has members banks: Algeria, Benin, Bolivia, organised in five modules delivered by a group Mali, Morocco, Peru, Senegal, Tanzania, Uganda of trainers, each of them having wide hands- and Vietnam. on expertise in their respective module and the beneficiary country. WSBI has found in the Accordingly, the WSBI is working on the Technical Cooperation Office of the Belgian organization of this new course of one month Government a prestigious partner. in Brussels or in another country for specific modules. Several members have already shown Already in June 2007, the WSBI was able to their interest. offer this course to a delegation of 15 branch managers from PostBank Uganda. Following this successful experience, the Belgian Technical Contact: [email protected]
Savings Banks Academic Award 2008
The European Savings Banks Group (ESBG) strongly believes that it is of prime importance to encourage and support research on savings banks in order to appreciate and to improve awareness of the characteristics of savings banks, both against the background of the European retail banking sector and of the world of banking in its different dimensions.
The celebration of the 2008 edition will be held in Brussels at the occasion of the European Conference on Savings Banks History:
”Savings Banks: Main Builders of the Regions” Brussels, 2 October 2008
The deadline for the 2008 Award edition is end November 2007. Candidates who still want to apply for the Savings Banks Academic Award, are invited to contact their national coordinators.
More information on : http://www.esbg.eu/savings_banks_academic_award.aspx or contact : [email protected]
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WSBI/ESBG Reception at the occasion of the World Bank/IMF Meetings
On 19 September 2007, WSBI and ESBG held their annual joint reception, at the occasion of the annual meetings of the World Bank and International Monetary Fund. This year, the reception took place in Washington DC, at the National Museum of Women in the Arts, a beautiful building in the heart of the US capital. It was attended by more than 300 delegates from banks and financial institutions, governments, supervisory authorities, international organisations. The WSBI members that participated at the Board and the General Assembly organised earlier that day, were also present in large numbers and appreciated the networking possibilities. The reception was kindly sponsored by the following WSBI/ESBG members: Associazione Di Fondazioni E Di Casse Di Risparmio Spa (ACRI), Confederación Española de Cajas de Ahorros (CECA), DekaBank, Groupe Caisse d’Epargne, Sberbank and SNS Reaal.
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Bank Management Simulation Seminar
In July 2007, participants from financial In the framework of the virtual Swiss banking institutions in Croatia, Slovakia, Albania, market recreated by the simulation software, Romania, Slovenia, Belgium, Ethiopia and participants gathered into four different groups Tanzania participated in Brussels at a Bank in order to manage four different banks, namely, Management Simulation course organised by “The First Cash Cow”, “The Swiss Popular WSBI-ESBG in cooperation with the Savings Bank”, “ABC Trust Bank” and “The Swiss Banks Foundation for International Cooperation Favorite Bank”. The simulation was run for four consecutive periods in which participants had The Bank Mangement Simulation, entitled the opportunity to manipulate interest rates on “Bank Strategies and Operational Decisions in a assets and liabilities, investments in shares and Competitive Environment” is a highly interactive bonds, equity increase, marketing investments training tool, in which participants experience and human resources policies. Results obtained the results of the strategic decisions taken over by each bank (financial statements) and market the operational results of their “virtual” bank. & competition reports were presented and Moreover, the software allows for each virtual discussed in plenary at the end of each period, bank to enter into direct competition with other having the share price as a benchmark for the participating banks and to compete for market best performing bank. share. The WSBI-ESBG has been running simulation The seminar helps participants to improve trainings for four years now. The simulations management skills. In particular, participants can be organised under the form of seminars, are expected to experience how to develop with participants from different financial and review a strategic approach of a modern institutions and countries, or under the commercial bank under the conditions of form of local workshops, with participants strong competition. The simulation also allows from within the same institution. The WSBI- participants to improve the assessment of ESBG is at your disposal for any enquiry with market opportunities and market risks as well regards to this programme. as improve participants’ skills in controlling the effects of their decisions on the success of “their bank” in the course of the future economic and Contact: [email protected] market development.
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WSBI takes part to the 1st Global Forum on migration and development
The 1st Global Forum on took good note of the suggestion to issue Migration and Development migrant ID to facilitate access to bank accounts. (GFMD) took place in Brussels on 10/11 July 2007, at the invitation The government of the Philippines has offered of the Belgian government. It to host the 2nd meeting of the GFMD in 2008. brought together about 700 government representatives WSBI also attended the 9 July Civil Society from 150 developing and Day, which gathered a broad range of non- developed countries to discuss practical ways governmental actors to discuss the migration of strengthening the mutually beneficial links and development nexus and give input between migration and development. Its purpose to the governmental discussions. It took a was to examine how migration can contribute specific interest in the session on Measures to to development and how migration policies increase the development value of remittances: should be integrated as a positive factor in Formalisation and reduction of transfer costs development policies, including in the context of and ways to enhance the micro-impact of the achievement of the Millennium Development remittances on development to the benefit of Goals. The Forum was honored by the presence the wider community. of Belgium King Albert II and Prime Minister Verhofstadt, UN Secretary General Ban-Ki moon Contact: [email protected] and European Commission President Barroso.
Although the GFMD was conceived as a government-only forum, WSBI was invited to contribute to the roundtable dedicated to Remittances and other diaspora resources: Increasing their Net Volume and Development Value and more specifically to the session on Increasing the micro-impact of remittances on development, as a representative of the financial sector. The objective was to discuss tools and incentives that may be defined by governments- in partnership with other stakeholders- in order to make remittance-related savings benefit more than their sole recipients.
WSBI presented some proposals for specific actions by international organizations and public authorities, with a view to encourage the flows via the formal financial system and the creation of an enabling environment for adapted, affordable and safe remittances services. It also emphasized that the role of the governments should concentrate in supporting the formal financial sector to engage more actively in the remittances business, while not interfering with the market. Representatives from the 20 governments and governmental agencies attending welcomed the recommendations and specifically underlined in their conclusions the need to develop synergies with actors involved, especially the financial sector, to build inclusive financial sectors, provide migrants with adapted and efficient banking services and facilitate the access to financial and payment infrastructures. They also
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Training on entrepreneurial branch management at Kenya Postbank
The training, organised by WSBI at Kenya the recipient, who then withdraws it as cash at Postbank for the members of the Eastern African another Safaricom shop.This service is yet another Savings Banks gathered 30 participants and indication that the financial services market covered the themes Customer Service, Customer is rapidly shifting away from the traditional Relationship Management, Leadership and Staff bank branches in favor of alternative delivery Motivation. As in Europe, African members face channels. Even more importantly it definitely the challenge to transform their institutions increases access to finance in the rural areas. in customer centric organisations with the appropriate human and technological support in Chris De Noose and Mrs. Koigi meet with order to identify, segment, organise and create Kenyan Central Bank adapted products and services. The challenges remain the same on both continents: know your Last but not least, the seminar was enhanced client, meet your client where he/she is, act in by the presence of Chris De Noose, Managing a proactive way. The training concluded with a Director of WSBI who accompanied Mrs. Koigi, team-building exercise which allowed identifying Managing Director of Kenya Postbank to the quickly a leader in the group. The seminar was Central Bank in order to discuss the future of the so successful that WSBI was asked to provide institution and to support Kenya Postbank in its it again before the end of the year to another strategic attempts to move into mainstream retail group of 30 Postbank branch managers banking. The Central Bank could appreciate the progress accomplished by Kenya Postbank and Kenya Postbank introduces Mobile Money their positive results, the important role played by savings banks in general and Kenya Postbank Besides the training itself, this event was also in particular in facilitating access to finance as the occasion to visit several branches and to be well as the support provided by the WSBI to its introduced to the brand new service of Kenya members. In this respect allow us to highlight Postbank: M-PESA. This service provided in that training events are also an opportunity for partnership with the local telecom company lobbying local authorities and increasing the Safaricom allows to transfer money via the visibility of the local members on the financial mobile phone. In practice, senders hand over market. funds to a Safaricom shop, that coverts it into ‘mobile money’ that is transferred by SMS to Contact: [email protected]
19 Consultancy SERVICES
ESBG develops regulatory and supervisory frame- works in Angola
At the end of September 2007, a international best standards. Absence of such senior ESBG consultant travelled frameworks is a barrier to the emergence of to Luanda (Angola) to commence NBFI’s into the market, as they need to be the assignment “Development of authorised by BNA. Non Bank Financial Institutions (NBFI) Regulatory and Supervisory The technical assistance to develop the regulatory Frameworks”. This project, for and the supervisory frameworks also includes which the contract between ESBG and the training to relevant BNA staff on implementation World Bank was signed in August 2007, aims to of the resulting frameworks. In addition, in order promote the development of the NBFI sector in a to increase the staff’s awareness of best practices, diverse, modern, safe and sound manner. a study visit may be organised to countries in the region that have already developed and The main beneficiary of the technical assistance implemented similar regimes. is the Banco Nacional de Angola (BNA). Objective is to bring the regulatory and supervisory framework in line with the recently adopted Contact: [email protected] umbrella Financial Institutions Act and with
Syrian banking executives improve management skills via ESBG Training
In July 2007, ESBG was awarded a contract accompanying materials (in both English and “Management Skill Development Training Arab), training will be delivered to senior staff Programme for the Banking Sector in Syria”. The of commercial and central banks. By delivering overall objective of the programme is to assist the training, it is hoped that the gap in training the development of the institutional capacity skills and knowledge are filled in order to of the banking sector by improving the skills of prepare staff for taking the lead in the changing staff and management of the Central Bank of process in the Syrian banking sector. Another Syria and the 6 state-owned banks. In addition, objective is to develop the managerial skills the project will support the continuing building of key staff placed in leadership, managerial of managerial knowledge and thus creating and supervisory positions, and to improve staff ownership for the changing process of the management practices, for instance in the fields Syrian banking sector. of performance management and appraisal.
Following an analysis of the banking sector and preparation of course programmes and Contact: [email protected]
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Spanish ESBG Member CECA and Bank of Spain receive a delegation from Bank of Russia
In November 2006, ESBG was In order to present European best practices, awarded a contract “Transition ESBG Consultancy Services is involved in the to International Financial arrangement of five study tours for a certain Reporting Standards (IFRS) in number of Bank of Russia participants to banks the Russian Banking Sector”. in several EU countries. The project is funded by the European Union and managed The first study tour was successfully completed by PricewaterhouseCoopers Moscow in in June 2007 with a visit to the Bank of Spain cooperation with ESBG Consultancy Services and to the Confederation of Spanish Savings and FBK Company Moscow. Banks (CECA) in Madrid. The tour included meetings with Bank of Spain representatives to The overall objective of the project is to assist the discuss the process used to convert to IFRS from Russian Banking sector and the Bank of Russia in the accounting methodology and supervision application of international standards principles in viewpoints. The tour also included meetings bookkeeping and accounting and in preparation at CECA who have gone through the process of financial reporting in accordance with IFRS. of converting to IFRS. The feedback given by Another goal is to enhance professional skills participants of study tour to Madrid as for the of bankers in order to improve the business and usefulness and knowledge gain of the study tour investment climate in Russia, in the perspective of received the highest ratings. a Common Economic Space (CES) between the Russian Federation and the European Union. Contact: [email protected]
Voluntary Use of the WSBI logo
The WSBI General Assembly, gathered on 19 October, has decided to allow WSBI members to use the WSBI logo in addition to their own logo in their business premises, and this as part of the business cooperation initiatives launched in the framework of the International Business Network. This will be a strong signal for external stakeholders and decisionmakers that savings banks develop international cooperation initiatives. The use of the WSBI logo will also enable customers to identify the members of the WSBI network outside of their home country and take advantage of the global WSBI network for commercial purposes.
The use of the WSBI logo is done on a purely voluntary basis and does not impose any new requirements to those opting in. For more information, do not hesitate to contact the WSBI/ESBG joint office.
Contact: [email protected]
21 cONSULTANCY SERVICES
ESBG Consultancy finalises a project for Postbank, a member of the South African Post Office (SAPO) group.
So why did you think of ESBG to do this consultancy mission?
From the beginning, we wanted to work with a specialised consultancy, that does not have a “one size fits all approach” but endeavours to deliver tailored work for its clients. And ESBG Consultancy, thanks to the efforts that have been done by its parent organisations ESBG and WSBI in the field of postal savings banks and postal institutions, has acquired a very extensive and specific knowledge. This was very important The study was commissioned to assist SAPO to us. in designing an appropriate regulatory framework to govern the activities of How do you evaluate the work of ESBG Postbank as it establishes itself as a distinct Consultancy? corporate entity and consequently enters into the arena of regulated financial institutions. They did good research and approached a News and Views asked Ms. Totsie Memela- wide range of stakeholders: the South African Khambula, Managing Director of Postbank Reserve Bank, National Treasury, Ministry of why she commissioned the study. Communications, and Postbank committee (subcommittee of the SAPO board). The experts Totsie Memela-Khambula: The new board of were very business minded and came up with SAPO is aware of the changing legal and some very good practical guidelines, which we business context in our country which will will now sell to our stakeholders. impact on the corporatisation of Postbank, but Overall, I would certainly recommend ESBG also sees perspectives and opportunities in the consultancy services, because of their particular international landscape. The board wanted to understanding of our situation “in the field”. do a regulatory benchmarking of the Top 10 comparable institutions and wanted to know Thank you very much, Ms. Memela-Khambula, how this institutions were regulated once they for your time and your kind words. were corporatised/privatised, taking into account the corporatisation of Postbank. Contact: [email protected]
22 wsbi/ESBG MEMBERS CSR EXPERIENCE
News and Views dedicates a series of articles on Corporate Social Responsibility strategy and experiences developed by WSBI and ESBG members, as a bottom line of their business model and with the objective to bring a return to stakeholders and to society.
AUSTRIAN SAVINGS BANKS ASSOCIATION DIE ZWEITE SPARKASSE* DIE ZWEITE SPARKASSE was instigated by ERSTE Foundation, the majority shareholder of Erste Bank Group, and established in cooperation with Caritas as well as debt counselling services, provided with a seed capital of 5.8 million Euros. It offers an account for people who experience financial trouble and who do not get any access to bank services. The “Bank for People without a Bank” is operated so far by voluntary staff and pensioners of Erste Bank and Tiroler Sparkasse. “From the opening of ‘Die Zweite Sparkasse’ in November 2006, more than 900 people have obtained bank cards enabling them to make cashless payments instead of using costly payment slips. “These advantages of a regular bank relationship are very important, in particular if you need to get back on your feet after a distressful situation“ says the voluntary chairwoman of the board of DIE ZWEITE SPARKASSE, Evelyn Hayden. Cooperation with Caritas und debt counselling services The credit account is not a single product, but forms part of a complete package of counselling and support services provided by Caritas or debt counselling services. The “credit account” was devel- oped in close cooperation with these institutions. In Vienna, die Zweite Sparkasse also cooperates with Magistratsabteilung 40 (Social Welfare) of the city of Vienna, the local social aid scheme of Vienna (Wiener Hilfswerk), the association “Dialog” for people with addictions, and the association “Neustart”, which assists delinquent people. In order to be entitled to such an account, which is limited to three years so far, customers must not have any account with another bank, and must already use the services of one of these organisations and be recommended by them. The step forward into the Provinces Once the pilot stage of the project successfully completed, the first step forward into the provinces was made with the opening of the second branch office in Innsbruck. Further branch offices will be opened in Salzburg on 22 November 2007, as well as in Klagenfurt and Graz in the 1st half of 2008. The products of Die Zweite Sparkasse basic account including a bank card; an investment account with increased interest rate; an optional building loan contract (s-Aufbau-Bausparvertrag);as well as the following products thanks to the cooperation with WIENER STÄDTISCHE: legal advice service, available once per quarter and free of charge; and a free-of-charge accident insurance, which are both automatically available when opening an ac- count; and an optional home owner insurance at a particularly low rate.
”Support of counselling organisations is indispensable,”… …says Reinhard Ortner, head of the savings bank council of Die Zweite Sparkasse. “The project ‘Die Zweite Sparkasse’ could not have been developed without the competences and the advice of the counselling organisations. However, their support is even more important for the current operations. Thanks to the contribution of the counselling organisations, ‘Die Zweite Sparkasse’ achieved a good reputation within short time, in particular with the employers. People, who provide of an account with ‘Die Zweite Sparkasse’, are on the best way to get back on their feet.” The director of Caritas, Georg Schärmer, said on the occasion of the opening of the second branch office in Innsbruck, “Die Zweite Sparkasse is a powerful and concrete symbol for our country. The work of Caritas aims, above all, at giving people a second chance. A bank giro account is something like a basic requirement for being integrated into our society. Here, we provide cooperation of competent savings bank staff and staff from the social sector in order to offer people a new perspective for the future. Thus, the basic task of Caritas – help to self-help – can be realised even better. “ Markus Jochum, chairman of the board of Tiroler Sparkasse, draws an analogy with the foundation of the savings banks in 1822: “In those days, the savings banks were also operated by voluntary staff, with the aim to provide to the people in the region financial protection and security. And similar to such concept, today’s new savings banks enable people with lack of access to bank services to take part in economic life.“ Contact: Erste Stiftung, Die Zweite Sparkasse, Maribel Königer, [email protected]
* In English, « Die Zweite Sparkasse » means « the second savings bank », a pun on the name of Austria’s biggest savings bank Erste Bank, litterally « the first bank ».
23 Training services
Ten years of sharing innovations in the savings market
At the occasion of the publication of the Investor’s preferences for different financial study “Ten years of sharing innovations in distribution channels the savings market” and the ten years of Impact of I.T. in the transaction of small sav- training services offered by WSBI-ESBG, News ings products among small investors & Views offers in each issue two interviews The role of agents in mopping small savings with representatives of the institutions that collections have presented a case study on savings mobilisation. After Sri Lanka and Colombia, For conducting market research on the above it is now the turn of India and Mexico. topics, a random sampling method based on a questionnaire was adopted.
Partnerships with individual agents serve both to create employment and to enlarge access to finance country-wide. How does Case study: Facilitating Depth NSI identify, train and hire agents? and Breadth of Financial Outreach in India NSI has been appointing the agents since 1971 onwards and to date around 500,000 agents Interview of Anil Bhattacharya are working all over the country, of which Director, National Savings Institute, India 150,000 are female agents. Before appointing those agents, credentials are examined i.e. background, educational qualification and health. Once a person has been selected by the Market research is a powerful tool for NSI NSI as an agent, he has to undergo a training to design products adapted to customer on the various aspects of the mobilisation of needs. Taking into account the size of your resources i.e. product knowledge, marketing network, but also the immensity of your skills, competitive activities, knowledge of the country, how is this research undertaken area, behavior of different customers. Once and what does NSI do once a newly detected they start working as an agent, they are paid need is identified? 1%. Female agents, especially in the Post Office Recurring Deposit Scheme where the agent has National Savings Institute was restructured in to go door-to-door to canvass the product of 2003 and has been working in the field of NSI, are being paid 4% commission. mobilization of resources over the last 50 years. One of the mandates of the newly restructured Redressing customer complaints is an NSI is to focus on market research. NSI has created important part of NSI’s mandate. How products that cater to different segments of the helpful are customer complaints to NSI in its customers i.e. low income group, middle income product design activity? group, higher income group, tax payers, non-tax payers, school students, farmers, carpenters, NSI gives great importance to the customer small shopkeepers, industrial workers, retired service and is also very sensitive towards officers/officials. This was done purely on the redressing the customer’s complaints since NSI basis of feedback received from the different is marketing financial products of the Indian distribution channels, the branch network and Ministry of Finance. We manage around 50 the customers from the different segments. million customers all over the country, and any complaint received by the NSI is redressed Recently we have undertaken research in the within 15 days whether the complaints are following areas: received via post, telephone calls or through the Distribution of account and collections be- website. We also receive suggestions from the tween tax and non-tax payers investors regarding their needs and to make Product preference of different age groups the existing products more attractive. Based on Distribution of collections between urban and these suggestions, we have already created new rural areas products, such as the Senior Citizen’s Savings Investment patterns among different income Scheme. groups
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The growth in financial terms of our three new has a balance of approximately 1,000 dollars branded products (“Hapan”, Punchi Hapan” and, at least in the case of the cooperatives, to and “Ithuru Mithuru”) also indicates the success become a client, people have to put down the in product brandings. joining share, which can be anything from 60 to 200 dollars. This makes the products these entities offer inaccessible to some of Bansefi’s customers. Finally, the interest rates that these entities pay on savings and investments are Case study: Channeling domes- situated between 4% and 7% per annum. tic resources through the for- mal financial sector. Hence, rather than being in competition with the entities of the popular savings and credit Interview with Javier Gavito Mohar, General sector, Bansefi takes a complementary position Manager Banco Nacional del Ahorro y de los by offering the most basic savings and payment Servicios Financieros (Bansefi), Mexico products to low income groups, thus enabling them to build up the financial means required to access the products offered by the other entities.
As a two tier bank, which serves both Additionally, in its second tier role as bank to the individual customers and other financial banks, Bansefi has a complementary function entities, is there a conflict of interest for vis-à-vis the popular savings and credit sector. In Bansefi, given that the said entities could this role, Bansefi carries out two main activities: compete with Bansefi in the market for individual customers? If so, how would such It administrates and promotes the project of a conflict be resolved? consolidating L@Red de la Gente
Bansefi carries out limited first tier activities and It provides solutions to the entities of the second tier activities in support of the popular popular savings and credit sector, enabling savings and credit sector. As for first tier activities, them to offer their members and customers Bansefi offers its customers, through a country- specialised financial products such as: wide network of nearly 500 branches inherited from the transformation of the National Savings Handling cash Institute (Patronato del Ahorro Nacional) basic Handling deposits savings and payment products, among which Trusts an instant savings product, with or without debit Electronic national and international money card, and a saving by instalments product stand transfers out. The customers who traditionally save with Debit cards Bansefi tend to come from low-income groups, Buying and selling of foreign currency as they can open an account with a little less Receiving third-party payments than 5 dollars. In light of the aforementioned, the average account at Bansefi has a balance of And soon: a little under 150 dollars and the interest rates payable are between 1% and 2% per annum. Credit cards Cash machines and sales point terminals However, the 124 entities of the popular savings Investment partnerships and credit sector which are affiliated to L@ Red de la Gente (the people’s network) have Finally, it is important to point out that to avoid a network of branches comprising 870 outlets any potential conflict of interest, Bansefi has distributed throughout the country. On the other two completely independent business structures hand, there are Bansefi branches in only 143 of to carry out it two functions, those of first and the 710 municipalities where L@Red de la Gente second tier. The second tier business, called has a presence. These entities offer savings, Banca Institucional, deals with the first tier investment and credit products to their members business, called Banca Comercial, as if it were in the case of the cooperatives, and to their just another entity of the popular savings and customers in the case of the popular lenders. credit sector. The typical customers of these entities tend to come from slightly higher income groups than Bansefi’s customers. The average savings account
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L@red de la Gente has brought great benefits to the associated entities. What about the Up to now, the market for sending remittances risk that a global brand could eclipse the to Mexico has been a transactional market, with individual brands of those entities? prices determined by commissions and margins depending on the exchange rate applied. The When L@Red de la Gente was created, the remittances market is controlled: members agreed to work under a “co-branding” scheme in which the brand of each member in sending by companies specialising in send- would go hand in hand with the L@Red de la ing money (Moneygram, Western Union, Gente brand. Under this scheme, the brand of Sigue, Vigo, Dolex, etc.) each member brings its local value to L@Red de in liquidation by commercial companies, de- la Gente, the tradition of good service and the partment stores and financial institutions, who proximity to their communities of the popular favour payment in cash savings and credit sector entities. At the same in arbitration by a company that handles about time, the L@Red de la Gente brand brings the half of all transactions. The rest of the transac- sense of belonging to the third most extensive tions are handled directly between the sender financial network in the country, as well as and the liquidator. access to standard specialised financial products and services such as national and international Under this scheme, the total cost to the sender remittances, and distribution of governmental is around 5% for an average remittance of 300 programmes. dollars. Of this 5%, approximately 3 percentage points represent the direct cost of the commission It is important to point out that L@ Red de la charged and the other two percentage points Gente is governed by its members. Among will be the margin that comes from the exchange its resolutions it was decided to distinguish rate applied to the transaction. Of this total between three types of financial products and cost, the sender shares between 7% and 20% services: with the liquidator, depending on the relative negotiating capacities of the two parties. Those products and services to which joint marketing under the same brand gives added Since it was created, L@Red de la Gente has value by being promoted under the name L@ aimed to offer its members and customers the Red de la Gente. National and international best possible conditions for receiving remittances. remittances and distribution of governmental This is why L@Red de la Gente has promoted the programmes fall into this type of products. sending of money from account to account Those products and services which each mem- to reduce the costs and incorporate migrants ber develops and markets individually under its and their families into the financial system on own brand, which includes the majority of sav- both sides of the frontier. The Directo a México ings and credit products. (Direct to Mexico) system, developed by the Those products and services developed and Bank of Mexico and the Federal Reserve Bank provided by the bank of banks which interest- of the United States, is used for this purpose. ed entities can market individually, such as for- It allows money to be sent from a savings or eign currency exchange and debit cards. current account in the United States to a savings or current account in Mexico. Under this scheme L@Red de la Gente has also greatly extended the participants are: the reach of distribution of remittances in Mexico. Is there also any incentive to in sending, financial institutions in the United reinvest this amount in a savings product? States (primarily banks, community banks and Is there any plan to enable the future credit unions) securitization of funds generated by the in liquidation, financial institutions in Mexico volume of remittances received every year? (banks, popular finance companies and coop- erative savings and loans companies, the last The sending of remittances comprises three two through their association with L@Red de activities: la Gente, using Bansefi as the point of access Sending - which is done in the country from to the payment system) where the remittance originates in arbitration, through the Direct to Mexico Liquidation - which is done in the country to system set up by the Bank of Mexico and the which the remittance is sent United States Federal Reserve Bank. Arbitration - which is the link between the sender and the liquidator
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This scheme represents the best option: which then become a productive resource for their communities as they are channelled into in cost to the remitter, as the sender charges credits for other members and customers. about 0.3% on an average remittance of 900 dollars and applies 99.79% of the interbank At the moment there are no concrete plans to exchange rate set by the Bank of Mexico. This securitize future funds received in the form of means the average saving on sending 100 dol- remittances in L@Red de la Gente, as the short lars is 3.91 dollars. and medium-term aim is to have a substantial and stable market participation that could for the remitter and the receiver, since they al- provide security for potential subscribers to these ready have a savings or a current account, they instruments. can access the financial system and all the pos- sibilities it offers, such as electronic payments, A constant model for receiving remittances will account history to obtain credit, direct debit- allow the families of migrants to access various ing, among many others. types of credit. We believe that, when the time comes, it will be preferable to securitize the Thus, under this mechanism, receivers have been credits linked to deposits from remittances rather incentivised to save part of the monies sent, than the actual remittance funds themselves.
WSBI reaffirms it commitment to strong corporate governance
There is a growing consensus corporate governance are mentioned the 2004 that one of the most important OECD Principles of Corporate Governance and criteria to assess the strength of the 2006 Basel Committee Guidance on Cor- an institution is not its business porate Governance for Banking Organisations. model nor its ownership The Basel Committee document built on the structure, but its commitment OECD Principles for issues of specific importance to good governance practices for banks. It intends to assist banking (e.g. solid control environment, high levels of organisations in enhancing their corporate transparency and disclosure, an empowered governance frameworks, and supervisors in board of directors etc). assessing the quality of those frameworks. The objective is not to establish a new regulatory This is one of the reasons for which WSBI framework layered on top of existing national strengthened the statutory provisions with the legislation, regulation or codes. introduction of non binding, general guidelines on principles of good corporate governance. As reference to generally agreed principles of good Contact: Anne-Françoise Lefè[email protected]
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Tunesian Post Swedbank
Elhaj Gley, Managing Director of La Poste Swedbank received the IDC EMEA 2007 Award Tunisienne, has been nominated Minister of for ICT Innovation for a project that adds Communication Technology. We address him B2B e-invoice exchange services to Swedbank's our sincerest congratulations. He is succeeded at product portfolio. The e-invoicing project was La Poste Tunisienne by Adel Gaaloul, to whom based on an on-demand service from TietoEnator. we also address our sincerest congratulations. Swedbank was one of three companies to receive the IDC EMEA 2007 Award for ICT Innovation this year.
WSBI – ESBG – The Global Voice of Savings and Retail Banking
WSBI (World Savings Banks Institute) is one of the largest international banking associations and the only global representative of savings and retail banking. Founded in 1924, it represents savings and retail banks and associations thereof in 92 countries of the world (Asia-Pacific, the Americas, Africa and Europe – via ESBG, the European Savings Banks Group). It works closely with international financial institutions and donor agencies and promotes access to financial services worldwide – be it in developing or developed regions. At the start of 2006, assets of member banks amounted to more than €8,081 billion, with operations through more than 191,000 branches and outlets.
ESBG (European Savings Banks Group) is an international banking association that represents one of the largest European retail banking networks, comprising about one third of the retail banking market in Europe, with total assets of € 5,215 billion (1 January 2006). It represents the interests of its members vis-à-vis the EU Institutions and generates, facilitates and manages high quality cross-border banking projects.
WSBI and ESBG members are typically savings and retail banks or associations thereof. They are often organised in decentralised networks and offer their services throughout their region. WSBI and ESBG member banks have reinvested responsibly in their region for many decades and are one distinct benchmark for corporate social responsibility activities throughout Europe and the world.
IMPRESSUM Editor in Chief: Chris De Noose, Chairman of the Management Committee. For editorial comments and queries, please contact [email protected] on 32 2 211 11 90. Lay-out: Malou Doumen This newsletter is distributed to 3000 people in over 90 countries, including all member organisations of the WSBI and ESBG. Published 4 times per annum by the joint secretariat of the WSBI and ESBG, Brussels, Belgium.
WSBI-ESBG International not-for-profit associations Rue Marie-Thérèse, 11 B-1000 Brussels Tel: +32 2 211 11 11 Fax: +32 2 211 11 99 [email protected] www.savings-banks.com