Thursday, May 31, 2007

No problem with proximity of bank services in the Netherlands

As an odd local Dutch thing we have an ongoing discussion (see earlier posts here) about whether or not payment services are sufficiently available in terms of proximity. This is due to the fact that around the millenium Dutch banks were quite early in closing branches (foreseeing/adapting to the effects of the Internet) and sometimes did so in a brutal/straightforward way; basically not treating their customers with all the respect they deserved. Still, about 99,9% of the public has a bank service within 5 kilometer of its house.

Today a group consisting of municipalities, smaller town organisations, bank, consumers, retailers and physically disabled finalised their work on the investigation if there were any remaining problems with this issue. They concluded they couldn't really find any problems, but nevertheless, in order to answer to the political discussion on proximity of bank services they agreed that they would monitor the developments closely. They also made an agreement to solve any local issues quickly by working closely together.

It will be interesting to see if anyone picks up on their press release. The title is: no problem in proximity of payment services. So my guess is that no one is going to pay attention to this non-issue. Execept perhaps for the politician Ferd Crone who still believes he's got his hands on a major social issue here and is most likely to pursue his draft legislative proposal anyhow (which more and more begins to look like a search for the Holy Grail).

Wednesday, May 30, 2007

May 30: Parliament to debate status of ABN Amro merger/takeover

Het Financieele Dagblad reports that next week the Dutch Parliament will further discuss the ABN AMRO case.

ABN AMRO's Supervisory Board steps in with Transaction Committee

ABN AMRO announces that in response to the bid of the Consortium, the Supervisory Board has formed a Transaction Committee (the "Transaction Committee") composed of the members of the Special Committee, being Arthur Martinez, chairman of the Supervisory Board, André Olijslager, vice-chairman of the Supervisory Board and Rob van den Bergh.

The Transaction Committee will liaise with the Managing Board and key staff and advisers of the Bank on an ongoing basis on all matters with respect to the recommended offer by Barclays Plc. for ABN AMRO as announced on 23 April 2007 and with respect to the proposed offer as announced on 29 May 2007 by the Consortium of Royal Bank of Scotland, Banco Santander and Fortis.

Of course it is a sensible thing to install such a Committee. But why throw in a press release or such an obvious thing. It does seem to reflect that the Commissioners at ABN AMRO may be getting scared that they may be held partially responsible if things go wrong. Or perhaps they are just being transparent...

POS-skimming reported, hundreds of victims

See the article (in Dutch) in outlining that in the province of North Holland, the police received more than 160 notifications over the weekend that skimming occurred (when paying in a shop). The POS-terminal has been taken away by the police. Total sum of money involved is unknown. Banks did outline that of course customers would be compensated.

Tuesday, May 29, 2007

RBS consortium bids 71,1 billion euro for ABN AMRO

See the Beurs XL UPDATE here and find out that the RBS trio bids about 8,6 billion more than Barclays. The division is:
- RBoS pays 27,2 billion euro for 38,2 % and desires the American and Asian bits of ABN AMRO,
- Fortis pays 24 billion euro for 33,8 % and gets Benelux, private banking and asset management,
- Santander pays 19,9 billion euro for the Brazilian and Italian activities.

To fund all this, Fortis will do a share emission for 15 billion euro, but it will also sell off some assets (see FD report here). The brand ABN AMRO will continue to exist.

Monday, May 28, 2007

RBS bid will come a bit later: DNB fears the risks... reports that the RBS bid will be announced tomorrow, Tuesday (as the Monday is a holiday here). But rumour in the Observer has it that DNB has a lot of concerns and fears as to the risks involved (even though RBS provided a full financial guarantee). DNB doesn't find the liquidity or solvability sufficient and is concerned as to the financial stability.

Well, the question is, can a supervisor that itself has been so bad in recognizing risks in the past (due to which it let some serious issues go sour at van der Hoop resulting in a liquidation of that bank...), now suddenly make proper risk assessments. Or will they be more careful, due to image considerations and thus prefer Barclays? To only find out many years later, that that was even more risky....?

Isn't it just a fact that regardsless of the party taking over, there will be a lot of changes for ABN AMRO. The main question is which company is best able to deal wih those changes/complexity.

Sunday, May 27, 2007

President of central bank spotted in New York..... why... ABN AMRO?

An interesting blog here by Gerben van der Marelm, reporter for NRC. He discovered Wellink was on the plane to New York. And asked him what he was going to do. Well, just a visit to his son, Wellink replied. Which Gerben wrote down on his blog, noting that all colleagues at home in the Netherlands said... how can you believe that...?

So the question is really, is there no business to be done at all in New York..? For example convincing Bank of America it should stop with these litigation threats... or it should not enter into a deal with RBOS....

Only in a number of months will we know what really happened...

Saturday, May 26, 2007

May 25, financial analystis favour RBS-consortium bid

DFT reports that an enquiry by Reuters shows that 7 out of 11 analysts believe that the RBS bid will be more successfull. Only 3 believe with a 100 % certainty that the Barclays bid will go through.

My guess: while the majority of the analysts is right, it may not always be about being right analytically. ABN AMRO has a former DNB-manager (deSwaan) in the background and will play some regulatory cards, casting doubt as to the RBS-bid. And with a lot of doubts, a central bank will not be happy, because that may mean a lot of risk as well.

P&S news 50 is out...

1. ECB and European Commission – Joint statement on the adoption of the Payment Services Directive
2. PayPal Europe – granted banking licence by the CSSF in Luxembourg
3. United Kingdom – Google checkout launched in the UK
4. Sweden – New structure for cash handling
5. Visa payWave – contactless payment solutions get a global brand name

Articles, speeches and reports:
1. European Commission – SEPA conference for public administrations
2. ECB – "The new SEPA landscape from vision to reality (and back)", speech by Gertrude Tumpel-Gugerell
3. ECB – “Modernising payments: No pain no gain”, speech by Gertrude Tumpel-Gugerell
4. Banca d'Italia – Guidelines for the business continuity of payment system significant infrastructures
5. Bank of England – Financial Stability Paper No. 2 – A new approach to assessing risks to financial stability
6. Magyar Nemzeti Bank – April 2007 Report on Financial Stability
7. Sveriges Riksbank – The use of cash and the size of the shadow economy in Sweden
8. Bank of Canada – Modelling Payments Systems: A Review of the Literature
9. Bank of Canada – Managing Adverse Dependence for Portfolios of Collateral in Financial Infrastructures
10. Federal Reserve Bank of Kansas City – Interchange Fees in Australia, the UK and the United States: Matching Theory and Practice
11. Federal Reserve Bank of Boston – Study of Consumer Behavior and Payment Choice: A survey of Federal Reserve System Employees
12. Federal Reserve Bank of Boston – Update of the Consumer Payments Research Industry Reference Guide
13. Federal Reserve Bank of Boston – Emerging payments industry briefing: "Mobile phone: the new way to pay?"
14. CapGemini - World Retail Banking Report 2007
15. UEAPME – The European association of craft, small and medium-sized enterprises has published a position paper on the SEPA
16. ForeSee – Bank customer satisfaction higher through online bill payment.

May 26- Securities regulator now demanding explanation from VEB (shareholders ABN AMRO)

The NRC informs us that the securities regulator, AFM, is trying to figure out if the pro-active shareholders associaton (VEB) has done something illegal during the take-over procedure of ABN AMRO.

Well of course VEB has done a lot and was shown to be right when challenging the LaSalle sale in court. So what happens next is that apparently the regulators get a bit sick of VEB complaining and sueing all around. So they get some in return which is an investigation into the role of the VEB.

VEB immediately published the AFM's letter with questions. Yet AFM did not wish to reply publicly, stating that it finds the letter confidential. But it is clear that it wishes the account numbers of VEB-employees and a list of the contacts of VEB with all involved players in the ABN AMRO take-over.

SNS Bank targets ABN AMRO customers with you-tube switching service commerical

In Europe there is some debate as to user mobility and the ease with which one can change banks. The EU has even set an expert group for this purpose. But interestingly that work may not be necessary anymore, given that the Commissions' enquiry into competition in banking outlines:
It is likely that a large proportion of banking customers, probably the majority in most Member States would describe themselves as satisfied with their current bank. For these customers the question of switching bank (and its related costs) does not arise.

For the Netherlands, the whole debate is in itself quite unnecessary; despite all easy shots from the hip (mostly by disgruntled representatives of consumer organisations rather than by the real consumers) there is quite some competition here and we also have a proper interbank switching service. The service works quite well and banks are effectively and actively using this service to lure customers away.

Most banks have integrated the switching service application form into their opening process. And now, playing on the ABN AMRO take-over sentiments, local bank SNS (savings banks) has even made quite a hilarious you-tube commercial and put it on a dedicated website with the name: switching to This commercial shows an ABN AMRO manager teaching the ABN AMRO consumers how to ask for a quick replacement of a lost debit-card (pinpas).

Now, anyone still claiming that banks do not properly compete ?

ESI: gaming PSP and e-money instituion: annual report

Readers that are interested in the 'hidden' world of gaming and payments for gaming, may appreciate the ESI press release containing a description of the developments in 2006 for this gaming payment service provider.

Fiscal 2007 was a year of significant decline in ESI's North American payment processing business for non-domestic internet merchants for U.S. consumers. ESI's strategy during the year was focused on expanding its market in North America before the enactment of the Unlawful Internet Gambling Enforcement Act (the "UIGEA") which lead to the cessation of the payment processing business for non-domestic internet gaming merchants for U.S. consumers.

Essentially they got stuck into US-litigation over their payment service provision for gaming in the US. And the US authorities also seized a part of their assets (as with e-gold):
Subsequent to year end approximately US$ 8.31 million Merchant Reserve Funds in the USA were seized by the U.S. Department of Justice (DoJ). The company is continuing to work with the DoJ through its legal counsel to resolve the situation.

So they refocused, obtained an e-money license (for penetration towards Europe) and had an IPO saving their financial day...

- Obtained an e-money license from the UK Financial Services Authority. This allows us to launch our products in Europe.
- Sourcing investment for growth. The Company raised $10 million through an Initial Public Offering of its shares which listed on the Toronto Stock Exchange, on March 30, 2006.

Friday, May 25, 2007

DOCData takes over Triple Deal (to establish Doc-date e-Financial services)

See the article on BNR Nieuwsradio that outlnies that DOCdata increases its stakes ni payment-service-provider Triple Deal B.V. from 30 to 70 % for a payment of 1,8 million euro in cash. Some 20 % of the shares remain in posession of Conclusion Consultants B.V. te Utrecht en some 10% are newly issued to Syllion B.V. in Baarn. This latter company is going to play an important role in the further development of Triple Deal.

Docdata will also provide an additional credit of 0,9 million euro so that Triple Deal can further build towards international expansion of its activities. Idea behind all his is that Docdata will now be able to provide full service internet-solutions through its e-solutions Group. As a result the name Triple Deal will be changed to DOCdata e-Financial Services.

So after Bibit, that is the second take-over in the Payment Service Providers business. Let's wait a while and see which company will take over Ogone then....

May 24: Groenink writes employees: on the Barclays track

DFT reported on a letter that Groenink sent to its employees. In it he still seems to be going for the Barclays route.

Thursday, May 24, 2007

GTnews article on conference about SEPA-role for the Public Sector

See the GTWnews article here outlining the content of the conference on SEPA for the public sector. It was done in response to the claims of EPC that also governments should take action. So McCreevy organised it and had some statements such as:
Where are we now with the SEPA project, and what do we need to do next? The good news is that the technical, business and legal foundations of the project have been firmly established. The recent adoption, in a single reading, of the Payments Services Directive (PSD) is in particular a major achievement. Now we need a robust and realistic timeline for completion of the project. And by completion, I mean wide-spread use of SEPA products by retail customers, SMEs, corporates and the public sector.

The PSD will not be implemented in national law until November 2009. This means that the SEPA direct debit products will not be available before that time. Only a few EU member states have so far declared their intention to phase out their domestic payments system and adopt SEPA. Against this background, the latest declaration of the EPC Plenary that they expect a critical mass of users by 2010 is a challenge. Therefore, we need to instil a sense of momentum and dynamism to make SEPA the success we all want it to be. Each stakeholder has to take responsibility for this in their respective domain.

Let me first turn to what I believe the banking sector should do. The banks obviously have the responsibility to design SEPA products that are attractive to customers, competitively priced and retain at least the levels of performance that current national products have. I am sure during the course of today you will have plenty of opportunity to hear what the banks plan and to have your questions answered.

Next, the banks will need to ensure that there are adequate governance structures in place to manage SEPA. The EPC is the only show in town as far as private sector governance of SEPA is concerned. It needs to better involve the users of payment services in its deliberations.

More also needs to be done to invest real authority in the EPC so that it can ensure that all banks are preparing themselves for the SEPA payments market on schedule. Laggards should be gently but firmly told to step up their efforts. The EPC will also need to use its new authority to establish a realistic timeline that all banks will be able to stick to for phasing out their old payments products and migrating their customers to SEPA products. To do this successfully, the EPC must be assured of the backing of banks at the top levels. This is an issue for boardroom discussion.

Well, this looks as if the EPC asked McCreevy to say that they need more power... so that the timelines of 2010 can be achieved. Yet, as stated earlier in this blog, in 2010 there may be some new instruments, but mass usage or domestic migration is unlikely to be underway (with a direct debit only coming on the market in 2010).

Capitalia and UniCredit merge to become second largest bank in Europe

See the news here that the Executive boards of UniCredit and Capitalia agreed to a merger. UniCredit, the biggest Italian bank will pay 21,9 billion Euro in stock for its smaller competitor Capitalia. This leads to the second largest bank in Europe. ABN has a share of 8,6 % in Capitalia, valued at 1,7 billion euro.

1. The merging continues.
2. The ABN AMRO assets can also be used later on.... to pay off loans for the takeover.

May 22, lengthy letter of Finance Ministry: ABN complicated things with sale of laSal(l)e

Here is a link to a letter by the Dutch Ministry of Finance further describing the procedures and rules in the take-over of financial institutions. Apart from a bit of lecturing, the Finance Minister notes that ABN AMRO complicated the take-over procedure with the sale of LaSalle. There is also a hint that in the end clear arguments and information are necessary, as it is the shareholder that has to make informed decisions (in the end).

I consider that a hidden complaint as to the brave and quick panic-sale of la Sal(l)e by Groenink.

Postbank jobs in Leeuwarden will remain despite changes to ING

The local Leeuwarder Courant reports that the Postbank will continue to provide jobs for local employees, despite the large change-over to ING. The Executive Board has informed the labour unions on this. At present there are 2100 employees in Leeuwarden, of which 1150 work for the Postbank.

May 23: Fortis considers ABN AMRO unique opportunity

See the news here at RTL outlining that Fortis chair Maurice Lippens stated in the annual share holders meeting in Brussels that it considered a takeover of ABN AMRO a unique opportunity. On the other hand, he also mentioned that Fortis does not need ABN AMRO to grow, so he's not going to overpay....

Rabobank adapts Minitix to penetrate m-payments market

See the news of last week on and Emerce, explaining that Rabobank is adapting its e-purse application Minitix (10.000 users and 100 shops) for use with the mobile. Ths user may now load the purse with 99,99 euro (this was 10 euro) and then pay for all kinds of digital stuff, that you usually pay with the mobile phone. Paying with Minitix can be done by using a shortcode.

The benefits are really there for the merchant; they are now glued to the mobile phone companies which only allow for payments of 1,50 euro max and then take a slice of 40-50 % as all-in merchant service fee. So Minitix add to the range and competition. Of course they will outsmart the sms; that is not so complicated: see the list of payment mechanisms (and cost) to buy a ringtone of 99 eurocent (with a popular radiostation radio538) are:
- 0900 (€ 0.31 extra)
- 0909-Pay Per Minute (€ 0.41 extra)
- Click&Buy (€ 0.15 extra)
- iDEAL (Rabobank, Postbank, ABN AMRO, SNS Bank)(€ 0.65 extra)
- MasterCard (€ 0.44 extra)
- MiniTix (€ 0.32 extra)
- PayPal (€ 0.40 extra)
- SMS (€ 2.01 extra)
- VISA (€ 0.44 extra)
- Waardecoupon (€ 0.00)
- Wallie-Card (€ 0.18 extra)
- YourGift (€ 0.00 extra)

Well, whats the use of such a payment mechanism if it is not freely available across closed mobile portals? Not so much, so that's why Rabobank also focused on the Open Mobile Internet initiative (OMI). This aims for open m-portals rather then the current closed shops where customers of Vodafone can hop around in the vodafone portal but really get charged when outside that portal (with Vodafone of course taking in the kick-back fees from content-providers on their own portal).

As it turns out that the customer doesn't like this closed shop idea (imagine that the internet started with a bunch of paid content available from the start, rather than as the free web it was) even the mobile operators feel that they have to change their business model (and there may be of course a bit of a concern that competition regulators start to understand their current business model with extraordinary high merchant service fee charges). So thats why they're also in the OMI.

By the way, the Rabobank Minitix is operator and bank-independent; just the same as earlier initiatives (that may have been too early in the market): Moxmo, Digipay (read the public report on their liquidation here). So let's see if this next shot at the m-payments market will have an impact.

Tuesday, May 22, 2007

New campaign effort to promote debit-card use for low value payments

Currence today launched a campaign to create awareness with the public that it is fine to use the debit-card for low value payments. The action is the second follow up to the outcome of a McKinsey/DNB study with respect to profits/loss in Dutch payments. The study showed that it would make sense to eliminate surcharging for low value payments. So now, we're gradually moving that way.

The first thing that happened, as a follow up to the report, was that more simple offerings were developed for all-in-one terminal packages. See the website devoted to this measure: smart POS packages....

The two measures will undoubtedly be reflected in this years data on PIN-payments in the Netherlands.

Correction: no ABN AMRO talks on sale Banco Real

Het Financieele Dagblad corrects its earlier report and rectifies that ABN AMRO is not talking about the sale of Banco Real. It also reports that VEB has assembled shareholders in London, this monday, to discuss how it would be possible to make Barclays raise its bid (for which they have only 1 day left).

Monday, May 21, 2007

ABN AMRO now considers selling Banco Real itself

The Financieele Dagblad reports this morning that ABN AMRO is now considering to sell Banco Real itself. Which sort of evens out the real differences between the Barclays bid (ABN AMRO sells LaSalle en Banco Real itself) and the RBS Consortium bid (three banks buying ABN AMRO and selling of/dividing the franchises later among themselves).

Actually one could argue that if RBS succeeds in neutralizing the Bank of America legal threats, the RBS-consortium bid is superior due to its lower legal risk involved.

Sunday, May 20, 2007

RBS to bid for ABN Amro despite US legal threat | Business | The Observer

The Observer outlines that this week the RBS Consortium will make public a bid of €72bn (£49bn) for Dutch bank ABN Amro.

Barclays to publish details of bid (including Brazilian spin off)

The Financieele Dagblad informs us that Barclays is going to publish the details of its bid next week in an effort to regain the initiative in the bidding for ABN AMRO. It will be interesting to see if indeed (as Volkskrant reports) Barclays will also split off the Brazilian part of the bank.

So indeed there is little difference between the bids of the RBS-consortium and Barclays. The only main difference is that with the Barclays bid, ABN AMRO itself already sold LaSalle but not the Brazilian part, while with the RBS-consortiums bid, the consortium would itself divide the bits/pieces of ABN AMRO.

Saturday, May 19, 2007

Interesting practice: rewarding debit card use

See the aticle here to see that El Paso County’s two largest credit unions have joined with a Denver-based company to pay cash rewards for debit card transactions with some merchants:

Ent Federal Credit Union began paying rewards of up to 20 percent Tuesday on debit card transactions with 128 local merchants and about 1,900 others statewide, while Air Academy Federal Credit Union expects to launch its program within three months.

Both credit unions are offering the cash rewards through a partnership with Rainbow Rewards USA Inc., which started the program three years ago. The program also is offered by 16 other Colorado credit unions and a credit card offered through Frontier Airlines.

Some banks began paying rebates and rewards to customers to encourage debit card use about 10 years ago, but the programs are now becoming more widespread, said Larry Martin of Bank Strategies LLC, a Denver-based bank consulting firm.

RBS in talks with Bank of America to settle LaSalle deal...?

See the article here:
Taking out the middleman, the Royal Bank of Scotland Group Plc and Bank of America Corp. may come to their own agreement over LaSalle Bank Corp.

The two have been in behind-the-scenes talks over the U.S. retail banking unit owned by ABN Amro Holding N.V. ABN said it will sell LaSalle to BofA for $21 billion as part of a deal to sell the Dutch bank to Barclays Plc. However, Dutch courts ordered ABN to freeze the deal, arguing that the sale needed to be put to shareholder vote.

BofA sued ABN, saying the two had a guaranteed deal to get the Chicago-based LaSalle. And ABN, Barclays and BofA also appealed to the Dutch courts to review the decision to freeze the laSalle sale. Now, with the court battles stagnant, RBS — a rival bidder for ABN and LaSalle — could reach a deal with BofA to own either part of LaSalle or the entire operation.

Quite an interesting turn in this soap-story. In the end we might see all the players of the RBS consortium (except Fortis) achieving their take-over goals...?

Mobile phones as aid in Africa: first results

Dave Birch blogs on the results of a mobile phone used for payment/remittances. Since its formal launch on 6th March:
- people have been registering at the rate of around 1,600 per day,
- there are now around 60,000 registered customers,
- approximately $2.5 million was sent person-to-person in the first nine weeks of operation,
- on a random day recently, more than $157,000 was deposited with M-PESA agents.

Which tells us boundaries continue to blur: is it a phone, is it a bank .... ?

Thursday, May 17, 2007

ABN Amro chief Groenink denied he considered to quit

Chief Executive Rijkman Groenink isn't planning to resign amid a row over his handling of the takeover battle for ABN AMRO. He denied to Dutch television channel RTL-Z "categorically" that he was under any internal pressure to resign. And e referred to the fact that all decisions were jointly taken by the Supervisory and Executive Board.

Then again, if one feels the need to defend oneself by means of a TV-programme, it does appear that the allegation somehow stung. So while keeping his head high, this may affect the morale of Groenink more than he would show the outer world. And if it would not, it demonstrates that he has a so-called 'bord' in front of his head (Dutch expression, referring to a wooden shelf, vertically placed in front of ones head, completely restricting the view and sensory sensation of the mutterings of the outer world).

ING eliminates its brand Postbank in 2009.....

During this weeks presentation of the annual results, ING announced that it would stop using the brand Postbank as of 2009 and replace it with ING. Which will mean that the old traditional association of Postbank with the former government payment and savings services (Postcheque and Girodienst, Rijkspostspaarbank) is no longer visible in the name of the brand.

The whole exercise will cost 890 million euro's in the next 5 years, but is expected to contribute to the profits in the long run, with an estimated 440 million euro of yearly savings as of 2011. The number of jubs will be reduced with 2500 (which of course lead to concerns of labour unions).

The timing is interesting. Amidst a national debate and sentiment that regrets 'losing' ABN AMRO and its traditions and histroy to foreign banks, ING decides to schrub off its old skin and replace it with the internationally better-known ING-brand. Whether this move is really a sensible and forward looking strategic move or a huge strategic error (disinvestment in a well-known trusted brand that has been around for quite some years) will be a question for the case writers of Harvard Business School to investigate.

One thing that is quite well considered is the practical information to customers. When opening the internet-banking, there is a link on the further integration. It answers common questions:
- gironumbers (7 digits) will remain to exist,
- ING will adopt the Postbank business model; Postbank will adopt the ING-name
- it integrates the best of two worlds (advice with ING / standard products with Postbank),
- there has been extensive research under consumers,
- are bank fees rising as a result? No, we ensure that you can bank at low costs.

Paypal upgrades from e-money issuer to bank license..!

Automatiseringsgids reports that the Luxembourg supervisor for banks, the Commission de Surveillance du Secteur Financier (CSSF), has given PayPal a bank license for the European Union, starting as of July 2, this year. Paypal will also move its headquarters there.

This is a remarkable moment in time, as it demonstrates the succes of the e-money directive. The e-money directive was made to allow new and innovative players entry into the banking market, without having to fulfill all banking rules. Now Paypal has been obliging with those rules for a number of years and have apparently concluded that they are better of with the EU-bank license. Which is a lot more convenient than the hassle they have in the US, where they comply with a whole bunch of state regulation (see this list).

The move also has tax-simplicity advantages. eBay recently created eBay Europe, S.à r.l, a new entity that became the new contractual partner for all of its EU-based members on March 1, 2007. The creation of this new entity means all EU-based eBay sellers are now treated equally and are subject to the same rate of tax on their eBay selling fees - the Luxembourg VAT rate of 15 percent.

According to Forrester, 23 % of the European online shoppers use and prefer Paypal. There are some 35 million EU-accounts active and Paypal is an acceptance brand at more than 100.000 locations in Europe. The payment volume of Paypal in Europe is now estimated at € 8,4 billion dollar (and is thus similar in size as all cash payments in the Netherlands in one year).

Shiibashi, champion of Suica contactless product, named visionary of the year

While we in Europe focus quite a bit too much on old style, old world payments, there is more going on in payments. In Europe itself we overlook the huge amount of m-payments. And are slow in adoption of other technologies/solutions, such as the contactless e-money solutions. Meanwhile in Japan the Suica scheme may serve as an example. In this article there is a bit of background information; explaining also why one of Suica's champions, Akio Shiibashi, is named visionary of the year.

Shiibashi, who is director of the Suica System Department for East Japan Railway Co., supervises what has become by most estimates the largest contactless fare-collection scheme in the world–with more than 20 million Suica cards on issue and hundreds of millions of transactions per month. The scheme launched in November of 2001, and he oversaw introduction of an e-money service using the same application on the cards in early 2004. The cards, which run on contactless chips from Japan’s Sony Corp., are accepted at more than 10,000 merchant locations in Tokyo.

While the Suica scheme began service after the pioneering contactless transit ticketing and e-money service Octopus Card in Hong Kong in 1997, much of JR East’s groundwork preceded that of the Octopus project. Suica also has the distinction of offering interoperability with some other large contactless fare schemes in Japan, most notably with its counterpart in the Osaka-Kobe-Kyoto area, since 2004. This year, Suica finally extended interoperability with other transit operators in the Tokyo metropolitan area.

Even as he was preparing to launch the Suica fare cards in 2001, Shiibashi was pushing the idea of putting the ticketing application on contactless mobile phones. After several months of trying, he finally found a receptive ear in Takeshi Natsuno, guru of the successful i-mode, mobile Internet service, at Japan’s largest mobile network operator, NTT DoCoMo. The telco and its competitors have run with the concept and have sold nearly 30 million mobile-wallet phones, “osaifu-keitai,” in Japan.

JR East introduced its Mobile Suica service in January of 2006, allowing subscribers to buy monthly rail passes and reload their e-money accounts over the air. While the service stumbled during its first 10 months, changes, including streamlining of the registration process, has improved demand among subscribers.

It will be interesting to see how Oyster, Visa and Barclays will perform with their efforts to match this development...

Equens Chairmain expects slow migration to SEPA

See this article:
During the 6th international EPCA Conference Michael Steinbach, Chairman of the Board of Directors announced the opening of Equens' first representative office in Helsinki, Finland. Equens signed a contract with OP Bank Group Finland. As of mid-2007, Equens will process EU regulation payments via its advanced ZVS-processing platform on behalf of OP Bank Group. The signing can be considered as a milestone because this is the first time that a Finnish bank outsources its payment processing to a foreign full-service payment processor. The representive office has been opened on 3 May 2007 and can be seen as a next step in the realisation of Equens' ambition to become one of the major and prevailing processors in Europe.

During this conference Equens' Chairman of the Board of Directors Michael Steinbach gave an overview of the SEPA developments in the coming years. And I noted in the article/press release that it was a realistic view. Steinbach stated: "It will take at least several years for SEPA-products to become mature. Product developments like e- and m-payments and e-invoicing for SEPA will further extend the SEPA-products. Eventually, standardised connections between the euro-domestic payments market and other major economies can lead to a worldwide standardised payment society. Beyond SEPA internationalisation will continue on a global scale. Global customers will look for global payment solutions and further scale increase can be achieved by combining volumes for example in the European and American market. This globalisation however will not have the political motivation that SEPA has. Globalisation will therefore be market-driven".

Quite a realistic sound on SEPA. Much better than all those regulators that still keep thinking 2010 is the deadline for major migration to SEPA.

VEB to fuel second court case against ABN AMRO

Today the news came out that the share holders association VEB will again take legal action against ABN AMRO, this time for not complying with the rules as to disclosure of all relevant information on the bidding process. It has:
- filed a complaint with the District Attorney,
- asked the regulator, AFM, to conduct a further investigation into the matter,
- asked the supervisory and executive board of ABN AMRO on clarification.

There may be some truth behind the complaint, given that it appears that the media leakages are well organised to slowly feed information to the public and make them implicitly aware that Barclays/ABN AMRO is the only relevant deal on the table. And the media statements of Seegers of Barlays are quite strong and coloured (speaking of a phantom bid when referring to the RBS-bid).

Wednesday, May 16, 2007

Bank of America (and Barlays) appeals ruling freezing LaSalle Bank purchase

See this article:
Bank of America Corp. filed an appeal to the Dutch Supreme Court on Tuesday over a ruling this month that froze the company's $21 billion purchase of LaSalle Bank from ABN Amro.
Hans de Savornin Lohman, a lawyer for Loyens & Loeff who filed the appeal on behalf of BofA, told Dow Jones Newswires he expects a ruling in the first week of July.

According to the BofA appeal, U.S. law, not Dutch law, should govern the sale of LaSalle, because the sale contract was drafted in the United States. BofA has also filed a suit against ABN Amro in New York Federal District Court to enforce its purchase of LaSalle.

The appeal also argues that even if ABN's shareholders needed to approve the sale, the Superior Court decision wrongly penalizes Bank of America for a possible mistake on the part of ABN Amro's management in agreeing to sell something it wasn't empowered to sell.

Supreme Court spokeswoman Evelien Hartogs said that Barclays was expected to file its own appeal Tuesday, and ABN on Wednesday, since "each has their own standpoint."

Strange world; when it so obvious that a sale can't be a true sale from, how can you honestly want to keep someone to the contract...?

Ministry of Finance answers to MP-questions on bank fees and duopoly in SEPA

As mentioned earlier on this blog, Dutch MPs asked our Ministry of Finance to comment on the retailer statements that payment with cards would become expensive due to a duopoly for Visa and Mastercard. Yesterday, the answers were published. In broad terminology the Minister seeks to appease both retailers and banks by outlining vaguely
- that he agrees with the conclusion of the competiton enquiry that competition and interchange fees are important elements of the future banking market,
- that he indeed has a concern with prices of banks and that those should remain as low as possible in a SEPA-world,
- that however the public should be aware that in a move to make pricing more transparent (the philosophy underlying the PSD), it may look to customers that bank prices rise, while effectively they get more control and insight into the cost of their payment behaviour, allowing them to influence and their own specific fee level to lower levels than under previous pricing regimes.

Tuesday, May 15, 2007

Supervisors ABN AMRO now working out MoU but FSA will be the boss

Minster of Finance Bos has outlined in a reply to MP-questions that the supervisors of ABN AMRO are now working out a Memorandum of Understanding to determine how to supervise the entities of Barclays/ABN AMRO. See also IEX.

The answers to the questions actually look a bit like the answers to a student exam question. It is a precise and formal formulation of the rules applicable. DNB will remain doing DNB-local Dutch supervision, as will Barclays. But in the case of disputes, the FSA will be the boss. The answers also specify that DNB has a more hands-on supervision approach; it more often visits the banks it supervises.

SNS Reaal buys local bank franchise Regiobank from ING

This article (in Dutch) outlines that SNS Reaal has bought the local bank franchise concept: Regiobank, from ING Bank. It will continue the concept with the name: SNS Regio Bank.

It is interesting to note that this move outlines the further changes and sclae growth in the banking landscape. There will be big international players (ING) which leave the delivery of full domestic focus/service to the local players (SNS) that want to increase their current regional scope to a national level. Big banks become international and regional banks remain domestically focused.

Monday, May 14, 2007

Regulators demands and gets clarity of RBS Consortium bidding for ABN AMRO

This monday morning the Dutch regulator for the securities market, AFM, published a press release to demand that all parties to the bidding for laSalle and ABN AMRO properly disclose all information to shareholders. And after further deliberation with the AFM, the RBS consortium disclosed its detailed information (here). And it announced that at the end of May, they would provide detailed information as to their bid. At the same time ABN AMRO clarified the further information available on their website.

Interestingly the intervention of AFM occurs in the week after our Minister of Finance clarified that it might want to better organise these kinds of public bidding procedures for companies. So AFM clearly wants to signal to the Minister that that is not necessary and that its role as a regulator that safeguards proper disclosure and bidding procedures stands unchallenged.

No time for a Commissioners seat at Shell

A number of media have the news that Mr Groenink has announced not to be available for a Commissioner-seat at Shell, due to the busy work at ABN AMRO.


Sunday, May 13, 2007

UBS second white knight with 5% ABN AMRO shares

Paper De Pers outlined yesterday that UBS now holds shares of more than 5 % in ABN AMRO.

If I am not misstaken, this means that they can block a hostile takeover of ABN AMRO, as bidding rules specify that a remainder of less than 5 % of unwilling shareholders could be forced to submit their shares for conversion in cases of hostile take-overs/biddings. But if more than 5 % of the shareholders is unwilling, the situation would be different.

Which would make UBS the second white knight in the game and which would reduce the RBS consortiums chances for the ABN AMRO takeover considerably.

US cops now heavy after e-gold; seize gold assets

Ian Griggs reports that US Cops now have come in for the gold at e-gold. See also my previous post on the indictment of the founders.

Saturday, May 12, 2007

DNB comforts Consumer Union with respect to ABN AMRO

A couple of days ago, the Consumer Union asked for clarification of the situation regarding ABN AMRO. Yesterday, the central bank provided a formal answer by means of an official letter of its president, Mr Wellink, to the director of the Consumer Union.

Essentially the answer is a reassurance that ABN AMRO is a very solid bank and that customers/consumers needn't be afraid that their funds will suddenly vanish. The central bank will carefully monitor the developments as a part of its supervision role and its role to advice the Ministry of Finance on the takeover.

Well, of course there is no real reason to worry. But the suggestion of Mr Wellink that customers can sleep quietly given that DNB watches over them is not one that is comforting. Last year, the central bank effectively failed to properly manage/supervise a smaller bank (van der Hoop), which lead to its downfall. And as of last week, some remaining creditors are now lining up to sue the central bank for neglect and not fullfilling its supervisory role properly.

SIA-SSB merger completed

Finextra reports that SIA-SSB has merger is now completed. This constitutes a merger between Società Interbancaria per l’Automazione and Cedborsa and Società per iServizi Bancari and it may become one of Europe’s technology main players in the card processing, payments system and capital markets space. The firm expects to manage 7.3 billion transactions with debit and credit cards and payment and collection operations, 8 thousand billion bytes carried on the network and 73 million trading transactions on financial markets this year.

The new group is composed of the parent company and the subsidiaries Kedrios, Perago, RA Computer, SiNSYS and TSP, which will maintain autonomous corporate structures. Hungarian firm GBC will be added to the group pending authorisation by the local market antitrust authorities.

EU banks in secret debit card talks..... but why would that make sense

A Reuters message outlines that EU banks supposedly are in secret debit card talks. Meaning that a third scheme would be born for EU-use in particular. The source is a document from Laffety Group which states that the banks are "believed to be unhappy with the possible emergence of MasterCard's Maestro as the dominant provider of debit card network services in Europe. The banks involved include Societe Generale, Deutsche Bank, Dresdner Bank, Commerzbank, Unicredito, ABN AMRO, ING, and Rabobank.

The main concern is that having two schemes is around would be insufficient for competition.... but why and how a third scheme would solve this is not clear. If we look at for example the situation in Australia. There used to be a bank credit-card scheme. But with international schemes coming in (also offered by those banks to allow their customers usage abroad and such) the bank card was in less demand than the international card schemes. Which is what will happen in Europe with this supposedly new scheme as well of course.

Imagine that a number of banks set up a EU-brand.. how are they gonna get that brand to work in the rest of the world? It is hard to figure out why this EU-brand would be preferred in Europes countries. Customers are increasingly travelling and mobile all over the world, so what would be the use of trying to build this third EU brand for EU-use. This would only work if the ambition and investment would go so far to completely replace one of the two brands internationally...

Which would be a silly ambition because in that case, this third EU-bred brand is a triplication of previous scheme efforts. So all in all, this doesn't make a lot of sense, other than that it might help a bit in the negotiations of EU-banks with Visa and Mastercard.

Friday, May 11, 2007

Groeninks appointment as a Shell-Commissioner under threat of institution investors

Dutch Volkskrant informs its readers that the huge ABP pension funds has prepared a policy note for other pension funds in which it discusses whether or not to agree with a proposal to appoint Groenink of ABN AMRO as a Commissioner for Shell next Tuseday. This is to be understood as a highly unusal event.

Apparantly the discussion between these institutional investors is a clear no against the appointment, with the discussion between these investors now mainly focused on the argument for the no-vote: a pragmatic reasons that Mr Groenink cannot be assumed to have sufficient time or a more specific statement about his lack of demonstrated managerial skills.

I think they'll go for the pragmatic approach in order not to be caught in a web of litigation (which might arise if they would choose for voicing their real opinion). Or.. what would be wisest.... Mr Groenink himself could choose this weekend to withdraw his candidacy for the post.

LANZen blog sheds light on possible weak BoA legal position

Just stumbled over this LANZen technology and strategy blog which contains an interesting analysis and would really mean that the LaSalle trick could backfire on ABN AMRO:
Here’s another interesting situation. In terms of US corporate law, Bank of America’s case looks strong and the ABN board could lose heavily if BofA’s case succeeds.

However, US corporate law lends precedence to the rights of the shareholders. As the ABN decision to sell LaSalle was taken without any consultation with the ABN shareholders, then a breach of “
fiduciary duty” would have occurred, which could simply render the entire deal null and void.

On the basis of that, it looks very unlikely that BofA could force ABN to sell them LaSalle, their only remedy would be to claim damages from the ABN board.

The situation could change overnight if an auction for LaSalle starts with more
US banks interested. BofA would have to bid or risk losing LaSalle by taking their eye off the ball. US Lawyers. You’ve got to love them, haven’t you?

Only last Friday, BofA’s chief investment officer, Ian G. Banwell suddenly resigned to launch an alternative investments company, Round Table Investment Management. His resignation was effective immediately.

Mr Banwell’s position has been taken by insider Walter J. Muller, who was the Bank’s Quantitative Finance Executive, a post he’d held since 1999. Make of that what you will…

So with LaSalle and ABN AMRO's CFO stepping down, the only one still in charge is Barclays CFO....

CFO ABN Amro leaves - RBS consortium will outline its bid end of May

Latest news on ABN AMRO is that its CFO, Hugh Barett-Scott, is leaving. ABN AMRO website states that he will step down per 1 August 2007 and will be succeeded as CFO by Huibert Boumeester, Member of the Managing Board. Officially the reason is that he is not satisfied with the place reserved for him in the Barclays merger.

This is an interesting motivation as it assumes that that deal with Barclays will go through. So we see ABN AMRO framing the world's mind as to continuation of the merger. But despite the steadily declining shares (a logical market reaction to the cost of the mess being made) that still is not a done deal. And we can only speculate as to the real reasons behind this move. Is this a first scape-goat? Will we soon see mr. Barett-Scott joining other companies? Time will tell.

Meanwhile Fortis, a partner in the RBS consortium, has announced that it will provide clarity as to its bid, well before the special shareholders meeting. This is expected before 27th of May. This we heard on the BNR-radio ; Fortis explained such in a conference call. Furthermore the FD had the news that it will take its time (3 years) to consume its takeover of Dutch ABN AMRO.

While some analyst find this time period too long, others find it appropriate and realistic. Furthermore Professor Pluijm explained to BNR that he considered the effects of the two bids to be equal in terms of effect on organisational change and the size of work force. Both operations require a lot of reorganisational stuff to be organised. So naming the one a merger and the other a spit-up is inaccurate. He also found a period of three years not to be long; the merger of ABN and AMRO (1992) even required about 5 years. So that's nothing to worry about.

Finally the Works Council of Fortis has yesterday afternoon (16.53) sent a letter to its own management asking for further clarification as to the bids.

to be continued.....

2007 Conference Papers on Nonbanks completely overlooks m-payments and mobile operators?

Payments news pointed out this page with the papers from the 2007 Nonbanks in the Payments System Conference in Kansas City. It starts with a first paper by Rosati and Weiner which compares the US en EU payments market and regulation. And interestingly we can see a complete white spot for m-payments, suggesting the market is still in its infancy.
Although volumes are still extremely limited, there are expectations in Europe about their growth potential, also in light of the forthcoming regulatory opening to nonbank payment institutions (see Section 4.2.2) which may contribute to a significant development of m-payment services.

Is this true?

I think it may be a sign of the complete ivory tower approach of central banks who don't have sufficient knowledge on the new payments markets out there. For example, earlier in 2003, a local policy analyst and payment expert, Lelieveldt, observed that M-payments already outsmarted the Dutch e-purse, with mobile operators being the new kid on the payments block. Yet, some four years later it appears as if regulators and central banks still haven't woken up to reality. Which is quite astonishing. Let's do some numbers here.

In the Netherlands payments via pre-paid or postpaid mechanism of the mobile phone (be it SMS, premium services, i-mode or what have you) have in 5 years come to grow from a small size comparable to the credit-card (40 M transactions), to the niche-market size e-purse type: 150 M and now have surpassed the debit-card at POS landmark of 1,5 billion transactions (deriving this from last years 2 billion euro revenue income for so-called data-services of the Dutch mobile industry). So in terms of number of transactions, m-payments are now the dominant payment mechanism in the Netherlands!

One wonders as to the nature of incidents that would be required to let the central banks wake up to reality. It can only be a monely laundering scheme via pre-paid phone money that will eventually make everyone look back amazed by the question whether it was ignorance or a deliberate regulatory capture situation that made the regulators/supervisors turn a blind eye as to the mobile operators' payments activities.

Which would of course be an interesting topic for a next research conference...

Wednesday, May 09, 2007

ABN AMRO appeals verdict of Enterprise Chamber; customers seeking accounts elsewhere... has the news that ABN AMRO will challenge the Enterprise Court ruling forbidding it to sell LaSalle without asking shareholders. Which basically means that ABN AMRO is now on a course to make the whole takeover a litigation mess, so messy that no one dare enter and bid for them any more. Meanwhile they won't cooperate with the RBS Consortium in an effort not to help them prepare clarity for the outside world as to the details of their plans. And my guess is that this strategy might just work.

In the meantime there appears to be an increasing flow of customers thinking about leaving the bank. Most of them appear to go to Rabobank (which due to its cooperative structure, cannot be taken over). And newspaper the Telegraaf threw some oil on the fire in an article (implying that ABN AMRO would not survive a sort of bank run if all customers move to different banks). Which made Mr Wellink (supervisor/central bank director) assure the public that its funds were safe at ABN AMRO.

As a final reassurance the chair of ABN AMRO Netherlands, Mr JP Schmittman, will be reassuring the public in a nationwide advertisment containing a letter to the public. He explains that the outcome of all the discussion cannot be anticipated. Yet, regardless of the outcome, ABN AMRO and its employees will be continuing servicing their customers. And these customers can either contact their regular contactperson or send him a personal e-mail.

So would this letter mean that there are more than just a couple of dozen customers that are leaving the bank?

Tuesday, May 08, 2007

ABN AMRO finds RBS bid insufficient, consumers worried and Finance Minister demands clarity on RBS bid

The sequel on ABN AMRO continues of course with the following steps:
- first of all ABN AMRO explaining that they find the bid of the RBS consotrium not superior to the Bank of America bid, amongst others because of a lack of financial guarantee; this is accompanied by a strong (unbacked) statement on this issue by ABN AMRO official Boumeester in FD,
- the RBS consortium replying with a statement they do find their bid superior, and outlining towards another newspaper (Telegraaf) that ABN AMRO has earlier last week received confirmation of Meryll Lynch that they do guarantee the bid,
- the Consumer Union writing a letter to the central bank: explaining that they get a lot of calls/mails of consumers asking if their money is still safe,
- one Labour Union taking position against the RBS bid and in favour of Barclays,
- the Minster of Finance explaining that he wishes quick clarity of the RBS bid
- shareholders getting rid of ABN AMRO, leading to a price more near to the Barclays than the RBS bid.

So this looks as if all signs point to the Barclays-deal. The interesting things among all this news are:
- Groenink is out of the picture: Boumeester is the man in charge now; I take it that Groenink will effectively resign once the Barclays takeover is done,
- the ABN AMRO top management and supervisors are still groupthinking towards Barclays; the claim that they do their best for the shareholders is bound to be formal lipservice,
- there are very few parties involved which essentially sit back and say; Hey dude, this is what markets do. Only the Minister of Finance dares to say so and explains that it was ABN AMRO in the first place that put itself on sale.

TJX breach due to bad protected wireless retailer network; lawsuits upcoming

Ian Grigg notes at his Financial Cryptography blog that the hackers in the TJX case did the following:
- sat in a carpark and listened into a store's wireless net,
- cracked the WEP encryption,
- scarfed up user names and passwords ....
- used that to then access centralised databases to download the CC info.

Now that banks are taking the hit for this uncareful behaviour the Massachusetts Bankers Association, a trade group, announced that it is filing a class action lawsuit against retailer TJX over this data breach, as it that put more than 45 million credit and debit cards holders at risk of having their financial information accessed.

The bankers association, along with the Connecticut Bankers Association and Maine Association of Community Banks, filed the lawsuit in the U.S. District Court in Boston. The three banking associations represent almost 300 banks and are seeking to recover "tens of millions of dollars" in damages, according to the filing.

Interesting to note that for a change it is not the retailers complaining and sueing over interchange fee, but the banks sueing the retailers for being careless.

ECB proposes oversight framework for card schemes

Finextra reports that the European Central Bank is proposing to establish a new oversight framework to oversee all card payment schemes operating in the euro zone. And the ECB starts a consultation on their work.

Interestingly, Finextra is incorrect to call this a legal framework, because the European Central Bank has no legislatory power over retail payments. Of course the ECB claims in the document that it has such power:
Under Article 105(2) of the Treaty establishing the European Community and Articles 3 and 22 of the Statute of the European System of Central Banks and of the European Central Bank (ECB), one of the basic tasks of the Eurosystem is to promote the smooth operation of payment systems. In this context, the ECB’s policy statement in 2000 clarified the role of the Eurosystem in the field of payment systems oversight. In particular, the policy statement states that “The Eurosystem may also formulate policy concerning the security of payment instruments in order to maintain the confidence of the users of the payment systems”.

But we should not forget the primary role of the ECB: monitor and ensure a stable interest rate in Europe and operate a gross-settlement system to effect open market operations. It is for this purpose of this specific whole-sale gross settlement/payment (via TARGET, to become TARGET2) that the ECB has been granted the powers to ensure a smooth operation of payment systems. It has never had the role or goal assigned to regulate retail payments.

This is a classic example of institutional drift. Central banks just sit together and find that they are responsible for retail payments as well. And then start making up stuff like security requirements for e-money. Or requirements for recycling bank notes which are then suddenly also applicable to retailers and banks all around. A bit too far a stretch.

So now the European central banks find themselves responsible for level playing field and maintaining confidence in card networks. They dug up the usual requirements (lamfalussy: legal issues, transparency, operational reliability, governance and clearing and settlement) that are usually applied to gross settlement systems and now rephrased them for cards. Without asking themselves if it might not be possible that market players already have a bunch of scheme requirements in place.

Each card scheme will then be expected to make sure that information - including data on financial risks - is available to all parties involved in the payment, and to ensure "an adequate degree of security, operational reliability and business continuity". Card companies will also be required to implement effective, accountable and transparent governance arrangements and manage and contain financial risks in relation to clearing and settlement processes. Companies providing credit and debit cards in the euro zone, including pre-paid card and gift card schemes, whill be expected to comply with the new rules. But the framework will not apply to card providers that have issued fewer that one million cards a year over the past three years. Companies that have recorded less than EUR1 billion in annual average transactions over the past three years will also be exempt, as will non-card e-money providers.

Well, quite an interesting move of the central banks. The ink of the Payment Service Directive isn't dry or they publish a bit of draft-regulation of their own which is not agreed by the European parliament and only bound to raise cost and prices in the sector. My guess is that that isn't the proper way forward for any European institution. If you are not satisfied with the rules that EP and Council drafted, you shouldn't try to make up some of your own.

Rabobank to start pilot to do banking via television

Leeuwarder Courant reports that a local Rabobank (Sittard-Geleen) is the first to start tv-banking, thus making banking more accesible to the public (and possibly the elderly and/or disabled). If the pilot works, it will be rolled out to the rest of the land.

Sunday, May 06, 2007

RBS Consortium bids for LaSalle: US$ 24,5 billion

A new day/event in the ABN AMRO story. FD reports that the RBS consortium has overbidden Bank of America to buy LaSalle. And the purchase condition is that LaSalle remains a part of ABN AMRO and that the three will not wish to be paying for any of the damages as a result of the Bank of America lawsuit.

Stuff is really getting complicated now. Because until the last day of the open period in which one could bid for LaSalle, there would have been no reasons for Bank of Amercia to start sueing. Nevertheless they immediately started to sue after the ruling of the Dutch Enterprise Court. So this can only mean that we are now less than one step away from the RBS Consortium sueing the Bank of America for obstruction or improper conduct (or whichever legal term one might find to desrcibe this premature litigation battle). Because if as Bank of America you have a signed a buying agreement which is quite advantageous to you if the deal would not come through, you should simply wait out your time/turn and take your losses if you can't match a bid.

This will most certainly become another interesting week !

Saturday, May 05, 2007

ABN Amro doens't allow more bids on LaSalle: Groenink did offer to resign informs us that ABN AMRO doesn't allow for more bidding on LaSalle. It refers to the Enterprise court ruling for an explanation. Not the strongest argument if I may say so.

Furthermore, DFT has the news that the RBS consortium are preparing a bid after the weekend. And they also tell that Rijkman Groenink has offered to step down 'for the sake and the good of the bank'. One could argue that is an interesting Freudian choice of words, implying no fault on his behalf.

Then again, he remains a lawyer of course; quoting any other reasons would have the implication that he would step down in recognitions of (the doubts as to) his ability to manage the bank properly. And that would most certainly incur some more law suits.

Words and action, action and words.

Banks block Mastercards as precautionary measure

Volkskrant informs: that Postbank and ING block a series of Mastercards as a precautionary measure, without further disclosing how many. There will be free new cards for the account holders in the Netherlands and there will be an arrangement for those that are on the road and require a new one. ABN AMRO is also replacing cards (some ten or twenty).

Friday, May 04, 2007

Bank of America sues over LaSalle sale; Dutch part of ABN AMRO thinks Fortis could work too

Reuters informs us that Bank of America sues over LaSalle sale. Which was of course to be expected. We have also come to know that Mr Groenink will not resign (given that the decision to sell LaSalle was a joint deciscion of Executive and Supervisory Board). And there was also the news that the higher management of ABN AMRO has informed the press indirectly that it is open for a cooperation with Fortis.

Analysts are also discussing if and which role our supervisor for the securities market should/would have had in the process surrounding the bidding. Shouldn't they have ensured due process more than just checking if the bidding statements are compliant with the current rules? And another analyst points out that the central bank, in its role as supervisor of ABN AMRO, has also evidently not delivered on their promise to very carefully monitor the further bidding process. Where were they?

So what does the continuing story of ABN AMRO tell us so far?

I think it tells us that big companies may just have become so big that they become steerless bureaucracies in the hands of incapable leaders (or groups of leaders) which are unable to think properly and independently. Most likely the financial compensation packages for leaders increase the groupthink processes near the top, leading to biased visions of reality and of what is and isn't right. Supervisors claim to be supervising but don't effectively substantiate their role. Meaning that indeed it is left to the market (shareholders) and the courts to correct the wrong vision/actions of the managing board (rather than Commissioners or supervisors).

Now we could try to increase the competencies of supervisors. Or change the financial compensation packages. But in the end all change will have to come from the inside. And my guess would be that the independent mental attitude required to contribute to correcting or preventing these odd groupthink processes is more of a Buddhist/Zen-like disattachment of money and status. Where people are not afraid to suffer prestige, financial loss or status loss when they speak up their real analysis.

But, how likely is it that anyone with such an attitudes will survive in those coherent topmanagement groups? And where could one find such attides in a society which values money beyond everything?

Thursday, May 03, 2007

Next step: Dutch judge forbids sale of LaSalle by ABN AMRO

In continuation of the ABN AMRO take-over sequel todays the news is about the court ruling by the Enterprise Chamber. It ruled that the sale of LaSalle by ABN AMRO be stopped/canceled. Which will lead to further litigations of course. Share prices rose on the news as it increases the odds for the RBS consortium to take over ABN AMRO.

Also, today there was a second court ruling on ABN AMRO as well. It found ABN AMRO and Goldman Sachs guilty of not informing the public properly on the IPO of World Online in 2002. Again it was the proactive association of share holders (named VEB) that sued ABN AMRO and won this case. VEB will further pursue a lawsuit for compensations of damages to the 11000 share holders they represent (which may lower the price for ABN AMRO a little).

In sum: everything is possible once again. Yet I can't imagine how the board of commissioners/supervisors would let chairman of the director continue functioning in office. So either they leave him formally in place so that he can continue finishing this deal (while informally the commissioners require him to ask for their approval on all his actions) or they kick him out and sort out the work himself. Either way it is quite likely that further lawsuits be started to sue either the managing director of ABN AMRO or the board of Commissioners.

So I wouldn't at all be surprised if we soon hear that someone has to take the fall and steps down....

Visa further penetrates retail market with Gamma

While retailers representative organisations are trying hard to stop the credit-cards from being used, large building and D-Y-I chain Gamma has introduced a Visa-Gamma card. Providing discounts to the D-Y-I shoppers.

Wednesday, May 02, 2007

Annual report 2006 of National Forum of Payments sent to Ministry of Finance

Our Dutch central bank (DNB) holds the secretariat of the socalled National Forum on Payment Systems. Basically a forum where representative groups of providers and customers of payment services meet and discuss relevant developments such as SEPA, safety of payment systems, how to improve efficiency and ergonomic accessibility and regional availability of payments services.

Today DNB sent out the annual report over 2006 of the Forum which contained an 1 MB update on:
- SEPA: it's coming but a lot of details are not clear yet; the work in 2007 will focus on a transition plan for the Netherlands,
- availability of payment services (see also this log-entry): no indications that there are serious problems; just some minor issues that all involved players agreed to solve,
- further improvement of efficiency: smart pinpackages should help out small retailers by providing low cost easy-to-use POS-terminals and fee deals,
- the publication of future reports on fraud characteristics of credit-cards, accessibility guidelines for POS-terminals, further research into cost/benefits of payments.

Dutch domestic web-payment method iDEAL outsmarts creditcard as web payment method

Scheme-owner Currence notifies us in a press-release that IDEAL, the home bred Dutch domestic web-payment method, is now more often used as the credit-card for online-payments in the Dutch market. Market research shows that customers find iDEAL easier, faster and safer. So within 1,5 year after its introduction, iDEAL usage now stands at 15 % while credit-cards are used 13 % of the times. We should note that this is quite a nice track record, given that iDEAL was launched only 1,5 years ago.

Currence expects the role of iDEAL to become even bigger in the future. Already in the month March, the total number of iDEAL-payments was 1 million (compared to 3 million for the whole of 2006). So we definitely have a winner here.

Some more information on other payment methods can be found at Planet's website. This shows that other payment methods, often used are:
- bill payment (acceptgiro) via internet banking: 24 %
- credit-transfer via Internet banking: iDEAL: 16 %
- bill payment (acceptgiro) via post: 7 %
- one off direct debit; 7 %
- Paypal: 3 %.

Which does leave another 15 % for obscure/other payment methods (payment via SMS, 0900-phone lines, pre-paid systems/cards etcetera).

Tuesday, May 01, 2007

Retailers continue gallery play for low bank fees while overcharging consumers themselves

Last week I noted that members of Dutch parliament (quite obviously prompted by retailer-lobby organisations) started asking questions in parliament on the competition in payments and on the possibilities of price increase as a result of SEPA. Which showed that retailers succeeded quite easily in (hijacking and) narrowing down complex policy discussions about European payments markets into an ordinary Dutch price-rebate discussion for merchants.

This week the retailers continue their battle in the Financieele Dagblad. Mr van der Broek, chairman of all retailers in the Netherlands explained in an interview that the retailer representative organisations withdrew from some subgroups of the socalled National forum on payment systems that dealt with SEPA. The reason for doing so was that the retailers found it unacceptable that the banks did not collectively wish to give a low price guarantee for future fees of payments authorisation. Not receiving any affirmative response, they concluded that it was most likely that further price hikes were upcoming and that in the end there would only be two acquirers in Europe: Visa and Mastercard; which would have to mean higher fees for everyone.

This oversimplification of reality did not go by without a comment of the Dutch banks. On their website they have provided a somewhat cool reply. In this news posting (in Dutch) they point out that the claim and fear for a duopoly in the cards market rests on the misunderstanding that retailers have direct contracts with scheme-owners rather than with all the players (banks and non-banks alike) in the acquiring market. So the duopoly is nowhere near in sight and will never become a reality.

They further continue - as a part of their explanation of the six most common misunderstandings about POS-authorisation fees- that already at this very moment retailers can choose from a wide number of banks and acquirers for pos-authorisation processing. And research by the Dutch competition authority demonstrates that this competition works and leads to lower fees.

In their statement the banks also politely hint at the oddness of the retailers price guarantee question, by explaining that it is forbidden as a collective of banks to do joint price setting. And that it is not proper conduct to asks banks to committ to such behaviour nor to draw conclusions from the fact that banks do not answer to this question that shouldn't even be asked in the first place. They point out that it even more incorrect to assume that the silence in reply to this question thus means that fees will become higher.

My personal viewpoint is less polite. Some 5 years ago, the retailers were among the loudest bunch in the audience to want the existing price-cartel/monopoly of banks (for authorisation of PIN-transactions) to be eliminated. And they were right in doing so. They got exactly what they wanted: banks were fined and all contracts now need to be bargained by retailers at individual banks. Retailers even got one cent discount as a part of a separate agreement with banks to set the past aside and work towards efficient payments in the future. So they dismantled the existing monopoly in exhange for competition. But instead of competition the retailers now appear to want a Dutch domestic bank monopoly back to fix or set some even lower prices for the future.

On their website, the Dutch banks once more outline that SEPA is not a banking party but the result of political pressure on banks (Lissabon agreement in 2000), leading to standardisation by the European Payment Council on the one hand and to legislation (Payment Service Directive) on the other hand. So the banks reject the retailer suggestions that SEPA is brought on the public because the banks want this so much. The banks also ask retailers to join in and do their bit: accept all panEuropean payment brands so that all Europeans may be able to pay efficiently at the point of sale.

And finally the banks point out that irrelevance of the whole issue brought forward by the retailers. They clarify that in the Netherlands it is possible to surcharge at the point of sale. So the retailer can choose to ask a fee from the consumer if a certain payment brand (or cash !) is a bit costly. Which would solve the whole problem of bank fees in the first place.

And with that last explanation comes another fine example of interesting retailer behaviour. The banks outline that 25 % of the Dutch retailers ask a 25 eurocent fee from the consumer if he chooses to use the direct debit card over other payment instruments for low value payments. While the bank fee for this transaction is only 5 cents, this does raise an additional question as to why retailers so heavily overcharge the consumer. It can't really all be 20 cents for terminal or telecommunication cost...

TCI fund calls for ABN Amro chairman Groenink to step down and class action in US underway

See the news here: to discover that the TCI fund calls for ABN Amro chairman Groenink to step down. Financieele Dagblad furthermore has the news that Halpert Enterprises will also jump on the litigation bandwagon with a class action suit to prevent ABN AMRO from selling LaSalle.

There is an interesting question here by the way. Could there be a point of time where the behaviour and strategy of Mr Groenink would lead either the Supervisory Board of ABN AMRO or the most senior management of ABN AMRO to step in and explain Mr Groenink that they can ethically no longer endorse the actions proposed by him and that they will refuse to further execute his orders?