In a competitive market, the perception that a company is socially responsible can be a major point of differentiation. We’re used to seeing “green” ads from car companies and Wal-Mart, or from financial institutions touting their new environmentally friendly buildings. But some banks in Japan have even found a novel way to use environmental protection to grow deposits. Read the rest of this entry »
Actually, I don’t dislike mission statements; it’s just that so many of them are meaningless, high sounding words that don’t give a clue to what the organization is really about. “Provide superior return for our stakeholders” — What does that mean? Better ROA than average? Top quartile performance? Better stock performance than peers? Which stakeholders are we talking about: community, employees, investors? What is our obligation to each? And anyway, doesn’t every bank claim to have similar goals: superior return, superior service? Read the rest of this entry »
Almost all companies undertake a time-consuming strategic planning process, but in survey after survey, more than half of respondents believe their company’s approach could be improved. Most indicate they are satisfied that their plans accurately describe the current situation and challenges. The most frequent complaint: too much time spent on where we are now; too little time assessing strategic initiatives that will really drive the business forward.
Chrysler and Ford announced they are exiting the auto leasing business. Some are gloating that the automaker’s captive finance companies are finally getting their comeuppance — The End of the Auto Financing Scam – and while we agree this may open opportunities for banks to re-enter a more rational marketplace, there are signs that the captives will simply shift their aggressive incentives to loans where risk is more contained. Chrysler has already indicated it will begin offering zero-percent financing for 72 months on more vehicles. Are there opportunities for banks? Yes, if they focus on 5 key strategies where they can make a difference. Read the rest of this entry »
More bank failures on the horizon? National City reported “We’re no IndyMac” as the bears circled.
Richard Bove, a well respected banking analyst, says there may not be many others at risk of failure. In the wake of IndyMac he reviewed the performance ratios of all banks with assets greater than $5 billion to assess the probability of failure. His conclusion: there are a few smaller banks that may be on the edge, but the only large bank at significant risk is WAMU.
Overall, the data “indicate that the system is not anywhere near the danger that existed in the late 1980s and early 1990s despite all the whining by public officials,” he wrote. “Perhaps the second-quarter numbers will prove them right.”
Bove has a great track record. But he also published a report on March 20 titled “The Financial Crisis is Over.” We hadn’t hit bottom then, and it sure doesn’t feel like we’re there yet.
For a readable review of his research note and comments on the Schumer/OTS pissing contest, see “Few other banks appear on brink“.
According to the Wall Street Journal, “Banking regulators are bracing for a slew of failures over the next year.” Undoubtably that prediction will come true since bank failures have generally occured when there have been systemic problems in the economy. With further declines in housing values and continued softening of the economy, this is as “systemic” as it gets. Read the rest of this entry »
I’m not talking about sophisticated schemes, it’s this simple: an employee takes a $10,000 check made out to General Motors Corp., scrawls a handwritten endorsement “GM” on the back, and then deposits it directly into their personal checking account. Read the rest of this entry »
Starbucks is closing stores after years of aggressive growth. Will banks face the same fate? Read the rest of this entry »
The subprime crisis is threatening to plunge the US into its’ first recession since 2001 — if it hasn’t already done so. The Wharton School at the University of Pennsylvania has done a great job of explaining the cascade of events, proposed remedies, and response of the Federal Reserve. This is well worth reading. See Inside the Subprime Crisis.
The newspapers were full of news today about the US Attorney’s probe of mortgage fraud which led to the arrest of 400 people nationwide. A headline in the Chicago Tribune screamed “67 from Chicago area charged in U.S. Crackdown on mortgage fraud”. We played a small role in helping to bring down one of these rings. Here’s our story. Read the rest of this entry »
I went to my mother-in-law’s branch of Union Bank of California yesterday and was surprised to find newly installed mantraps. Read the rest of this entry »
What is the controversy over LIBOR and why are some experts suggesting that banks replace it with a different index? Read the rest of this entry »
How do you make a small branch on a busy corner really “pop”? Wachovia did it in Dallas. Read the rest of this entry »
The widely watched S&P/Case-Shiller Home Price Index released on Wednesday showed home prices declining 14% from the same period last year. These are scary numbers for both homeowners and lenders. Why are some financial institutions gearing up home equity and mortgage lending in the face of this negative trend? Precision targeting is the key. Read the rest of this entry »
I’ve been impressed with Wachovia’s ability to acquire premium retail branch locations in Texas. Read the rest of this entry »