2011 | World Finance

Bank sees benefit of dynamic economy

Posted on April 19, 2011August 6, 2019 by

This change in status prompts Cape Verde to transform donor-beneficiary relationships with traditional foreign partners into a framework of economic cooperation and to diversify its partnerships, in particular with other developing economies. In December 2009, the IMF completed the 7th Policy Support Instrument (PSI) review, approving the country’s policies: an important signal for donors, development banks and markets.

The new PSI aims to build on the progress made under successive programmes with the Fund, with a focus on promoting a broader basis economic growth, diversifying the economy and boosting spendings with social impact. Key targets under the new PSI include:

– Supporting the exchange-rate peg to the euro through the accumulation of foreign-exchange reserves.
– Gradually unwinding the fiscal stimulus implemented in 2009-10, with the aim of bringing the country back on track with its medium-term fiscal programme.
– Safeguarding priority spending, despite fiscal tightening, with a focus on channeling resources towards increasing employment and improving training opportunities for the young.
– Reforming state-owned enterprises, with the aim of improving their financial stability and phasing out the subsidy regime.
– Scaling back external borrowing once the current phase of large-scale infrastructure projects has been completed.

Cape Verde aims at becoming an international hub in different areas: in transportation services, given its strategic position between America, Europe and Africa and its air connections between Senegal and Guinea Bissau; in financial services and Information and Communication Technologies (ICT) for off-shoring; in maritime services through its ports and fish processing facilities; and in the culture sector, with its music, theatre festival, traditional dance, and the historical heritage of Cidade Velha, which was inscribed in UNESCO’s World Heritage List in June 2009.

Tourism is the most dynamic economic sector, with a significant and increasing contribution to the country’s GDP, and will certainly remain the most valuable and competitive activity sector.

The government of Cape Verde is promoting the private sector by easing the process of starting a business and paying taxes. It has reduced direct tax rates for firms and is implementing a reduction of tax rates on imports starting in 2010. They will gradually decline to zero by 2018 in compliance with World Trade Organization (WTO) guidelines.

The country strongly supports an innovative e-government system and is diversifying energy production, turning to renewable sources of energy to reduce its oil dependence. The development of wind and solar energy in Cape Verde exploits the advantages of the country’s unique geography, which offers abundant wind and solar resources.

The Economist Intelligence Unit’s 2010 democracy index ranks Cape Verde 27th out of 167 countries, up from 34th in the previous edition of the index and putt it among the 57 countries considered “flawed democracies.”

It was the second highest ranked country in Sub-Saharan Africa, behind only Mauritius, having swapped places in the continent’s hierarchy with South Africa since the 2008 index.

Banco Interatlântico
In January 1998, Caixa Geral de Depósitos (CGD), the largest Portuguese bank, following its Internalisation policy and considering the historical and commercial ties between Portugal and Cape Verde, inaugurated its first branch in Cape Verde islands.

One year later, considering the significant investments opportunities offered by a flourishing and modernising economy, particularly in the financial sector, Caixa Geral de Depositos, decided to upgrade its presence in Cape Verde, in order to increase its participation in the economic development of the country.

Thus, in July 1999, Caixa Geral de Depositos, and a group of local investors, created Banco Interatlântico, by incorporating the CGD Cape Verde branch’s activity.

Since the beginning of its activities Banco Interatlântico chose to be different from existing banks in the market. It decided to give special attention to corporations and high income private individuals, which was quite challenging, given the small size of the Cape Verde economy and its corporate market. These strategic options explain the bank’s competitive strategy, its branch network policy, its selective notoriety and its achievements.

As a matter of fact, as of December 2010, 69 percent of the bank’s loan portfolio was corporate loans and 58 percent of its deposits were corporate deposits. This is a unique situation in the Cape Verde banking system, where corporate loans represent about 45 percent of total loans and corporate deposits represent about 38 percent of total deposits.

Committed to delivering high quality and global financial services, Banco Interatlântico was soon recognised for its innovation and technological modernisation capacity, especially in the payment system where it played significant role in the expansion of bank automation network (ATM and POS) in the country.

Having CGD as its major shareholder and major partner, allowed Banco Interatlântico to have extended capacity in dealing with international payments, which has been a competitive advantage in the past, when foreign currency asset was an important competitive instruments.

In this regard the bank introduced a credit facility for trade finance which became very popular and has granted to the bank a good deal of awareness among imports companies.

To increase its landing capacity, since the beginning of its activity, the bank has been very active in using international financial institution facilities. Credit lines from the European Investment Bank and the French Development Agency have been used as well as guarantee facilities from GARI (west Africa, guarantee funds for private sector).

The bank’s branch network covers the four main islands in terms of economic activities (Santiago S. Vicente, Sal and Boa Vista), with nine point of sales in total, being five in Santiago Island, two in Sal, one in S. Vicente and one in Boa Vista. These four islands represent more than 85 percent of the country’s GDP.

Supporting the local economy
Banco Interatlântico has been playing an important role in supporting European companies in establishing in Cape Verde, specially Portuguese, Spanish and Italian companies. Some majors tourism projects developed in Sal and Boa Vista, are support by Banco Interatlântico, either alone or in syndication.

With the development of tourism real estate and the increasing interest of European investors, especially from the UK and Ireland, in Cape Verde’s real estate market the bank designed special lending facilities for non-residents to finance home acquisition. This facility is available under the brand “Live In Cape Verde,” a registered and promoted brand of Caixa Geral de Depósitos, Portugal.

In order to further increase its lending capacity and improve capital adequacy ratio, Banco Interatlântico issued in 2008, through the stock exchange, with great success, the first subordinated obligation in Cape Verde’s financial sector history. In 2010 the bank share capital has been increased 66 percent, from €5.44m to €9.67m, to cope with further capital need arising from the activity increase and supervision requirements.

The bank had positive evolution of all its main indicators such as total assets, asset quality, profitability, equity, number of employees and branch network. It ranks as third largest bank in the country with about 14 percent of market share in both deposits and loans, as of December 31, 2010, with total assets of €166.3m and 97 employees.

International Accounting and Reporting principles as well as an Operational Risk Prevention programme are under implementation in the bank, in order to improve its prudential indicators adequacy and the service quality.

Human resources management improvement, internal procedure enhancement, brand notoriety reinforcement and innovation in serving our customers and the country, will guide the bank in the near future.

For more information www.bi.cv

Brazil to tame inflation after record growth

Posted on April 19, 2011August 6, 2019 by

The financial crisis of 2008 pushed the Brazilian economy into recession starting in the fourth quarter of 2008, mainly by limiting the ability of small and medium banks and companies to obtain funding in the market and by causing problems with credit portfolios. This situation increased interest rates on loans and reduced liquidity in the financial system, impacting companies and the job market. The government swiftly adopted counter-cyclical policies, by injecting credit into the system through official banks, cutting taxes on certain industrial products to stimulate consumption, and increasing disbursement of infrastructure investments under the existing Growth Acceleration Plan. The Central Bank eased banks’ reserve requirement and lowered the benchmark interest rate. These measures proved effective, and the economy recovered starting in the second quarter of 2009, with continuing strong growth in 2010.

Brazil’s GDP grew 7.5 percent in 2010, and may have overtaken Italy (whose data are still preliminary) as the world’s seventh largest economy. That strong expansion happened because companies increased their investments in 2009, getting ready for 2010. The tax incentives offered by the government had a big impact on the economy, by hastening consumption and stimulating the industries and retailers. The real increase in the minimum wage was also very important in boosting demand, and the strong economy caused unemployment to fall to record low levels. The credit market was strong and consumer confidence was high. In fact, first-quarter growth was so robust that it took the market and the Central Bank by surprise.

In early 2010 the market had already projected growth above seven percent. But with such strong expansion of output, spurred by aggregate demand, capacity utilisation increased and inflation started creeping upward. This prompted the Central Bank to start a tightening cycle in April. After two increases of 75 basis points, the most recent hike was 50 basis points, bringing the benchmark SELIC rate to 10.75 percent from 8.75 percent (the lowest ever seen). The reason for not taking stronger action given by the Central Bank was that current inflation permitted more accommodating monetary policy.

In fact, the consumer price index (CPI) held steady for the first quarter (at zero percent), but the economy was just going through an adjustment, and inflation started climbing steeply in September, closing the year at 5.91 percent, 1.41 percentage points above the target of 4.5 percent.

The outlook for 2011
Inflation is a big problem now in Brazil. The loose fiscal policy since 2009, real increase in the minimum wage, record low unemployment and strong expansion of credit are all boosting consumption and pushing up the inflation. There are two particular problems on the inflation front: foodstuffs have a large weight (around 22 percent) in the CPI and many prices (such as rents) are subject to indexing. Because of the run-up in commodity prices and seasonal factors (climate conditions and harvest periods), the food group has been under pressure since September 2010, exerting pressure on the index. Another big problem is the inflationary inertia, particularly affecting the services group. In this case the causes are the low unemployment and higher payroll levels. However, the effects of the monetary tightening last year and the continuing monetary and fiscal tightening this year should reduce inflation to 5.9-6.0 percent this year and 4.7 percent next year.

Because of the expansion of demand, and to avoid future problems in the credit market, the Central Bank adopted macro prudential measures in December, by raising reserve requirements and also increased the factor of risk weighting on personal loans with maturities of more than 24 months. Additionally, the Central Bank raised the interest rate in January to 10.75 percent from 10.25 percent, and three or four more hikes are expected at the next meetings of its Monetary Policy Committee, so that the SELIC (overnight lending) rate should close out the year between 12.25 percent and 12.75 percent.

After a fast growth in 2010, GDP growth will decrease to 4.0-4.5 percent this year. The strong growth in 2010 was driven by fiscal incentives and low interest rates – Brazil is enduring high rates, no fiscal incentives, more inflation and measures to constrain credit. With the cooling growth this year, expansion should be 4.0 percent to 4.5 percent. This is very positive because it is within the range of potential GDP growth. The Central Bank also understands the need to anchor inflation expectations to allow inflation to converge back to the central target, and thus to have a sustainable growth rate.

Individual economic results
Exchange Rate: The Real has been appreciating against the US dollar, prompted by strong capital inflows attracted by Brazil’s good growth prospects, relative macroeconomic stability, high commodity prices and large interest rate differential. Last year the government adopted some measures to avoid this appreciation, such as increasing the IOF tax. This year the Central Bank created a reserve requirement for banks’ short position in foreign exchange. The Central Bank also bought US dollars almost daily in the spot market and resumed using reverse swaps as well, employing a new tool called the Term Auction. The Central Bank argues that these purchases are to accumulate reserves, but they are also an attempt to counteract the forces acting to strengthen the currency, in deference to pressures from exporters and producers of domestic goods that compete with imports. Without these interventions, the exchange rate would be stronger than it is at present.

Public Accounts: The primary surplus target was not achieved in 2009 or 2010. In the case of 2009 this was due to the counter-cyclical fiscal policies introduced in response to the international crisis of late 2008. In 2010 these looser fiscal policies were continued because it was an election year, and they were accompanied by many artificial accounting adjustments to make the public accounts look better. The new administration of Dilma Rousseff has announced spending cuts this year.

Current Account/Trade Balance: The overvalued exchange rate and strong demand growth acted to stimulate imports, which grew significantly and lowered the trade balance. The small trade balance and the higher repatriation of profits and dividends along with net international travel spending helped to expand the current account deficit. Foreign direct and portfolio investments are strong enough to cover the current account deficit.

About ICAP and ICAP Brazil
ICAP’s businesses are distributed across more than 70 locations in 32 countries worldwide, with a strong presence in all major financial centres in EMEA, the Americas and Asia Pacific. Our largest offices are in the UK, the US and Brazil. Our business is organised across three divisions: voice broking, electronic broking and post trade risk and information services.

ICAP is the largest securities broker in the world in intermediating operations with voice broker and electronic systems. To keep the average volume over $2trn traded per day, ICAP employs approximately 4,500 people worldwide including in the three largest financial markets: London, New York and Tokyo.

ICAP is a publicly held company with shares traded on the London Stock Exchange and is part of the FTSE 100 index. The London branch is globally present with 60 percent of its employees and 54 percent of its revenues derived from outside the European Union.

Despite the financial crisis of 2008, ICAP has closed its fiscal year with record revenues of £1.5bn. This fact is explained by the “fly to quality” phenomenon, which is when, in moments of crisis, investors seek bigger and stronger institutions to run their operations.

The purpose of ICAP is being a global leader in the OTC market intermediation, such as 35 percent of total market revenue. Its energy is focused on the transfer of business to higher growth markets, innovating and maximising the potential for conversion to electronic transactions.

Brazil is considered a strategic market by ICAP. Boosted by growth in recent years, the country has the potential to represent more than 80 percent of the company’s revenues in South America. Supported by these figures, in November 2008, ICAP held its first strategic acquisition in the country: the purchase of 100 percent stake of Arkhe, one of the top five brokerages in the BM&F.

In April 2009, ICAP began negotiating with Bovespa and established its Home Broker, named MyCAP (www.mycap.com.br), and received the award for “Best Online Broker of the Year” in 2011 for Latin America from World Finance. Today, ICAP has also become a major broker in the Brazilian market in equities, futures, FX, bonds, commodities and energy, increasing its market share, as can be seen below:

Overall, including futures and equities, ICAP today is the biggest independent broker (non bank owned) in Brazil. With offices in São Paulo and Rio de Janeiro, ICAP currently has more than 280 direct and indirect employees. The Brazilian operation reinforces the ICAP’s presence in Latin America, already established in Argentina, Chile, Ecuador, Colombia and Mexico.

For more information: www.icapbrasil.com.br; Email: ines.filipa@br.icap.com

Service still king in automated trading

Posted on April 19, 2011 by

Alongside its professional trading, exclusive video tutorials and professional guidance, youtradeFX has truly mastered the art of customer service, a rare quality in the industry today.

A high level of computer knowledge is essential for employees at youtradeFX, as each trade paves a way for new developments and analyses for the professional team. Since the company was established in 2009, the dealers have incorporated a plethora of new and upcoming trading techniques such as algo-trading.

It is safe to say that today’s market is becoming more dynamic than ever before – more traders are depending on automatic trading to determine the most miniscule of opportunities while reducing risk. Algorithm trading has proven to capture signals one step ahead of the human being in efforts to provide stronger success in the online trading arena. Because excellent customer service is the most important goal of the youtradeFX team, algo-trading was immediately implemented to reduce subjective and impulsive trading behaviours to as little as possible.

Although the foreign exchange market is still considered a relatively new platform, the procedure of buying and selling is nevertheless considered multifaceted – self-discipline in this market is extremely hard to come by. However, algorithm trading eliminates the human subjective response and reduces emotion induced loss. Although this technique may reduce possible profit margins, algorithm trading allows traders to stop before it’s too late.

According to David Smith, a senior dealer with youtradeFX, using algo-trading and beginner techniques are vital to the company and its clients. “Not everyone knows how to read the market and not everybody knows how to contact an analyst who is experienced in positioning trades for them,” he says. “The algo-trading robot knows how to read the market and decides, based on research, patterns and techniques, how to properly optimise the client’s trades.”

Automating risk management
On the other hand, even though the robot knows how to project the trade, there are several levels on which the trade can be interpreted. “Some work on scalping, which are short term trades,” says Mr Smith. “The robot’s research can predict which one of the currencies is going to rise or fall abruptly, so they actually give us an opportunity to benefit with small action and result in big volume. It is a way to make big money in a short amount of time.”

Regardless of the size of the trade, the customer will always be taken care of – unlike many foreign exchange companies, youtradeFX holds its own dealing room. A personal response is always vital at the company.

The dealing room consists of approximately 20 qualified dealers; all have a certified degree in either business or economics and are all on staff 24/5. Additionally, Monday through Friday, there are always three designated analysts conducting detailed research on the markets and sending real time signals to clients.

The customer service at youtradeFX has become one of the most favoured qualities about the company. Since installing the user-friendly MetaTrader 4 trading platform, trading is easier and simpler – the rollout of MetaTrader 5 in April 2011 will add more features such as the ability to trade on several markets at once, including indices and stocks commodities.

According to Marianne Houllou, Sales Manager for English-speaking countries, “Upgrades, especially in the trading platforms, are extremely vital to us. My clients are so valuable to me that any improvements are essential in order for me to continue giving my clients the best services I can.”

Unique to youtradeFX are its exclusive video tutorials. These free videos are one-on-one sessions teaching beginner traders about the market. “I love teaching my clients how to view graphs and how to analyse the market – it is something that I am passionate about and I get to share and teach to others,” says Ms Houllou. “In addition to the videos, we give them our contact details; I am always available to help my clients via LiveChat, phone or email.”

Brazil enters new growth cycle

Posted on April 19, 2011 by

At the beginning of 2011, the Bradesco brand was considered the most valuable among Brazilian banks in a survey conducted by consulting firm Brand Finance, and the sixth most valuable among banks worldwide. This is just one of many international acknowledgments Bradesco has received over the years. Building on a 68-year tradition of excellent results – the bank began operations in 1943 – Bradesco posted record net income of more than $6bn in 2010, 25.1 percent up on 2009. The bank closed the year with total assets of $382.6bn, 26 percent more than in 2009, while total assets under management moved up by 24.3 percent to $523.7bn. Bradesco’s preferred shares appreciated by 12 percent in the year, versus only 1 percent for the Ibovespa, which comprises the most traded shares on the São Paulo Stock Exchange. Bradesco’s shares are also traded on the NYSE, in New York, and the Latibex, in Madrid, where they are renowned for their high liquidity.

These numbers are the result of the successful strategies adopted by Bradesco at the beginning of the last decade, when it began rapidly expanding its service network, bringing its products and services to millions of people hitherto deprived of the banking experience. Bradesco became the first financial institution to be present in all of the country’s 5,565 municipalities and ended last year with an estimated 60 million customers; in other words, a third of Brazil’s population is a Bradesco customer.

The development of the country, and the accompanying increase in jobs and income, has fueled demand for financial services, and the bank is fully prepared to meet this demand, no matter how remote the region. One example is the country’s first floating bank branch, on the riverboat Voyager III, which covers the 1,600km between Manaus and Tabatinga, in the state of Amazonas, twice a month. There are 11 municipalities and 50 riverside communities located along the route, whose total population of 250,000 had access to banking services for the first time.

Bradesco was also the first bank to expand its loan portfolio in anticipation of demand for loans generated by economic growth, the current upward social mobility process and the creation of a strong domestic market. In December 2010, its loan portfolio totaled $176.2bn, 23 percent more than the same period in 2009. The portfolio is of the highest quality, protected by strict risk evaluation and monitoring processes that are substantially more rigorous than the norm in the financial system. In December, the delinquency rate on loans overdue for more than 90 days stood at 3.6 percent, recording its fifth consecutive quarterly decline.

Bradesco ended 2010 with more than 44,000 service points, 3,604 of which branches and 32,307 correspondent banks, plus 32,000 ATMs. Abroad, the bank maintains branches in New York, Grand Cayman and Nassau, and subsidiaries in Buenos Aires, Luxemburg, Tokyo, Grand Cayman, Hong Kong, New York, London and Mexico.
Bradesco BBI, an investment bank, has an exceptionally strong presence in the capital market. Last year, it was the lead manager for the primary offering of Petrobras common and preferred shares, the world’s largest ever stock offering, which raised $72bn, and took part in more than 80 percent of all issues registered with the Brazilian Securities and Exchange Commission (CVM). Bradesco Seguros e Previdência, one of the largest insurance companies in Latin America, posted annual revenue of $18.6bn, 18 percent up on the year before.

Technical reserves totaled $52bn, representing one third of Brazil’s entire insurance market.

Bradesco, with its wide range of products and services, is fully equipped to serve customers from all social and economic levels, from low-income individuals to the largest corporations. This profile is in line with one of the bank’s oldest commitments and one of the values underpinning its corporate culture: supporting economic and social development in Brazil for the benefit of its citizens. This commitment is forever. As a result, every year it invests more than any other company in the sector. In 2010, for example, it invested around $2.3bn in infrastructure, IT and telecommunications, as well as more $64m in the training of its 95,000-strong workforce.

If Bradesco is regarded in Brazil and abroad as a modern, solid, dynamic and constructive institution, which benefits both its customers and shareholders, this is due as much to its performance as to the responsible management that has characterized the last seven decades, not to mention the private social investments that have made it so distinguished among the Brazilian business community. In September 2010, its corporate governance practices received a GAMMA 7 score from Standard & Poor’s, the highest score ever granted by the firm. On the social and environmental responsibility front, it has signed up to the most important national and international commitments, including the Global Pact, the Equator Principles and the Principles for Responsible Investment. It also joined the Green Protocol, a Brazilian Environment Ministry initiative for the implementation of a common sustainability agenda in the banking sector. Bradesco is included in the Dow Jones Sustainability Index, the Bovespa Corporate Sustainability Index and the Carbon Efficient Index, a joint initiative of the São Paulo Stock Exchange and the Brazilian Development Bank (BNDES).

In addition to its corporate initiatives, Bradesco also contributes to the welfare of the country and its population by investing in various social and cultural projects. Through Fundação Bradesco, founded 54 years ago, the Bank has developed an extensive educational programme geared towards underprivileged communities, running 40 schools throughout the country which provide free, high-quality education to needy children and teenagers, in addition to a number of other social and educational activities. Since it began operations, Fundação Bradesco has provided more than two million students with an education, which, together with other courses – both on-site and distance learning – rises to more than 4 million.

The Bradesco Sports and Education Program has provided volleyball and basketball training for around 2,000 girls aged between 8 and 18, in addition to classes and activities to supplement schoolwork. Since 2010 the program has been implemented in a modern, 10,000sq. m sports complex equipped with courts, locker rooms and pools. Every year, Bradesco invests in hundreds of cultural and folk events and sponsors various initiatives designed to promote citizenship and respect for the environment.

It is a virtual consensus among market analysts that Brazil has entered a new growth cycle, tied to the responsible management of social and environmental issues. This country has become particularly attractive, with its robust domestic market, major infrastructure projects and excellent prospects for a continuous upturn in income and jobs. And Bradesco has played a primary part in consolidating this scenario. With its efficiency, brand strength and tradition of service excellence, the bank will continue contributing to an even better future.

Risk practices prove popular

Posted on April 19, 2011 by

Banco Popular became the property of Luis Carlos Sarmiento Angulo in 1996, one of the most outstanding economic groups in the country. Angulo in turn owns important financial institutions comprising Grupo Aval, with additional participation as well in areas such as real estate, public works, agro industry, gas and communications.

Group Aval is the largest financial group in the country, with 30.7 percent of the banking system’s total assets. It is comprised of Banco Popular and three other banks: Bogota, Occidente and AV Villas; as well as Corporacion Financiera Colombiana, Fondo de Pensiones y Cesantias Porvenir, and various affiliates of each entity which offer insurance, trust and stock market services, and logistics for foreign trade operations.

Banco Popular’s membership of Grupo Aval has given it a significant strength for its business growth, thanks to the support and synergies obtained from the group’s nationwide integrated customers service network and the technological and operative optimisation of processes.

Commercial trend
Banco Popular ranks seventh among the 18 banking entities in Colombia by asset size, with total assets of $6.6m as of December 2010.

The bank mainly directs its activity towards financial intermediation, that is, credit granting, so that 69 percent of its assets are placed in its credit portfolio. As of December 2010 this showed a total of $4.5m, a 26 percent year-on-year increase.

Banco Popular has a defined orientation to consumer credit, and is leader in retired and employees credits, with wage income as payment source, by means of discounts on their salaries made by the employer and transferred directly to the Bank. This product, called ‘libranzas,’ allows beneficiaries to take care of their needs regarding education, health, housing improvement and recreation, and assures the bank high financial return, the atomisation of risk and low default. As of December 2010, this credit line totalled $2.3m – 52 percent of the bank’s total credit portfolio.

Also, due to its state-owned origin, the bank has a particular strength dealing with public sector clients, in services as well as in deposits and credit portfolio, mainly in libranzas.

Among the strategies launched in recent years is targeting of the medium-sized enterprise segment (companies with annual sales or income between $1m and $20m), without disregarding its participation in larger enterprises and corporate credits.

Additionally, the bank offers customers other services and products such as chequing accounts, savings, term deposits, credit and debit cards and electronic banking services.

With the merging of its affiliate Leasing Popular last year, other products were included in the bank’s portfolio such as factoring, real estate leasing, capital goods leasing, infrastructure and lease back, which enlarged its customers’ ability to enhance their business needs.

Besides the credit portfolio, the bank has an investment portfolio in fixed income securities, well controlled regarding size and risk, reducing the effect of market volatility. This generates significant liquidity benefits, as it allows Banco Popular to obtain credits from the central bank, guaranteed with securities, most of them issued by the Colombian government.

Geographic and online coverage
Banco Popular has a broad national coverage through its own branch network and transactional integration with Grupo Aval entities. It is present in all main cities of the country and in most of the municipalities.
The bank has taken care to attract attention and new customers with its sites, opening new offices, ATMs, non banking correspondents and technological centres – where internet services, ATMs and telephones are available.

Along with traditional services, the bank has made important efforts in developing electronic banking, offering products and services online or by other transactional networks.

Profits and quality
The results of the permanent updated strategy of the bank are shown in its profit performance, which in recent years has ranked among the top performers in the banking industry – and in some quarters, led the field.

With last year’s net profit of $184m, Banco Popular obtained a return over equity of 23.5 percent as of December 2010, far higher than the 16.7 percent average of the Colombian banking sector.

This result follows from the suitable strategies developed for the management of the banking business variables – including the bank’s emphasis on financial intermediation, with high productivity standards and low risk.

The bank’s growth has been accompanied by efficient management of credit risk, using a strict control on new credits and an appropriate payables collection process, which allows the bank to maintain better than average levels of credit portfolio. This is how the productive assets of the bank represented 91 percent of the total assets as of December 2010.

The bank also develops commercial strategies on segmentation in order to assist clients according to their particular needs, helping both client retention and recruitment.

On the other hand, Banco Popular maintains a funding mix for credit hedging, mainly through chequing accounts, savings accounts, term deposits, and controlling financial expenses with a considered balance of cost and term.

A large portion of the bank’s deposits are obtained by means of banking services agreements with clients, who are committed to maintain average amounts in their accounts as a reciprocity; these resources are characterised by their high level of permanence and contribute to the funding stability.

Better indicators of administrative efficiency have also contributed to the bank’s profits. As of December 2010, the operative expenses vs. financial income ratio was 33.8 percent – better than the 44.5 percent of the total Colombian banking system.

Technology
With the aim of offering a fast and secure service to its clients, the bank has made important investments to keep its technology up to date and optimise its internal processes – focused on strengthening its internal platform, data storage systems, telecommunications and security schemes. This has enabled the broadening of services and products offered, along with the business strategy for each one of the target segments of the bank.

The bank also works with alternate contingency and operation centres – which, in the event of an accident in its primary data centre, would allow the bank to restore operations and recover its processing and production capacity. For this reason, ICONTEC has ratified during the last six years the quality certificate ISO 9001 that was granted to the bank in the year 2004 for some of its products and services, including libranzas.

Conservative risk management
In accordance with the orthodox policies of the bank, the handling of risk is part of its culture and complies with all legal regulations regarding credit, market and liquidity risk, operative risk and assets money laundering control, established by the Colombian Financial Superintendence, according to the Basilea Committee guidelines.

The strong performance of the bank is acknowledged by risk rating agencies BRC Investor Service SA and Value and Risk Rating SA, which have granted maximum rating AAA for long term debt and ‘+1’ for short term debt.

These rating entities support the results in the equity capacity of the bank, its positive financial results, the credit portfolio growth, the focus on specific market niches and the outstanding position of quality and hedging indicators. As one rating agency states, “They manage to keep the bank as one of the soundest and most profitable credit establishments of the Colombian financial system.”

Outlook
During the past years of world crisis, Colombia showed a positive performance, due to the conservative management of the monetary and fiscal policies and to the stability and soundness of the financial sector.
This has produced economic growth, improved the average living standards of the population and increased the foreign investment in different sectors such as mining, oil, energy and telecommunications.

For 2011 the country is expected to keep up its growth rhythm, which forecasts a good prospect for Banco Popular’s performance and continuance of its excellent indicators.

The promise of Paraguay

Posted on April 19, 2011 by

Many still think of Paraguay as the ‘forgotten country’ – and although that label is no longer valid, it’s not hard to see where it came from. Paraguay is bordered by much more populated countries – Brazil, Argentina and Bolivia – and it’s land-locked. Not exactly on the tourist trail, it was long ignored by all but the most adventurous travellers. Having been ruled by dictatorships for nearly all of its 200 years of independence, its reputation has been plagued by human-rights abuses. Further, until the last few years Paraguay’s economic performance has been – to put it mildly – undistinguished. For good measure, the banking sector nearly collapsed, not once but twice, in the final years of the millennium.

However Paraguay is too modest for its own good. Under much more enlightened governance it has been catching up fast, installing a wide range of economic and social reforms that increasingly put it on the global map for astute investors seeking the kind of opportunities that are only available in fast-modernising countries. The banking sector, for instance, is unrecognisable from the one that once thrived on the laundering of money, while taxation has undergone a thorough overhaul that has made it one of the most attractive regimes in the entire region.

Taken together, the reforms helped the country bounce back impressively from the financial crisis which reversed its seemingly unstoppable rise in gross domestic product.

Reforms continue apace under president Fernando Lugo, a former priest, and finance minister Dionisio Borda, who has an international reputation for what the IMF called “macro-economic stability.” Right now, he’s in the process of pushing a cost-cutting programme through the executive branch that will reduce public expenses by over three percent and he expects similar percentage cuts from Congress and the judiciary after the latter two branches went on a job-hiring spree.

In the next parliamentary session the government will take another step in the rehabilitation of the banking sector by passing a law that provides for the seizing of any laundered assets. “We are very tough on money-laundering here,” points out Conor McEnroy, Chairman of Sudameris Bank.

Global approval
The results of this belated programme of reform are unarguable, as the latest World Bank/International Finance Corporation’s survey on the ease of doing business shows. On all counts Paraguay is moving up the rankings. Overall it stands at 106 and, while there’s obviously room for improvement, it’s moved ahead of other nations in its region such as Argentina (115), Brazil (127), Ecuador (130) and Bolivia (149).

Similarly, the ratings in crucial areas such as protection of investors, the obtaining of credit, speed in providing construction permits and enforcement of contracts are improving all the time – and generally exceeding those of its neighbours, some of them by comfortable margins. For instance in terms of protection of investors – a prime consideration for foreign capital – Paraguay ranks at 59, which puts it well ahead of Brazil (74), Argentina (109) and Bolivia and Ecuador (tied at a dismal 132).

There’s still a lot of work to be done, as the IMF notes in its latest report. Some of the state-owned institutions are inefficient and cumbersome, and a lot of red tape remains to be cut.

However Mr McEnroy is a keen and involved observer of Paraguay’s rapid reforms and he likes what he sees. As head of Paraguay’s fifth-largest financial institution, he’s had a ringside seat. And on the basis of what he’s observed in the seven years since his Abbeyfield Group bought the then-ailing bank, the former Swiss Bank Corporation executive is more than optimistic for the nation’s future. “I see GDP growth of five to eight percent for the foreseeable future,” he told World Finance. “Paraguay is a country that has passed a milestone… How many countries have it to say that international reserves are more than twice national debt; and in the practice Paraguay has balanced budgets.”

He cites a few vital signs that suggest a bright tomorrow for a once benighted nation. Take, for instance, the kind of commodities that are in fast-rising, global demand. Paraguay is the world’s largest exporter of organic sugar. It’s also a big exporter of soya beans, sesame seeds and high-quality beef. In beef alone, the value of exports, mainly to Russia, the Middle East and Europe in the form of specialty products, is approaching the $1bn a year mark.

“Paraguay has an important regional and global role as a low-cost commodity producer for the food industry,” explains Mr McEnroy. However, rather than rely on long-established industries – profitable as they are – the nation is also capitalising on its historic husbandry and agricultural skills by developing a high-margin horticulture industry in fruit and vegetables – notably oranges and limes.

Both industries are kick-started by fertile but inexpensive land. While good cattle country can be had for as little $50 a hectare, prime horticultural land is available at $4,000 a hectare, low by the standards of competing regions. As economists point out, the availability of land at these prices gives investors a low-cost advantage in export markets.

Mindful of the need to attract foreign investment, tax reform has been nothing short of revolutionary, particularly so for foreign investors. Under the so-called 60/90 law, foreign investors are permitted to repatriate the first 10 years of dividends from an investment without being charged withholding tax. In a similar capital-attracting concession, imported equipment is landed VAT-free.

The rest of the tax regime has been streamlined to attract foreign capital and know-how. The simplest way to understand it, say locals, is to think in terms of 10. Corporation tax is 10 percent, VAT on everything except luxury goods is 10 percent, and the individual tax rate is 10 percent (At the time of writing, however, the government was considering raising taxes on windfall earnings from exports, particularly of soya bean and beef, to meet a budget deficit – albeit a modest one by western standards).

FDI windfall
Unsurprisingly, foreign capital has been flowing nicely. Although most foreign investment originates from such reliable sources as the World Bank, the Inter-American Development Bank, the IMF (which is quite a fan of Paraguay’s progress) and other state, semi-state and multi-lateral institutions, foreign investors have begun piling into Paraguay as trust has built in the quality and permanence of the recent bout of reforms. From a low point of less than $40m in 2004, foreign direct investment (under the 60/90 tax incentive scheme) has since soared. By 2006, it more than tripled to $130m and, apart from a blip in 2009 because of the global financial crisis and a drought, it has grown ever since.

Predictably, the initial surge in outside capital originated from the Mercosur – that is, the regional common market – in the form of Brazil, Uruguay and Argentina, as well as from closely-connected nations such as Chile, Peru and Colombia.

But that’s starting to change, explains Mr McEnroy. In the last few years there’s been a steady stream of investment from European family businesses and offices, some of whom have long connections with the region and want to get on the bandwagon.

Industrial innovation
Traditional agricultural industries may have provided the foundation of Paraguay’s recovery, but new ones are emerging on the back of economic growth. The capital Asuncion, which has a population of 520,000 including many young professionals in the city proper, has become a preferred location for Spanish-speaking call centres for banks and telecom companies (among other industries) scattered around South America.

Another fledgling but promising assembly industry is Asian-designed, low-cost motorcycles and scooters for sale in Paraguay and further afield – but especially in Asuncion, where a staggering 65 percent of the population is under the age of 30.

As a junior member of Mercosur, Paraguay qualifies for special domestic-content rates of 40 percent that help give it an edge in this and other relatively recent assembly industries such as computers and electro-domestic goods.

Other industries that are rapidly transforming the nation’s economic landscape are brewers, energy (especially in the form of low-cost, exported hydro-electricity from the Itaipu station) and textiles.

Indeed hydro-electric energy is another engine of growth. “Paraguay has power to burn and is one of the biggest exporters of power in the world,” Mr McEnroy points out. “The agreement with Argentina on Yacreta will expire shortly and that with Brazil for Itaipu in a little over 10 years: soon we’ll be bursting at the seams with cheap energy for any energy intensive industry that wants to set up in Paraguay.”

The rich, fertile and vast land area is seen as another building block: forestry is booming, especially in the long-fibre trees used by the newsprint industry. And, proof positive that the world is finally taking notice of Paraguay, Asuncion has the seeds of a conference industry with the arrival of global brands such as Sheraton, Accor and Ibis.

Resource riches
The fabled Amazon is also a vital tool in Paraguay’s recovery. Widely seen as a muddy, piranha-infested river braved only by intrepid paddlers, it is in fact a vital artery to export markets; playing the same role that the Mississippi plays in the US. Another increasingly busy waterway is the 1,630-mile Paraguay River that is attracting the interest of some of the world’s biggest port operators, including one from Asia that is looking at a substantial investment along its banks. Meanwhile, traffic along the river – which runs through major trading nations such as Brazil, Bolivia, Paraguay and Argentina – is growing, especially in grains and boxes.

“Shipyards are turning out barges as fast as they can build them,” says Mr McEnroy.

Oil exploration is on the rise. Having enviously eyed the enormous contribution that oil and gas have done for Brazil, Paraguay has only just changed highly protective laws to encourage exploration, in particular for methane and hydrocarbons. “Under the old laws, exploration licences were issued for 12 months at a time, which wasn’t nearly long enough, and were renewable only once,” explains Mr McEnroy. “But the government has brought licences to international standards and given companies eight years to prospect.”

Renewing its promise
Paraguay’s membership of Mercosur is seen as important for the nation’s future. South America’s leading trading bloc, it’s short for Mercado Comun del Sur – the common market of the south. Exactly 20 years old, it has a combined GDP of nearly $3trn but it differs from the European Union in being an economic and political agreement between just four nations – Argentina, Brazil, Paraguay and Uruguay. Venezuela under the left-wing government of Hugo Chavez would like to join Mercosur but Paraguay, fearing its influence, repeatedly exercises its veto to block its membership.

Paraguay’s recovery began in 2000 with, as is often the case, a severe economic shock in the form of a collapse of the banking sector. A newly independent central bank took control, shutting down corrupt banks, cancelling licences, tightening supervision and raising standards across the board except for the smaller and systemically less significant cooperatives. A direct result of this spring clean is that foreign-owned banks such as Sudameris dominate the sector.

Today, Paraguay’s rules for a bank’s capital adequacy would shame many of the institutions in Europe. “They’re some of the toughest in the world,” notes an approving Mr McEnroy. “Tier one capital must be a minimum 10 percent by law, but on average tier one is up to 17 percent. The tier one of Sudameris is 16 percent. We don’t do funky stuff in Paraguay. Regulation is plain vanilla, black and white, no grey. Banks are run very conservatively here.” Thus the central bank is an unapologetic advocate of the kind of old-fashioned banking practices that are on the way back around the world.

Mr McEnroy ticks off the main elements of Paraguay’s recovery. “The turnaround had a phenomenal effect on the economy,” he remembers. “Some of the main elements were the reform of state companies, although there’s still work to do there. The business of government was greatly improved, for instance in the collection of taxes. And corporation tax was reduced from 30 percent to 10 percent. The interesting thing is that, instead of tax receipts falling, the amount of tax collected rose by five times.”

A beneficiary of the reform process has been the local currency, the Guarani. As the IMF said in its latest report, “all available indicators suggest the level of the Guarani is consistent with its fundamentals.” Named for the nation’s original language, the Guarani has not been rebased since it was established in 1943 and, in a red-letter event, the currency will be re-based later this year with three zeroes being cancelled.

The important thing, as Mr McEnroy points out, is that the currency is holding its own in the Mercosur and beyond. “It will continue to appreciate modestly against the US dollar and the euro, as it’s been doing.”
The rise of Sudameris Bank says much about the new-look Paraguayan economy. As Mr McEnroy freely admits, it was not exactly the most impressive institution in the country when Abbeyfield bought it in July 2004. “It was the last bank in the queue,” he says. At the time it could boast net income of just $100,000 and $120m of assets (the Paraguayan economy is still about 45 percent “dollarized” – that is, the volume of greenbacks in use). But after seven years under a hand-picked management and board that includes senior central bankers drawn from around the region and from Europe, net income in 2011 will exceed $16m on assets of $700m. That kind of growth could not have happened in the moribund economy of the final years of the millennium.

A troubled history
Paraguay’s material and social development has been hampered by almost 200 years of dictatorships. Indeed the so-called Colorado party, which ruled uninterrupted for more than half a century and remains a powerful influence, routinely adopted populist economics that rode rough-shod over the vast majority of the population. When Lugo won the presidency in 2008 on a mandate of improving opportunities for Paraguay’s 6.3m people, it was the first time government had changed hands to an opposition party peacefully.

A former bishop of San Pedro, Lugo is only the second socialist president in nearly 200 years. He promised economic and social salvation for a country “deeply drowned in misery, poverty and discrimination.” So saying, he refused his presidential salary.

However Lugo is in a vulnerable position. In Paraguay’s bicameral system dominated by coalitions, President Lugo has no majority. The Liberal party, which is the biggest grouping in the governing coalition, does not support his reforms in their entirety. As the Bertelsmann transformation index, a measure of turnarounds in nations, notes, “the topic of land reform in particular is highly contested.” Indeed land-owners have long formed a powerful clique that protects its interests.

Still, this is clearly a different Paraguay. The workforce is young, aspirational, impatient and tech-savvy. As Mr McEnroy points out, 85 percent of the population own a mobile phone, a remarkable percentage in a country where the average per capita income is $4,900, although rising. And with rising incomes and material standards, the domestic market will grow in proportion, predicts the Sudameris chairman.

As that happens, Paraguay will inevitably take its due place on the world map. “This is the untold story, the last frontier,” he says.

Fancy flotations

Posted on April 19, 2011 by

In the break-out from the financial crisis, one of the much-debated issues has been whether the kind of private equity-sponsored initial public offerings seen before 2008 would ever make a comeback.

Although nobody’s predicting the imminent return of $50bn deals, two US flotations have gone some way to settling the issue. The IPOs of pipeline company Kinder-Morgan, which raised $2.9bn, and hospitals group HCA Holdings in mid-March, which investors rushed for nearly $2.8bn, reassured believers such as Kirk Radke, private equity specialist for 101 year-old global law firm Kirkland & Ellis.

For him, the flotations are a precursor of even better things to come. “Those IPOs validated the private-equity investment thesis and will go a long way to answering the questions in investment committees,” he told the magazine. “They are a very important part of the whole capital markets story because they show that equity markets are open and that this size of transactions can be done.”

The HCA float, in particular, astonished observers. Sponsored by Bain Capital and KKR, the Nashville, Tennessee-based group was expected to attract prices of around $27 for 124m shares. Instead investors snapped up 126.2m shares at $30, prompting optimism among market-specialists such as Bill Buhr, IPO stategist at Morningstar. “If you can price a $3bn deal for a hospital operator that has a few warts and so successfully, there are lot of [other] deals that could be done right now,” he told Reuters.

The hospitals group, which was taken private in 2006 in a $21bn buy-out, does indeed have a few warts in the form of heavy debt but the market has clearly discounted the burden in the prevailing environment of low interest rates.

But how much higher can these deals go? According to market insiders, $15bn is currently practicable at a debt:equity ratio of 2:1. “You need two things – debt and equity markets with that kind of capacity,” adds Mr Radke, whose firm is the 11th largest practice in the world by revenues with clients such as Samsung Electronics, Siemens AG, General Motors and BP.

The omens are promising. According to sources, David Bonderman, founding partner of TPG Capital, recently told a private-equity conference in Europe that transactions based on $10bn in debt could be mounted in the US, albeit in the club deals that will probably become typical of the rebound from the crisis. In general Mr Radke agrees with this prognosis: “These transactions can be put together in consortiums – the confidence is there – but the big question is where exactly are the US equities markets at? We’ll know that in coming months.”

As the fund-raising season gathers pace, with firms queuing up to tap sources of finance, the next big question will be put. Namely, exactly which private equity houses have emerged from the crisis with their reputations damaged, intact or even enhanced. “Exactly who will be successful in the coming year is the big question,” predicts Mr Radke. “That will tell us a lot about the new market.”

The total amount raised by the industry as a whole will also tell us a lot, particularly after last year when funds dried up. Just $225bn was raised globally in 2010, less than a third of the $700bn accumulated in 2007 and 2008, and the lowest annual total since 2004. Although giant buy-out firm Blackstone was able to raise $15bn for a new fund earlier this year, that was considered something of an aberration because most of the money was in the pot before the financial crisis. However a continuation of low interest rates in western markets is seen as nothing but helpful.

What’s good for America may also be good for Asia. Mr Radke’s latest annual fact-finding tour of the region’s capitals has convinced him that Asia could be ripe for an explosion of private-equity deals, albeit on its own terms. “The mood in the banks, sovereign wealth funds and other firms I spoke with was very positive. They are very aware of how the private-equity model adds value to portfolio companies,” he reports.

Investment in the region is occurring on three levels. “It’s local, regional and global,” he adds. “New regional funds are emerging in countries like Korea and Indonesia. Most of these are country-specific but they’re also very forward-looking. For instance, Korean investment professionals are looking at opportunities in their own country but also in the wider world. Overall the confidence of investors in Asia is much stronger than it was when I visited last year.”

In that wider world, yet another reason for optimism is the surprising re-emergence of less restrictive borrowing terms known as covenant-lite. Almost demonised by critics in the wake of the financial crisis, “cov-lites” get their name from the softer covenants contained in the fine print that gave more freedom to borrowers. Hardly any cov-lites were written in the last, highly risk-averse 2.5 years.

However, they are making a comeback across the board, not only in new deals but also in the refinancing of existing debt as borrowers seek more flexibility in conditions. So far this year, American companies including retailer J Crew and food group Del Monte have issued some $17bn in cov-lite loans. Although that’s way down on the $100bn written in 2007 alone, it’s a sign of a thaw in extreme risk-aversion.

For Mr Radke, this can be taken as a feather in the cap of the private-equity industry — an acknowledgement by lenders of its generally robust performance during the crisis. “It’s happening in new and old transactions,” he explains. “As clients retool their existing debt, more and more packages are being written under cov-lite terms. Cov-lite loans come with incremental increases in interest rates but they aren’t prohibitively more expensive than covenant-heavy packages. “

The less onerous terms make sense for both sides. Buyers are attracted to the additional yield and are happy to give up a measure of control in return, while private equity appreciates the extra latitude in the way it manages portfolio companies. And very importantly, as the industry holds these companies for generally longer terms than it did before 2008, it also permits private-equity owners to take a more strategic view and deal with unforeseeable events.

Indeed it may yet turn out that cov-lites function better than their covenant-heavy cousins. According to research by Citigroup, the cumulative default rate since mid-2007 for cov-lite debt is almost half that of regular leveraged loans.

Bahrain-leading Batelco continues growth

Posted on April 19, 2011August 6, 2019 by

Batelco now encompasses operations in seven geographies and end-to-end integrated communication services covering fixed, mobile and broadband via state-of-the-art next generation networks.

Batelco offers end-to-end telecommunications solutions for its residential, business and government customers in Bahrain on Next Generation, all-IP fixed and 3.5G wireless networks, MPLS based regional data solutions and, GSM mobile and WiMax broadband services across the countries in which it operates.

Today, the Batelco Group, which is listed on the Bahrain Bourse, operates across seven markets in MENA and India serving the consumer, corporate and wholesale markets in Bahrain and also delivering cutting-edge fixed and wireless telecommunication services to its customers in Jordan, Kuwait, Egypt, Saudi Arabia, Yemen and India.

Batelco’s overseas operations continue to add value to the group and in 2010 contributed 34 percent of gross revenues. The group’s successful expansion strategy is establishing the Batelco name as a dependable and reliable company throughout the MENA and Asian regions and resulted in over 9.2 million subscribers at the end of 2010, equivalent to a massive 67 percent year-on-year increase over 2009. The group announced gross revenues for 2010 of $902.7m and net profit of $230.2m.

In the Kingdom of Bahrain, the group’s home market, Batelco retains the position as the leading integrated communication services provider in spite of intense competition from a number of companies offering mobile and internet services. Bahrain is considered the most liberalised and competitive telecommunications environment in the MENA region.

Serving both the corporate and consumer markets in Bahrain, Batelco delivers cutting-edge fixed and wireless telecommunication services. At the end of 2010, Batelco Bahrain’s customer base stood at 770,000 mobile customers, 88,500 Broadband customers and 185,000 fixed line connections, confirming its market leadership.

Awards success
In 2010, for the second successive year, Batelco took home the Telecoms Company of the Year award for the Middle East Region at the annual Arabian Business Achievements Awards 2010.

Batelco was also voted as Bahrain’s Leading Quoted Company for Investor Relations (IR) at the Middle East Investor Relations Awards ceremony held in Beirut, Lebanon in 2010.

The annual IR awards, which recognise practitioners and companies in the Middle East for best IR practices at global standards, was attended by fund managers and capital market executives who gathered to celebrate the development of excellence in IR standards across the region.

Winning such a coveted award validates Batelco’s high standards and transparency in all the company’s investor relations communications. Batelco has significantly raised the bar in recent years by implementing best practice corporate governance initiatives across all areas of the company including the key area of investor relations.

Batelco is committed to principle-based, value-driven corporate governance, embracing the governance principles led by the Bahrain Ministry of Industry and Commerce and developed by the Central Bank of Bahrain (CBB).

In preparation for the introduction of mandatory corporate governance compliance in the Kingdom of Bahrain from January 1st 2012, Batelco is taking all necessary steps during 2011 to ensure that the company remains fully compliant and meets all the applicable requirements of the new code.

Batelco affiliates and subsidiaries
Umniah, Jordan: Umniah, Batelco’s 96 percent owned subsidiary in Jordan, continues to demonstrate its strength and popularity in the Jordanian market with a mobile customer base at the end of 2010 of 2.1 million and 19,000 broadband customers, increases of 31.5 percent and 5.1 percent YoY respectively.

A driving factor behind Umniah’s success is its sound business strategies and its provision of a comprehensive range of telecom solutions that includes advanced mobile, Internet and business solutions. Umniah operates a nationwide EDGE 2.75G network with more than 1,350 base stations, offering great coverage both inside and outside the Amman.

Furthermore, and as part of its commitment to help stimulate development within Jordan’s telecom sector, and in line with the directions of His Majesty King Abdullah II, Umniah contributed through its wide variety of services towards increasing mobile and internet penetration, which supports the directions and objectives of the national strategy for the Jordanian telecom sector.

Broadband services, Umax and UDSL, combined with data business solutions and state of the art mobile telecom services, underpin Umniah’s growth for the future.

Qualitynet, Kuwait: A 44 percent Batelco-controlled subsidiary company, Qualitynet meets the challenges of an era of convergence by providing total ICT solutions. Qualitynet remains the clear market leader in the Data Communications and Internet Services industry in Kuwait, where there are four licensed ISPs delivering services.

Qualitynet’s market share for broadband services is estimated at 40 percent, with data communications estimated to be 55 percent at local level and 70 percent at international level. Qualitynet is the first telecom operator in Kuwait to open up terrestrial broadband services with Iraq.

During the last two years, the company has launched global managed services in partnership with global players to serve corporate and multi-national companies, as well as surveillance and security services to meet the growing demand from corporate clients and shopping malls.

Qualitynet continues to distinguish itself as the leader in providing call centre services to its customers with differential service levels. Qualitynet has also been voted over two consecutive years as a ‘Super Brand’ within the State of Kuwait.

Etihad Atheeb Telecom, Saudi Arabia: Etihad Atheeb, in which Batelco holds 15 percent equity, has grown its broadband customer base by a staggering 100 percent to 104,000 by the end of 2010, thanks to the commitment of a strong team and the reliability and popularity of its GO brand.

The company’s services include numerous wired and wireless services such as voice telephone communications, data services, Internet telephony services, broadband Internet via WiMax technology, fixed telephone lines, and optical fibres to homes and businesses, in addition to video services.
Arabian Business Economic magazine ranked GO as one of the top 50 brands in Saudi Arabia in September 2010, a considerable achievement for the company after only a year and a half of commercial operations as the first 4G Cloud Telecom in the region.

SabaFon, Yemen: Sabafon, in which the Batelco Group holds a 26.94 percent equity investment, has continued to impress and ended the year 2010 with more than 3.6 million customers, an impressive 40.2 percent increase year on year. Sabafon is the largest GSM mobile operator in Yemen and offers national coverage with over 940 base stations across the country.

The company started its operations in February 2001 with the vision to establish a strong, dynamic and flexible organisation to serve and benefit the people of Yemen with the latest GSM technology and services.

The company provides high quality and innovative mobile services and presents the best value to all Yemeni customers.

S Tel, India: S Tel is a joint venture of Siva Industries & Holdings Ltd, India, with BMIC Ltd. holding 42.7 percent equity. S Tel currently operates in five of its six licensed circles – Bihar, Odisha, Himachal Pradesh, Assam and North East and is now in the process of rolling out services in its final circle Jammu & Kashmir. S Tel is the only new telco to rollout services at all locations where spectrum is available and the only new entrant to win 3G licenses.

In a short span of just a year S Tel has a customer base of over 2.3 million (as on 31st December, 2010) generating more than 13 million minutes a day with a strong and dependable network of 3,478 sites and over 35,000 points of sale.

S Tel has pioneered, in the highly cluttered mobile telecom market, the ‘bulk minutes’ concept and has created a unique brand and product proposition.
With the ethos of collaboration and partnership, S Tel has forged best-in-class partnerships with over 40 leading organisations and also conferred with the prestigious CIO ‘Innovation Awards 2010’ for its innovative IT Project ‘C FUTURE’.

Batelco Egypt Communications (SAE), Egypt: Batelco Egypt is wholly owned by the Batelco Group. The company was established in 2003 with an initial focus on providing worldwide telecommunication services to corporate and multinational customers. Today, Batelco Egypt is focused on providing end to end data solutions to multi-national companies through the Batelco Group’s worldwide network.

The company’s services are based on Global IP-VPN through Batelco’s own infrastructure in the Middle East and it is further extended across the globe through alliances with international partners. Batelco Egypt aims to deliver one-stop-shop services to cater to all of its customers’ diversified communication needs.

Acquisitions remain the number one priority on the Batelco Group’s agenda for 2011 with the Middle East, North Africa and India/Asia Pacific regions being the main areas of the company’s focus.

Banorte expands franchise

Posted on April 19, 2011 by

Banorte is one of the largest banking institutions in Mexico in terms of assets, loans and deposits as well as one of the country’s most profitable banks over the past decade. It has the largest presence in Small and Medium Sized Enterprise (SMEs) banking, financing and capital access for home developers, third party correspondent banking and distressed asset management. It is the second largest mortgage bank, the third largest in car lending and financing to states and municipalities and the fourth most important in corporate banking and payroll lending.

Banorte’s main business is retail banking with 8.5 million clients and 1,500 corporate clients, having a footprint of 1,134 branches, 5,004 ATMs and 58,336 POS’s nationwide. It also provides a wide array of products and services to more than 7 million additional clients through its retirement savings funds, annuities and insurance companies. It operates a broker dealer, mutual funds, leasing, factoring and warehousing, among other business lines. It manages more than $55bn in assets and is the only large institution controlled by Mexican shareholders.

Current strategy
The main focus of the bank’s strategy in the recent past has been to strengthen its fundamentals, complement organic growth through acquisitions and expand its international presence. The main differentiators of Banorte among the top financial institutions in Mexico are continuous innovation, committed personnel, conservative risk management, increasing market shares and sound financial performance. Since its inception, Banorte has had a principle of shared responsibility and value creation, added to the genuine concern for preserving the environment, which has translated into a model of sustainability that takes into account all its stakeholders with a long-term vision, achieving as a result high standards of excellence in human resource management and corporate practices. The bank was recently recognised as one of the best places to work in Mexico and to launch a career. In corporate governance, 50 percent of its board members are independent and Don Roberto Gonzalez Barrera, our majority shareholder and architect of the modern Banorte was designated as Chairman Emeritus, while Guillermo Ortiz, the former Governor of the Central Bank and Minister of Finance, was appointed as Chairman of the Board. Also, the Social Responsibility Annual Report for 2009 achieved the level of GRI B+, proof of the continuous efforts to evolve as a socially responsible organisation.

As part of its expansion strategy, Banorte recently announced a merger with IXE, a Mexican bank specialising in Premium and Wholesale Banking. This merger will consolidate Banorte’s presence as the third largest bank in Mexico, with the second most important footprint in Mexico City and a leading presence in leasing, factoring, brokerage, mutual funds, investment banking, DCM and ECM, among other business lines. After the merger, Banorte will add Ps. 113.6n in assets and 155 branches to its existing base, among other things.

In the USA, Banorte has been undertaking a “three-pronged strategy” that has produced significant benefits for its clients via private banking and brokerage services through Banorte Securities, as well as retail banking through Inter National Bank (INB), a Texas-based bank, and remittances services through Uniteller in New Jersey and Motran in California.

Presence in financial markets
The bank’s shares trade in the Mexican Stock Exchange (Ticker: GFNORTEO), and is one of the 10 most liquid stocks in the IPC index. Also, as part of a strategy to expand its presence in international financial markets and access new investor pools, Banorte established in 2009 a Level I ADR Program (Ticker: GBOOY) in the OTC markets, which recently started trading in the OTCQX International Premier electronic platform. Additionally, Banorte was listed in 2009 in the Madrid Stock Exchange’s Latibex market (Ticker: XNOR), being included in the FTSE Latibex All Shares Index and the FTSE Latibex Top Index as part of the listing. The bank has also issued in the past senior unsecured debt and subordinated debentures, all of which currently trade in the international markets.

Future outlook
Over the next 12 months, the bank’s strategy will focus on increasing profitability by successfully integrating IXE’s operations into Banorte and realising the synergies from the merger, as well as by taking advantage of the banking penetration opportunities that exist in Mexico and by cross selling retail products to the increasing client base. The bank will continue to develop innovative products that best suit the needs of the Mexican population and SME’s, increase its service standards, modernize its operations and IT platforms, grow organically and through strategic acquisitions, enhance its human capital, proactively manage its balance sheet while integrating social and environmental best practices, hoping to make Mexico stronger.

David Ricardo Suarez is Head of Investor Relations at Banorte

For more information tel: (52 55) 52 68 16 80; email: investor@banorte.com

Kuwaiti FX broker wins key to Europe

Posted on April 19, 2011 by

Founded in 2005, Arab Financial Brokers (AFB) provides online brokerage and trading services, alongside micro trading services through its AFB and AFB Multi Terminal online trading platforms. Its clients can be found in 52 countries – they vary from individual speculators to asset managers, white labels and introductory brokers. And as a mark of the company’s progress, were awarded Best Arabic Online Platform and Support (2009, 2010) at the Middle East Forex Trading Awards.

A closed shareholding corporation registered under Kuwaiti commercial law, AFB was created to address the increasing number of currency and futures trading demands in the Middle East (and in the Gulf Region in particular) and to cater for clients investing heavily in the futures and spot forex markets.

According to General Manager Abdullah Abbas, AFB’s management team identified the opportunity for a regional trading platform that would develop a niche market geared for individual forex traders and speculators.

“At Arab Financial Brokers, our goal is to provide the best online brokerage services for investors by offering competitive conditions and high quality services while building a long term relationship with our clients,” says Mr Abbas. “Our management team created a new generation of brokerage firms that resolved customers’ needs for speed, accuracy and accountability in order to pursue forex pricing and trading.

“At the same time, we leveraged relationships with strategic alliances and experienced forex professionals, and employed a team of experts to serve our customers in the Middle East, Gulf Region and countries worldwide.

“Our founding principles are aimed at initiating the best technological infrastructure and utilising the most advanced forex trading software, while at the same time delivering the best possible client services,” he says.
AFB provides an online trading platform for individuals, introducing brokers and financial institutions that want to speculate on the exchange rate between two currencies.

In doing so, traders buy and sell currencies with the hope of making a profit when the value of the currencies changes in their favour, whether from market news or events that take place in the world.

The forex market is the largest market in the world with daily volume of over $1.7trn making it one of the most exciting markets for trading.

“The main advantage of the forex market is that it is a true 24-hour market,” explains Mr Abbas. “No matter what time it is, there are always buyers and sellers somewhere in the world actively trading forex, which means that investors can respond to breaking news immediately.”

Forex Islamic and swap free accounts
Aiming to meet the needs of Muslim forex traders, and in strict compliance with Islamic Shariah Law, AFB offers swap-free Islamic accounts to traders, for whom interest and swaps contravene their religious beliefs. They also give their owners an opportunity to hold their positions for an unlimited amount of time.

“We are like no other world traders,” says Mr Abbas. “We respond to our Arab and Islamic clients’ needs and in compliance with the Islamic Shariah, we have the opportunity to run our own forex accounts, referred to as Forex Islamic Accounts.

Low trading rate of $50
Alongside offering this vital service for their Muslim clients, AFB provides individual investors with access to all major capital market sectors. It focuses on providing retail clients with professional tools to profit from multiple markets, not just forex.

AFB provides its customers with the chance to start trading at a rate as low as $50, through its Micro Account service.

“Our Micro Account is a great opportunity for traders from all over the world to trade smaller transactions online under real market conditions and there is a minimum investment of only $50 to open an account,” says Mr Abbas. “Traders can deposit and withdraw funds easily and quickly when it is convenient for them via our website, making it more straightforward than ever to get started.”

For the more serious investor, a fast, reliable and secure online trading platform is also available in the form of AFB Trader. This platform enables clients to trade all major forex, energy, metal, soft commodity, equity and indices right from their desktop.

“Our advanced online trading platform, AFB Trader, provides a unique trading experience delivering fast, reliable and secure trades in an easy to use interface,” says Mr Abbas. “It gives our clients access to real-time tradable prices and the power to trade global markets from one integrated account 24 hours a day.”

Traders are also able to get full access to their account and all the services provided by AFB, at anytime from anywhere, through AFB’s mobile service.

“Our AFB Wap technology allows anyone with a mobile phone to check the current market quotes around the clock and get access to real time prices worldwide,” says Mr Abbas.

Individual investors
The key to AFB’s popularity with independent affiliates is its ability to deliver reliable, competitive currency pricing and quality in its products and services, says Mr Abbas. “Traders who use AFB achieve maximum security and reliability to get the information needed for instant results,” he says. “Our systems utilise a fast order execution and trading structure supported by multiple redundant server clusters, internet connections and backup power systems.”

As a leader in foreign currency trading, Arab Financial Brokers is also able to offer smaller transactional sizes and allow traders of almost any size, including individual speculators or companies, the opportunity to trade the same rates and price movements as the large players who once dominated the forex market.

But what makes AFB so successful? The advantages of dealing with his firm, according to Mr Abbas, are clear.
“Our strength and stability is structured and based on the foundations of the Kuwaiti trading regulatory authority laws and our activities, trading and services policy is built and committed to maintain security and protection for our client’s investments,” he says.

“Aside from our swap-free accounts, we offer added benefits which include 24 hour trading online and via the telephone, instant fills, free news and research resources, a low minimum investment, multilingual support… We also provide real-time streaming quotes, charts, account information and management, a fully secured platform and full product range, varying from foreign exchange to future contracts, and instant online support is available through our experienced and knowledgeable staff members.”

Good customer service is especially vital, he says: “We have clients in 52 different countries, including some in Europe and the USA, however our main customers come from the Middle East, North Africa and the Far East such as India and Pakistan, so in turn we provide 24 hour customer support in a wide range of languages; English, Arabic, Indonesian, Indian, Mauritian, Urdu and Turkish.”

Key to Europe
All of these services have made AFB one of the world’s leading forex brokers, but it also has plans to expand further over the coming months.

Following on from its success in attaining the Cyprus Investment Firm registration license [CIF] from the CySEC in 2010, AFB has set its sights on London.

“The license from Cyprus was the first ever CIF license to be issued to a firm from the State of Kuwait,” says Mr Abbas. “[It] will help us spread our means and attract more clients, mainly from Europe, Russia and the USA.”

So the future looks bright for AFB; with a registration license from Cyprus obtained, one from London on the horizon and its wide range of unique client services, AFB are sure to keep providing one of the best online brokerage services for investors in the Middle East and around the world.

Kesko pursues sustainable growth

Posted on April 19, 2011 by

Kesko was established in 1940 by four regional wholesale companies, with the purpose of sourcing and delivering goods to K-retailers on competitive terms. This function has remained, although the operation has expanded to cover the management and development of store chains, retailing and store site operations.

Kesko was listed on the stock exchange in 1960. At the end of 2010, there were over 38,000 shareholders, of whom 26 percent were foreign. In 2010, Kesko’s net sales totalled some €8.8bn and the whole K-Group’s (i.e. Kesko and retailers) sales amounted to some €11bn. Kesko operates in eight countries and has about 22,000 employees, while the whole K-Group staff is 45,000. More than a million customers shop at K-stores every day. Since 2005, Kesko’s President and CEO has been Matti Halmesmäki, MSc (Econ), LL.M.

Seventy years of responsible operation
In 2010, Kesko’s net sales returned to growth with an increase of 3.9 percent from the previous year. Improved management of inventories coupled with cost reductions contributed to a more than 70 percent improvement in operating profit over the previous year. Kesko has a very strong balance sheet and the company has no net indebtedness. This enables capital expenditure on future growth areas, and capital expenditure will grow in 2011 – with the main emphasis on the food trade and the building and home improvement trade. Growth is sought especially in the rapidly developing Russian market.

For years, Kesko has been included in the most important sustainability indices and ranked among the best companies in the world in the compliance with the principles of sustainable development. Kesko is included in the Dow Jones sustainability indices DJSI World and DJSI Europe. In the 2010 assessment, Kesko ranked the best in the sector in operational eco-efficiency, environmental reporting, risk management, and anti-corruption and anti-bribery practices. Kesko is included in the FTSE4Good Global and FTSE4Good Europe indices focusing on responsible investment.

Kesko is also included in The Global 100 Most Sustainable Corporations in the World list, published annually at the meeting of the World Economic Forum in Davos. Kesko has been on the list since 2005. Kesko’s ranking on the list published in January 2011 was 26, compared with 33 a year before.

In the Sustainability Yearbook 2010, published by the SAM Group in January 2010, Kesko’s sustainability work qualified in the SAM Silver Class in the Food and Drug Retailers sector. Kesko was also recognised as the ‘Sector Mover,’ a qualification given to the company that has achieved the biggest proportional improvement in its sustainability performance. Kesko’s responsibility programme covers the period 2008-12 and the updating will start in 2011. The CSR report provides information on the performance of the programme with various indicators and case studies.

Sustainable business success
Kesko is strongly committed to the best of good corporate governance practices – openness, transparency and the pursuit of the best interests of the company and its shareholders – encouraging confidence in internal and external stakeholders.

A continuous improvement of Kesko’s corporate governance has prominently featured on the agenda of Kesko’s board of directors and top management, says Anne Leppälä-Nilsson, the Kesko Group’s General Counsel. She is responsible for the Kesko Group’s legal affairs, enterprise risk management and internal audit, all of which are key corporate governance support functions.

Anne Leppälä-Nilsson has actively contributed, not only to the development of Kesko’s corporate governance, but also to the self-regulation concerning all listed companies in Finland and the Nordic countries. Ms Leppälä-Nilsson chaired the corporate governance working group which updated the Finnish Corporate Governance Code 2008, represented Finland in the Nordic corporate governance working group, and was a member of the 2003 and 2010 corporate governance working groups.

Communications and responsibilities
Kesko has wanted to exceed the level of corporate governance obligations of listed companies and to establish explicit and transparent decision-making structures and systems which are communicated to the market in an open and up-to-date manner. Kesko’s website at www.kesko.fi/investors provides the most up-to-date information, with the company’s corporate governance principles, decision-making structures, decision-makers and their background, board and management remuneration and reporting all easily accessible to stakeholders.
Kesko’s enterprise risk management, major risks, and the internal control and internal audit functions are described extensively.

Kesko’s one-tier governance model is clear. The board is composed of seven non-executive directors, all of whom are elected for a three-year term at Kesko’s general meeting. The operative management is not represented on the board, as the board’s principal functions include choosing the managing director as well as supervising and controlling the company’s top operative management.

The decisions of the board members are made in the best interests of all shareholders and the company – it is therefore important that the majority of the board’s members are independent of the company, and all board members are independent of significant shareholders.

Committees enhance preparation
The audit committee and the remuneration committee are elected by the board from its own members to enhance the efficient preparation of matters for the board. The committees have no autonomous decision-making power, and all decisions are made by the board. The board has confirmed a charter for the committees, which defines the matters to be prepared by them. This enables the board to concentrate more extensively on strategic matters.

The audit committee addresses and evaluates financial reports regularly released to the market; the audits, reports and consultation services provided by auditors; the efficiency and function of internal audit and risk management functions; and the implementation of Kesko’s responsible operating principles. The audit committee also regularly conducts a competitive tendering of auditing services and prepares a proposal for the auditor elected by the general meeting.

The remuneration committee evaluates and prepares, for decision-making by Kesko’s board, competitive and appropriate remuneration and compensation plans for the Kesko Group’s top management. Long-term compensation plans are aimed to align the objectives of Kesko’s shareholders and management with the positive long-term development of the company’s shareholder value. The annual short-term bonus system provides rewards for achieving annual targets to the extent that predetermined criteria are fulfilled. The performance based bonuses have maximum amounts. Any share or share-based compensation plans are resolved by the general meeting.

Kesko’s compensation plans are linked to pre-determined objectives and their realisation. The remuneration schemes are designed to have an incentive effect in enhancing the long-term growth of shareholder value, not in short-term risk-taking.

The openness of remuneration, remunerations schemes and decision-making play a key part in good corporate governance and confidence. On its website, Kesko discloses detailed information on the compensation, fees, benefits, retirement benefits, annual bonuses, option or share remuneration and remuneration criteria of the board members, the President and CEO, and the Corporate Management board as part of Kesko’s remuneration statement.

The board does not have share-based fees. All of the board’s fees are resolved by the general meeting. All of the fees and remuneration schemes of the top management are decided by the board.

Strategic objectives
Profitable growth
– Our objective is to grow faster than market
– We seek growth in nearby areas, particularly in Russia
– We invest in our store network
– We develop e-commerce solutions
– We increase our shareholder value

Sales and services for consumer-customers
– We increase the value of our brands
– Our customer satisfaction exceeds that of our competitors
– Our competitive asset is the K-retailers who know the local customers and their needs
– We use loyal customer information efficiently and commit our customers

Responsible and efficient operating practices
– Our operating practices are responsible
– We efficiently combine retailer entrepreneurship and chain operations
– We leverage our economies of scale and competence for the benefit of customers
– We automate our routines and processes

Kesko’s divisions
Food trade
Kesko Food is the leading operator in the Finnish grocery trade. K-retailers, with whom Kesko Food applies the chain business model, are responsible for customer satisfaction at the more than 1,000 K-food stores.

Kesko Food manages four K-food store chains. Kesko Food’s main functions include the centralised purchasing of products, selection management, logistics, and the development of chain concepts and the store site network. Chain operations ensure the efficiency and competitiveness of business. In addition, Kesko Food’s subsidiary Kespro is the leading wholesaler in the Finnish HoReCa business.

Home and speciality goods trade
Kesko’s home and speciality goods trade consists of clothing, home goods, sports, leisure, home technology, entertainment electronics and furniture. The total number of home and speciality goods stores is 427, which operate in 13 chains.

Building and home improvement trade
Rautakesko is an international service provider which retails building, renovation and home improvement supplies in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Russia and Belarus. Rautakesko manages and develops the K-rauta, Rautia, K-maatalous, Byggmakker, Senukai and OMA retail chains and B2B sales in its operating area.

Rautakesko’s main functions include the centralised development of chain selections, centralised purchasing and logistics, and the development of chain concepts and the store network. There are 331 building and home improvement stores in eight countries and 88 agricultural stores in Finland. All stores in Finland are run by retailers.

Car and machinery trade
This division consists of VV-Auto and Konekesko with their subsidiaries. VV-Auto imports and markets Volkswagen, Audi and Seat passenger cars, and Volkswagen commercial vehicles in Finland, and it also imports and markets Seat passenger cars in Estonia and Latvia. VV-Auto is also engaged in car retailing and provides after-sales services.

Konekesko is a service company specialising in the import, marketing and after-sales services of recreational machinery, construction and materials handling machinery, agricultural machinery, and buses and trucks. Konekesko operates in Finland, Estonia, Latvia, Lithuania and Russia. Konekesko arranges the manufacture of and sells Yamarin boats in Finland and exports them to several European countries and Russia.

Enel Group targets carbon neutrality

Posted on April 19, 2011 by

To protect the planet, as well as to ensure its competitiveness and develop its business, the Enel Group is investing in the best technologies available for reducing emissions of GHG and pollutants, as well as in innovative research.

Enel’s strategy is based on five specific approaches, which cover all of the main elements of carbon neutrality:
– Use of the best existing technologies: Enel’s thermoelectric generation operations are gradually moving towards a mix which includes the exclusive use of high-efficiency plants, and therefore, reduced emissions;
– Developing ‘zero emissions’ sources of energy, such as renewable and nuclear power: Enel’s longstanding leadership in the renewables sector is being consolidated through its renewable energy company Enel Green Power, while an increasingly important role is planned for nuclear power within the group’s generation mix;
– Energy efficiency: Programmes are underway to make the networks more efficient and initiatives are in place to promote the effectiveness of end usage through the group’s energy service companies;
– Research and innovation: Enel is committing important investments to implement demo projects for CCS systems and to develop innovative solar technologies and intelligent networks (smart grids) from 2009 to 2013. It will also promote the spread of electric mobility;
– Global commitment to reduce CO2 emissions through activities to extend projects and best practices in Eastern European and developing countries. Enel will also use the flexible mechanisms introduced by the Kyoto Protocol (Clean Development Mechanism and Joint Implementation), in which the group is a global leader.

Green from the ground up
Since 2004 Enel has played an active role in developing projects – especially CDM – to abate greenhouse gas emissions. Such projects make it possible to optimise the costs of compliance to the European Emission Trading Scheme system (EU ETS), while at the same time favouring the transfer of technologies and sustainable development in Emerging and Least Developed Countries.

Enel has implemented these activities by using a model of vertical integration through its direct involvement in the development of projects in all the technical, commercial, and authorisation phases of the project life cycle. Among private and single buyers, Enel is the world’s largest CDM operator in the primary market. It has contributed with abatement projects that amount to potential avoided greenhouse gas emissions of 200m tonnes up to 2020, both by direct participation and through international funds.

Scouting activities on projects have involved the major developing countries that are currently active in the low carbon market, particularly China, India and South America, where the opportunity to generate important greenhouse gases reductions have been successfully developed.

Many of the projects in Enel’s current portfolio are being developed in China, mainly thanks to the Sino-Italian Cooperation Programme (SICP), which was set up in 1999 by the Italian Ministry of the Environment together with the Chinese State Environmental Protection Administration (SEPA) and other primary Chinese institutions. The central goal of the agreement is to fully implement concrete initiatives for sustainable development in China.

Other initiatives include the Memorandum of Understanding signed in 2009 between the Ministry of Science and Technology of the Chinese People’s Republic and the Ministry of the Environment and Protection of Italian Territory and Sea. The objective of the agreement is a feasibility study aimed at constructing a plant to capture the CO2 produced and its injection into a petrol deposit, at a Chinese coal-fired plant, involving the subsequent use of the carbon dioxide, thus making it possible to improve extraction performance through Enhanced Oil Recovery (EOR) technology.

M&A growth
The acquisition of Endesa, the largest Spanish electricity company and the largest private operator in Latin America, has further strengthened Enel’s leadership position in the carbon market. Endesa has in fact launched Endesa Carbono, an operator specialising in the supply of commercial credit and the origination and development of projects to abate emissions for third-party clients. The Endesa Carbono portfolio can count on a wide range of projects, from wind to geothermal, to hydro and co-generation plants in a well diversified set of countries all over the world that are managed from offices located in Europe, USA, Latin America and the Far East.

One of Endesa Carbono’s chief strengths is its active presence in these different markets, permitting it to identify CDM projects both in Enel’s installations and in those of its customers. Its position in the US is also key to the start-up of the carbon market in this country, which has made a firm commitment to cut emissions.
The Enel portfolio includes 105 projects, in addition to its participation in nine funds, five of which are World Bank initiatives. The portfolio includes projects from renewable sources (68 projects including hydroelectric, wind and biomass), energy efficiency (15 projects) and greenhouse gas abatement from chemical and fossil fuel upstream activities (22 projects). The whole Enel portfolio accounts for about 70m tonnes of CO2 equivalent emission reductions certified to date, the equivalent of 12 percent of credits already certified in the world.

To effectively accomplish business initiatives in the carbon markets, in 2009 Enel created the Carbon Strategy Unit by integrating Enel-Endesa skills and portfolios. This unit acts as a single point of responsibility for the group’s compliance strategies, origination activities, market operations and portfolio optimisation for all carbon credit markets. The Enel Carbon Unit is the key instrument to operate in all carbon markets for the implementation of the Enel Group strategic effort to reduce greenhouse gases emissions, by means of Kyoto Protocol flexible mechanisms.

About Enel
Enel is Italy’s largest power company, and Europe’s second largest listed utility by installed capacity. It is an integrated player which produces, distributes and sells electricity and gas.

The Enel Group has a presence in 40 countries over four continents, has around 95,000 MW of net installed capacity and sells power and gas to more than 61 million customers.

Enel is also the second-largest Italian operator in the natural gas market, with approximately 2.7 million customers and a 10 percent market share in terms of volume.

The company’s growth is based on a strategy of financial solidity and the profitability of its long-term business plan, while respecting stakeholders and the equilibrium among the economic, environmental and social variables.

Value generation, discussion with communities, safety for employees and suppliers, action against climate change: these are only a few of the commitments attesting Enel’s engagement in corporate responsibility.

Blom Bank maintains drive to diversify

Posted on April 19, 2011 by

As one of the oldest established banks in Lebanon, if not the region, Blom Bank has always been at the centre of the country’s banking system. Its universal banking services revolve around trust and credibility, built with its clients through long-term personal relationships, integrity, and the strong financial results that it has consistently delivered.

The bank’s renowned conservative management has paid off over the years: for decades, Blom Bank has been the most profitable and among the largest banks in Lebanon. It is proud to have become its clients’ preferred banking partner and investment reference, meeting all their financial needs and ensuring their peace of mind.

Blom Bank is also proud to extend this ‘Peace of Mind’ vision to the larger community, through its CSR activities like Blom Beirut Marathon, the Blom Mastercard “Giving Card,” and its educational initiative “Blom Shabeb.”

Throughout its history, Blom Bank has maintained a track record of exceptional performance. The bank’s operational and managerial efficiency in 2010 helped it maintain the lowest cost–to-income ratio among its peers, of 35.6 percent. Blom Bank’s profit increased by a CAGR of 13 percent to reach $330.7m by 2010. This implied the highest return on average equity at 21.1 percent among listed banks. In addition, assets increased at a CAGR of eight percent to a total of 22.4bn, and customer deposits increased at a CAGR of nine percent, to $19.6bn by December 2010.

Safety in numbers
Moreover, Blom’s consolidated Basel II Capital Adequacy reflected solid solvency with a ratio of 14 percent, well beyond the international minimum of eight percent. Additionally, Tier I Capital increased by 12.3 percent to $1.83m at end 2010, attributed mainly to increases in retained profits. In fact, the bank’s policy is to strike a balance with respect to maximising shareholder value without compromising its Tier I capital growth.

Blom Bank’s strategy is based on regional expansion and the diversification of its services to become a leading regional bank. In this respect, Blom Bank has the widest foreign presence among Lebanese Banks, and is currently present in Lebanon, Syria, Jordan, UAE, France, UK, Switzerland, Romania, Cyprus, Egypt, Qatar, and Saudi Arabia.

Blom conducts its international operations either directly or through its subsidiaries: Bank of Syria and Overseas, Blom Bank France, Blom Bank (Switzerland), Blom Bank Egypt, Blom Egypt Securities, Syria and Overseas for financial services, Blom Bank Qatar, Blom Invest Saudi Arabi, Blom Invest Bank, Blom Development Bank (Islamic Bank), Arope Insurance, Arope Syria Insurance, Arope Egypt Insurance and Life Insurance.

In a drive to diversify its revenue base and enrich its asset class, Blom is prioritising its regional expansion through a policy of organic growth. To this end, the bank is capitalising on its competitive edge in terms of common culture, existing relationships and the replicability of its excellent products to strengthen its foothold in the region and beyond.

Blom Bank Group services
– Commercial banking
– Corporate banking
– Private and investment banking
– Asset management
– Retail banking
– Islamic banking
– Brokerage services
– Insurance products and services

Funding boosts Brazil housing

Posted on April 19, 2011 by

Gafisa’s trademark brand recently celebrated the completion of its thousandth development, Terraças Alto do Lapa, in São Paulo, a testament to the company’s experience, expertise, and execution capacity. It was fitting that this ceremony took place in the city where the company is headquartered, although as a national homebuilder Gafisa is present in 136 cities in 22 states plus the Federal District, offering a diverse range of housing to Brazilians of all socioeconomic levels. The previous decade has been transformative for both Gafisa and Brazil. The company, which was founded more than 50 years ago, has kept pace with the extraordinary growth of the Brazilian economy and seized the unprecedented opportunities that exist in the homebuilding sector. Today, Gafisa’s market capitalisation is approximately $2.8bn.

Gafisa has enjoyed many important accomplishments in the past decade, including its IPO on the Bovespa Novo Mercado in 2006, and a public offering on the New York Stock Exchange (NYSE) in 2007. The listing on the Novo Mercado segment of the market, Brazil’s most demanding in terms of corporate governance, signalled Gafisa’s commitment to all of its shareholders. Inclusion on the NYSE was also a defining moment for the company. Gafisa was the first, and remains the only, Brazilian real estate company with a listing on the Big Board in the US, which affords the company a strong reputation for operational and financial transparency through full compliance with Sarbanes-Oxley. It also established Gafisa as a professionally managed, world-class corporation in an industry commonly associated with family-run enterprises, and ensured exceptional access to capital. Moreover, having all of its shares publicly traded, without the presence of a controlling shareholder, today Gafisa is a fully public corporation, which is common in Europe and the United States but still not the convention in Brazil.

The listings on the Bovespa and NYSE combined, made Gafisa the most liquidly traded of Brazilian homebuilders, and lay part of the foundation for an aggressive growth plan based on geographic expansion and the assembly of a broad product portfolio. This expansion and diversification has leveraged Gafisa’s considerable experience and reputation for building high quality homes, a professional culture which has always prioritised the cultivation of talent within the company, and a commitment to bringing innovative, sustainable home products to Brazilian homebuyers.

Geographic expansion through land acquisition, the formation of local partnerships in high-growth markets and the acquisition of two important homebuilders – AlphaVille, the leader in community developments, and Tenda, a leading homebuilder for the lower entry level segment – has provided the company with the capacity to execute on a national scale. By extending the reach of Gafisa’s well regarded product portfolio to the inhabitants of 23 of Brazil’s 27 states and districts, and building a national sales infrastructure, the company has gained the flexibility to selectively develop its land bank based on local or regional market trends, thereby maximising returns to shareholders. Importantly, the geographic distribution of Gafisa’s land bank is reasonably in keeping with Brazilian GDP distribution.

As recently as December 2006, the Gafisa brand higher income products represented 100 percent of the company’s revenues, pre-sales and launches, but Gafisa enters 2011 with a streamlined corporate structure that features three leading businesses and brands, with Gafisa, AlphaVille, and Tenda each serving their respective market segments. The Gafisa segment represents close to 50 percent of development launches, with AlphaVille and Tenda making growing contributions to overall results.

AlphaVille offers innovative, residential community living to middle and high income homebuyers. The acquisition of this innovator in the Brazilian market positions Gafisa well to benefit as suburban living becomes more common in Brazil due to massive infrastructure investments and changing demographics. Tenda, which offers affordable and entry-level homes at some of the lowest price points in the industry, is helping to address the current housing deficit throughout Brazil.

Former president Luiz Inácio Lula da Silva’s government committed to provide financing for one million new homes for this sector by the end of 2010 through a programme called Minha Casa Minha Vida (My House, My Life). Brazil’s new government has demonstrated its commitment to continuing the federal programme in support of home purchasing through 2014 by adding an additional two million homes and allocating $40bn to the second phase of Minha Casa, Minha Vida, which aims to further reduce Brazil’s housing deficit. Tenda is strategically positioned to be a strong player in closing this gap.

Environmental, social & governance fundamentals
Professional management distinguishes Gafisa from many of its Brazilian counterparts, and the company is proud of a tradition of investing heavily in its human capital. Its management training programme is recognised as a leading one among Brazilian corporations from any sector, and the company has been successful in retaining top talent due to its meritocratic culture. With the expansion of Brazil’s homebuilding sector in recent years, the labour market has tightened considerably, and Gafisa’s cultivation of talent from within is likely to give it a competitive advantage into the future.

Supporting the sustainable and socially responsible development of the business in a way that benefits society as a whole is a priority for the company. Promoting proper waste management through reduced volume, the reuse of materials and recycling in all offices and also at all job-sites are examples of some of our important initiatives. AlphaVille’s standard practices of setting aside development land for conservation and using rainwater collection systems for non-household uses are other measures that reduce environmental impact and encourage the conscientious and rational use of natural resources.

No example better illustrates Gafisa’s environmental and societal objectives than the successful launch of the Eldorado Business Tower in 2007, which demonstrated an awareness that conservation and minimisation of environmental impact extend to the post-construction phase of the project. This was the first project in Latin America and the fourth in the world certified with the Leed (Leadership in Energy and Environmental Design) CS 2.0 Platinum seal from the US Green Building Council, as the use of new technologies allowed a significant reduction in the consumption of inputs like water and energy, both during construction and after its conclusion. Gafisa also procured 47 percent of the total inputs from local suppliers, thus helping to reduce pollution and supporting local businesses.

Gafisa has long enjoyed strong relationships with financial institutions and the capital markets, and during 2010, successful primary share and debt offerings in March and September respectively signalled investors’ continued recognition of the company’s leading market position and favourable growth prospects. Proceeds of the offerings – which totalled more than $800m – are being using for working capital, new developments, land acquisition, strategic joint ventures, and acquisitions; and will contribute to Gafisa’s execution of a robust business plan in 2011 and beyond.

Brazil continues to enjoy very favourable fundamentals that support economic prosperity, factors which combined with government programmes in support of the homebuilding sector bode very well for the industry. The expansion of real wages, record low unemployment rates (just 6.1 percent in January), strong consumer confidence and the availability of credit are stimulating growth. Brazil’s nominal and real interest rates also continue to be at historic lows. In addition, the availability of loan tenors of up to 30 years on mortgages is helping to make monthly payments much more financially viable for consumers.

Signs that demand for new homes in Brazil will remain strong continue to abound. The most recent study by the Fundação João Pinheiro measured the housing deficit in Brazil at 5.8 million homes, and a poll conducted by Data Popular in late 2010 pointed to the intended purchase of 9.1 million homes within the coming twelve month period, nearly double the figure projected at the end of 2008.

As one of Brazil’s leading nationwide homebuilders with a broad geographic reach and truly diversified product offerings for people of all income levels, today Gafisa is ideally positioned to capitalise on the expanding marketplace. The management team is excited about the tremendous opportunities that lie ahead and remain confident in their ability to execute the company’s long-term growth strategy. Thanks to the hard work and dedication of all of its employees, Gafisa continues to deliver high quality residences to all income segments of the population and is helping to build a bright future for the people of Brazil.

German bank enters UK market

Posted on April 19, 2011 by

Berenberg Bank is proud of its 420 year history. The Hamburg-based bank provides services for wealthy private customers and institutional investors, as well as commercial banking services for medium-sized businesses.

In 1585, as Dutch Protestants were given the choice either to convert to Catholicism or leave the country, the Protestant Berenberg family from Antwerp, which was then the richest and busiest city in Europe, left in search of a new home. They found it in Hamburg, which is where brothers Hans and Paul Berenberg founded the company in 1590.

The company was active in the cloth trade and the general import and export business. Dutch Protestants were seemingly highly ambitious and successful; at the beginning of the 17th century, 32 of the 42 firms in Hamburg that achieved turnovers of over 100,000 marks were of Dutch origin. The Berenberg brothers were ranked in 15th and 16th place. At that time, Dutch people in Hamburg were subject to heavy restrictions, such as being forbidden to do business with other foreigners within the city limits. After the Thirty Years’ War, the third generation of the Berenberg family, namely Cornelius Berenberg, played an active part in the economic life of Hamburg. In 1684 he took the citizen’s oath and paved the way for subsequent generations to hold public office. He also increased the trade in goods far beyond Germany’s borders.

From a trading house to a bank
The lack of a functioning banking system meant that traders used to provide financial backing for transactions themselves. They granted loans to their customers and made advance payments to suppliers for their deliveries. The sheer number of currencies also formed the basis for an extensive exchange business which provided good earning opportunities. Cornelius built on the wealth he had acquired through trade and became more active as a banker. The reputation of the Berenberg brothers grew. Cornelius’s son Rudolph was elected to the city council, and family members later became senators.

As well as founding new businesses in Boston and New York, the Berenbergs quickly realised the importance of the newly created stock corporations and were founding shareholders for many well-known companies during the era of industrial expansion in the mid-19th century. Thanks to their international activities, which were already widespread, the Berenbergs were also co-founders of several Scandinavian banks, as well as the Hong Kong and Shanghai Banking Corporation HSBC.

The USP
Today, Berenberg Bank is one of Germany’s most prestigious banks. While many private banks have since become part of international finance conglomerates, Berenberg is still managed today by personally liable partners who, along with the Berenberg family, hold the majority of shares in the company.

‘The trust that our customers place in us reflects our commitment to responsibility and our sense of duty’, says Dr Hans-Walter Peters, spokesperson for the personally liable partners of the bank. ‘The customers value the fact that a private bank like ours is managed by personally liable partners.’ According to Peters, it is not just the indispensable skills of the company advisors that are important, especially as these form the basis of good working relationships, but also their personal commitment and the lasting nature of the relationship between client and advisor. The personal atmosphere and high level of confidentiality is greatly valued, as is the personal service and independence from corporate interests.

The bank’s successful development can be attributed to its clear strategic positioning and focus on ‘service instead of selling products,’ as Peters succinctly puts it. As well as private banking services, which are always perceived to be the most important aspects of a private bank, Berenberg is also highly successful at providing individual solutions and advisory services in the fields of investment banking, asset management and commercial banking.

As Peters states, ‘the art of managing assets in a professional way lies in minimising risks while achieving attractive returns’. This means the advice that the bank provides is not just limited to stocks, but rather incorporates all kinds of investment opportunities. This comprehensive approach towards assets entrusted to the bank not only appeals to a constantly increasing number of investors, but also ensures that Berenberg is consistently noted for its high level of quality in market surveys. As well as winning a number of awards for equity research and private banking, Berenberg recieves regular prestigious commendation from international publications such as World Finance, Euromoney or Handelsblatt.

UK private banking operations
Berenberg Bank launched its UK private banking operations in January this year. The bank sees the UK market as a strategic next step in developing its international private banking operations and will provide a full advisory service. Andreas Brodtmann, one of the bank’s three Managing Partners, commented “Berenberg is a highly ranked independent private bank. We already advise a large number of foreign investors, who respect our banking style, especially in terms of customised service. The UK offers a dynamic entrepreneurial market for us, with good long-term prospects for wealth creation, within which we can add significant value to our clients.”

Ross Elder and Fred Hervey, both formerly at Barclays Wealth, will be heading the private banking team from the bank’s UK headquarters in Threadneedle Street, London.

Facts and figures
Founded: 1590
Assets under management: €25bn
Liable equity capital: €213m
Annual net profit: €62m
Return on equity: 45%
Employees: 1,000

Business divisions
Private banking
Investment banking
Asset management
Commercial banking

Personally liable managing partners
Dr Hans-Walter Peters (spokesperson), Andreas Brodtmann, Hendrik Riehmer

Locations
Hamburg, Bielefeld, Braunschweig, Bremen, Düsseldorf, Frankfurt, Munich, Stuttgart, Wiesbaden, Geneva, London, Luxembourg, Paris, Salzburg, Shanghai, Vienna, Zurich