Mergers way into Indonesia banking sector

FOREIGN BANKS that have been frustrated trying to break into one of the world’s most-profitable countries for banking, Indonesia, now may have a way. Buy two lenders, merge them -- you may get management control while Indonesia gets to cut its weakest players and consolidate its banking sector.

After Indonesia imposed rules three years ago that limited foreign ownership of its banks to 40%, the ground shifted again this year. Regulators started saying that bidders could go above the threshold if they bought and merged two local lenders. At least two deals, by China Construction Bank Corp. and Korea’s Shinhan Bank, have been given the go-ahead.

“It may be an odd way of being allowed to enter the market, but maybe it’s a relatively small price if you are taking a long-term perspective on Indonesia,” said Mark Young, the Singapore-based head of Fitch Ratings’ Asia-Pacific financial institutions group.

“This market is something that any regional bank that has ambitions would look to enter.”

MOST PROFITABLE

Indonesia is among the most profitable lending markets in the world. The country’s four largest banks, with market value exceeding $5 billion, have a return on equity of 20.4%, the highest among similar-sized banks in the 20 biggest economies of the world, data compiled by Bloomberg show.

The banking sector’s average net interest margin of 5% is more than double that of Southeast Asian neighbors Singapore and Malaysia, the data show.

Loan growth is expected to accelerate as much as 13% next year, according to Indonesia’s banking regulator, Muliaman Hadad, chairman of the Financial Services Authority.

Yet the problems and costs of merging two banks’ differing operational systems and family owners who may not want to fully cede management control make such acquisitions tricky, said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd.

In addition, Basel rules requiring more liquidity buffers for banks mean lenders could be spending precious capital for an acquisition that may not end up delivering results for years -- especially in an economy that is heavily tied to commodities, which are currently in a down cycle.

“It might be double the trouble actually,” said Antos.

“A 2-for-1 sale is something that you find in a retail shop, not in a banking sector. It’s not a bad idea in theory, but the reality is going to be very tough.”

Valuations of Indonesia’s smallest banks have risen in the past year as indications emerged that regulations were shifting. Shares of the 10 smallest lenders listed in Indonesia have risen an average 38% in the past 12 months.

By comparison, the top 10 have fallen an average 29% in value.

China Construction Bank said in September it would become the controlling shareholder of Jakarta-based Bank Windu Kentjana International, which handles trade financing and foreign currency from 78 outlets primarily on the island of Java, after the Indonesian bank bought Bank Antardaerah in July, a small commercial bank with 30 offices in Java, Bali and Lombok.

China Construction Bank said the acquisition would help it offer infrastructure lending in Indonesia as well as financing for cross-border settlements to facilitate trade with China.

“This is a critical step for CCB in entering the Indonesian market,” Qi Jiangong, CCB’s deputy general manager for strategic planning and investment, said at the Sept. 18 signing ceremony in Jakarta for the purchase. “Indonesia has always been a high priority market for CCB’s overseas development.”

SHINHAN BANK

Shinhan Bank also received approval to buy more than 40% in two Indonesian banks it purchased in stages.

Shinhan said it signed a deal for 40% of Jakarta-based commercial lender Bank Metro Express PT in 2012, though it got Indonesia’s approval for the purchase only this year when it sought to buy Surabaya-based small-business lender Centratama Nasional Bank.

The deal is also paving the way for Bank Negara Indonesia to open its first branch in Seoul.

The new rules allowing majority stakes make more sense for foreign buyers than buying minority stakes, said Kevin Kwek, an analyst at Sanford C. Bernstein & Co. in Singapore.

“At 40% or below, you are merely buying an exposure to growth,” he said. “Without effective control, there is a limit to how much a foreign buyer can bring in expertise, know-how and a host of other intent to drive value out of an acquisition.”

After failing to win regulatory approval for a majority stake in 2013, Singapore’s DBS Group Holdings Ltd. scrapped plans to buy PT Bank Danamon Indonesia.

PUSHING CONSOLIDATION

Indonesia, with 118 commercial banks, is pushing for banking consolidation. With its top 10 banks accounting for more than 60% of total assets, the country is trying to weed out the bottom performers.

The Financial Services Authority’s Hadad said last year that the regulator would push small lenders to merge or seek strategic investors, as well as increase industry oversight by tightening non-performing loan levels.

“For consolidation, it’s not enough for them to acquire just one bank,” Irwan Lubis, the regulator’s deputy commissioner of banking supervision, said on Sept. 18.

The CCB deal “should be a lesson for other investors interested in acquiring Indonesian banks. Hopefully with this example, they will know what to do next.”

He said regulators would consider previously stated criteria such as reciprocity between Indonesia and the buying bank’s country, and whether the buyer would help to grow the economy, when deciding whether to approve controlling-stake acquisitions.

NO PLANS

Nelson Tampubolon, chief executive officer of the Financial Services Authority, said by text message that there are no plans by other foreign banks to buy another Indonesian lender at this time.

In addition to the CCB and Shinhan deals, Tokyo-based J Trust Co. managed to buy 99% of PT Bank Mutiara a year ago, with regulators making an exception for the Japanese financial-services firm because it was buying a distressed bank. The bank is aiming for as much as 20% loan growth this year.

Others are content with less. Taiwan’s Cathay Financial Holding Co. said in January it was buying 40% of Bank Mayapada International, while Sumitomo Corp. paid$460 million to raise its stake in Bank Tabungan Pensiunan Nasional to 20% in February.

“If you look long-term the Indonesia market is very attractive, but it will need capital to support the growth,” said Fitch’s Young. The government’s efforts at pushing banking consolidation “makes life easier for themselves, and if it means mopping up weaker entities, that’s smart too.”

-- Bloomberg

LandBank seen to further expand prepaid card system for CCT

State-owned Land Bank of the Philippines (LandBank) eyes the rapid adoption of its antifraud prepaid card product it has cobranded with the electronic money, or e-money, issuer OmniPay Inc. OmniPay Inc. President and CEO Simon Ung said the prepaid cards have proven very useful in deploying funds set aside for the government’s Pantawid Pamilyang Pilipino Program,  or the 4Ps.

He said with over Php50-billion cash grants already disbursed by the bank, he expects a rapid migration to prepaid cards over the next 18 months. He said the number of beneficiaries and households under the 4Ps already total 5 million and covers over 41,000 barangays.

LandBank First Vice President and Card and Electronic Banking Group Head Randolph Montesa said the cash cards can be used in over 17,000 BancNet automated teller machines (ATMs), including more than 1,400 LandBank ATMs.

LandBank has contracted additional payment service providers for areas with no available ATMs.

“LandBank supplies the most payment instrument, via cash cards, being the primary payment service provider of the Conditional Cash-Transfer (CCT) Program,” he said at the recent Asia Pacific Financial Inclusion Summit 2015 organized by the Financial Times business magazine.

Montesa said of the total Php17.752-billion education and health grants distributed from January to June 2015, 44.83 percent of the amount was made via LandBank’s cash cards, while 55.17 percent was through cash disbursements.

According to the Department of Social Welfare and Development, the budget allocated for the 4Ps this year amounted to Php62 billion.

Some of the challenges in cash disbursements include security and cost issues, especially when transporting cash to remote areas. “There’s the challenge in maintaining the proper levels of liquidity. It’s tedious because recipients have to present acknowledgment receipts to get their money over-the-counter,” he said.

Also, the system uses more than 2 million sheets of paper at each pay period. He also said LandBank prepaid cards serve as an ID card and can be used as payment tools in more than 100,000 point-of-sale terminals.

“By 2018 LandBank will be the top universal bank that promotes inclusive growth and improves the quality of life especially in the countryside through the delivery of innovative financial and other services in all provinces, cities and municipalities,” Montesa said.

For the first nine months, the bank posted net income of Php10.27 billion, 11 percent higher than income of only Php9.26 billion in the same period in 2014. It also exceeded its third-quarter net income target of Php9 billion by 14 percent.

LandBank President and CEO Gilda E. Pico is confident the bank would surpass its 2015 net income target, seen driven by the robust growth in its lending and investments businesses.

“We hope to finish 2015 strong with greater focus on strengthening our core business segments and assisting our mandated and priority sectors. Our efforts are geared toward contributing to the government’s goal of promoting sustainable development and financial inclusion, bringing financial services to underserved and unbanked areas,” Pico said.

LandBank has a distribution network of 357branches and 1,466 ATMs, as of end-October 2015.

Banking giants learn cost of preventing another financial sector disaster

SEVEN years after the collapse of Lehman Brothers jolted the global economy, the world’s biggest banks may need to raise as much as $1.2 trillion to meet new rules laid down by financial regulators.

After years of work, the Financial Stability Board (FSB), created by the Group of 20 (G-20) nations in the aftermath of the crisis, published its plan for making sure giant lenders can be wound down and recapitalized in an orderly way, without taxpayer bailouts.

Under the rule for total loss-absorbing capacity (TLAC), most systemically important banks must have liabilities and instruments “readily available for bail in” equivalent to at least 16 percent of risk-weighted assets in 2019, rising to 18 percent in 2022, the FSB said on Monday.

A leverage ratio requirement will also be imposed, rising from 6 percent initially to 6.75 percent. The banks’ shortfall under the 18-percent measure ranges from €457 billion to €1.1 trillion ($1.2 trillion), depending on the instruments considered, according to the FSB.

“TLAC is one of the last bricks in the wall of the postcrisis-reform agenda,” said Richard Barfield, a financial-services risk and regulation director at PricewaterhouseCoopers Llp. Many big banks “will now resume the debt issuance that has been put on hold while waiting for today’s details,” he said. The FSB’s impact analysis shows that most of them “should be able to meet the requirements.”

The push to make sure banks are no longer too big to fail is also advancing on a second front, as Wall Street expands a revision of financial contracts worth trillions of dollars. The changes are expected to allow certain securities and funding contracts to remain intact for as long as 48 hours after a bank fails, said three people with knowledge of the matter.

The extra time is intended to give a faltering bank’s home government time to jump in and set up a healthy version of the doomed institution, something that’s difficult to do when counterparties have terminated contracts and fled.

Bank of England Gov. Mark Carney, who heads the FSB, said on Monday that the TLAC rules make a major failure less likely, because banks’ creditors know they’ll face losses in a collapse.

Previously, the “lenders, the unsecured creditors, to a bank were implicitly and ultimately explicitly relying on the state to back them up and, therefore, didn’t pay that much attention to what the institutions were actually doing,” Carney told reporters in Basel on Monday. “Now they actually have skin in the game, so to speak, and they will exert greater pressure, consistent with their fiduciary duties, and that in and of itself will make failure less likely.”

The FSB rules separate the liabilities needed to keep a bank running from purely financial debts, such as notes issued for funding. By “bailing in” the bonds—writing them down or converting them to equity—regulators aim to ensure a lender in difficulty has the resources to be recapitalized without using public money, and to allow the resolved firm to continue to operate. In a departure from previous practice, senior debt issued by banks is explicitly exposed to loss.

The hundreds of billions of dollars governments globally poured into banks reeling from the 2008 financial crisis were used as much to rescue lenders’ senior bondholders, whose claims sat alongside and were equal to those of depositors, as to bail out the banks themselves. The situation confronted governments with the choice of risking bankruptcy by rescuing the lenders or allowing the disorderly collapse of the financial system.

Carney said in an interview last week that it would take “several years” for banks to “reorganize their capital structure and also their business models” to comply with TLAC, and only then would regulators be in a position to resolve a major global bank.

Analysis done by the Basel Committee on Banking Supervision showed that two-thirds of the banks on the FSB’s list are short of their targets for 2019. Those in developed markets had 14.1-percent TLAC at the end of 2014 and need to boost that level by €498 billion in the next three years. Including the emerging-market banks, the shortfall amounts to €767 billion.

To put the shortfalls into perspective, across 29 global banks total outstanding debt security issuance was €4.5 trillion at the end of 2014, the FSB said. Average issuance is €156 billion, of which 81 percent matures in the next five years. The regulator said issuance to meet TLAC should largely involve “substitution of one bond for another with different characteristics, and not net new issuance of the full shortfall amount.”

Banks from the US, European Union, Japan and Switzerland account for the lion’s share of the FSB’s list of systemic institutions. The Federal Reserve moved on October 30 to apply the TLAC standard to eight of the biggest US banks, estimating their total shortfall of long-term debt at $120 billion.

“TLAC is crucial,” Nathan Sheets, US Treasury undersecretary for international affairs, said before the announcement. “It’s a very important step forward toward addressing concerns about too big to fail, giving large financial institutions additional buffers that can be drawn on in extremis to protect the taxpayer from having to bail out these institutions.”

Emerging-market banks on the FSB list have until 2025 to meet the 16-percent loss-absorbing capacity target, rising to 18 percent in 2028. This schedule could be accelerated if, “in the next five years, corporate-debt markets in these economies reach 55 percent of the emerging-market economy’s” gross domestic product, according to the FSB.

Authorities in some G-20 nations still lack the power needed to be able to resolve a major lender without turning to taxpayers, the FSB said. Along with bail-in, these powers include the ability to prevent counterparties demanding early settling of trades, the power to establish a bridge bank and to impose changes in company structure and management.

The regulator gives the US, EU, Japan and Switzerland a largely clean bill of health in its review of the G-20’s progress in implementing measures needed to resolve large cross-border lenders in an orderly manner. Yet, China lacks the majority of the powers it would need should one of them fail, according to the FSB.

The extent to which taxpayers can be shielded when major banks fail will depend on how bail-in works in practice.

“Let’s hope that it takes longer than in the past before governments have to get involved, because that’s one way of thinking about the bail-in process and how it’s supposed to work,” said Stefan Ingves, chairman of the Basel committee. “We just don’t know how it will work.”

-- Bloomberg News

PH Financial system posts ‘positive’ performance

Philippine financial system expanded further in the first half of 2015 due to positive market sentiment that boosted bank incomes despite some structural changes here and abroad, data from the Bangko Sentral ng Pilipinas (BSP) showed. Philippine banking sector -- which makes up 80.8% of the local financial system -- saw its assets grow by 9% to Php11.2 trillion as of end-June as the firms saw double-digit growth in investment and loan portfolios, the central bank said.

“Despite the moderation in credit allocation particularly with the real estate sector, the BSP remains proactive in its surveillance and use of macroprudential tools to mitigate the buildup of systemic risks,” the central bank said in a statement yesterday.

“The Philippine financial system... remains in a position of strength in the first half of 2015 amid structural shifts in the global and domestic financial landscape,” the BSP said.

Net profit of Philippine banks grew to Php68.9 billion in the first half, up by 8.1% from the Php63.7 billion recorded in the comparable January-June period in 2014, marking a recovery from the decline seen the year prior.

Income from trading activities provided the biggest boost. “Trading income, in particular, registered a hefty growth of 35.9% on favorable market sentiment during the first semester of 2015,” the BSP said.

Loans grew to Php5.4 trillion for first semester, growing by 14.6% from last year’s Php4.7 trillion. Meanwhile, deposits logged a 9% growth rate to Php8.6 trillion, though slower than the 24.5% expansion in the previous year.

“Funding profile remained stable with retail and domestic-oriented deposit liabilities continue to be the main source of funds,” the BSP said, citing a “modest” growth in deposit liabilities of banks.

The slower growth in deposits was due to the entry of more alternative investment products, such as insurance variables, that offer “more competitive” interest rates than leaving the money in the banks, the regulator said.

Despite an increase in lending, banks were able to trim the share of bad debts to their total loan portfolio to 2.4% from 2.7% the year prior.

Meanwhile, lenders’ capital adequacy ratio -- which measures their cover against credit risks -- stood at 15.1% on a solo basis and at 16.1% on consolidated basis, well above the BSP’s 10% minimum requirement and the 8% international standard under the Basel 3 framework. Capitalization on a solo basis covers a bank’s head office and its branches, while the consolidated basis includes its subsidiaries.

Banks also expanded their services in the first semester, with 638 banks operating 9,890 branches in the country, up from the 9,456 branches in the same 2014 period.

More ventured into electronic banking, rising to 268 from the past year’s 245. These services include electronic wallet, cash/remittance products, Internet banking, phone banking, mobile banking and hybrid mobile/internet via BancNet-MegaLink switch banking.

“Notwithstanding the sustained positive performance of the financial system, the BSP continues to closely monitor potential pressure points. This is in line with the BSP’s objective of promoting greater financial stability,” the central bank yesterday said.

The Philippine banking system is the only industry out of 69 sovereigns rated by Moody’s Investors Service that carries a positive outlook. Last year was the third straight year since 2012 that the sector held that tag from the global debt watcher.

-- Business World

PH mobile financial services growing leaps and bounds

Amdocs projects a strong growth in mobile banking in the Philippines as mobile financial services (MFS) are more universally offered or practiced across the country. Amdocs Vice President for Mobile Financial Services Justin Ho said the use of mobile money is a more effective way of reaching the country’s unbanked and underbanked sector.

Amdocs, he said, is a market leader in software solutions and services for the world’s largest communications, entertainment and media service providers.

He said, “Using MFS is three times cheaper than using a bank branch. The mobile financial service is the way to go. Banks and telecommunication companies can both participate in its success,” he recently said at a news conference on the subject.

When asked about regulatory concerns on MFS, he replied, “The Bangko Sentral ng Pilipinas has been inclusive and helpful in terms of providing the right regulation to promote MFS. It’s always open to adopt and welcome new ideas.” He added that the Philippines has a central bank that cares about financial inclusion unlike other central banks in the world He said the MFS penetration in the Philippines is no longer in infancy.

“In the next five years, that [MFS] will be mainstreamed,” he said.

“Banks of today are more advanced technologically but still siloed. We wanted digital. We provide mobile money.  “We have an MFS platform which is the most advanced,” he said.

Ho said people can put their domestic remittance in mobile money and use it to pay bills.

The salary of certain people may be dispensed via mobile money platforms and the government’s cash-transfer program may also be conducted using electronic wallets. He said such often underserved people like farmers who use so-called electronic wallets can keep track of their digital footprint. He also noted some 25 percent or 28 percent of Filipinos live below the poverty line and that financial inclusion is important to get people above the poverty line.

He cited a World Bank report which showed 69 percent of the population are unbanked Filipinos. They patronize loan sharks and pay more than 300 percent for the accommodation.

He also cited another survey in the Philippines which showed 38 percent of the Filipinos saying it’s easy to pay cash, 38 percent having privacy issues, while 27 percent do not know how to use the MFS.

He said 54 percent of the people surveyed trust banks and that a large chunk or 31 percent said they trust mobile banks.

-- Business Mirror

BPI mobile-banking users hit 1 million

The Bank of the Philippine Islands (BPI) has passed the 1-million mark for mobile-banking users and targets to acquire at least half of the lender’s clients over the next five years.

BPI Vice President and Electronic Channels Division Head Carlo Carmelo Gatuslao said 1 million of the 7 million BPI retail clients use the bank’s mobile app at present.

He said BPI already exceeded this year’s 40-percent growth target or 800,000 mobile-banking users by year-end. Combined online and mobile-banking users already reached 1.8 million and mobile-banking users alone reached 1 million.

“We expect our digital channel enrollment and usage to grow. We will offer more services beyond what we have now. Currently the penetration rate is 35 percent of our customers. Half of the bank’s customers will use electronic banking in five years. We can have half of 7 million bank clients in five years,” he said. He sees further growth in usage of mobile-banking services because of the convenience and efficiency it offers.

“With the BPI Express Mobile app, our clients can easily access their accounts and make financial transactions even with the most affordable smartphone. About 32 percent of smartphones users in the Philippines use it for data. In five years, the number of smartphone penetration will double,” he said.

BPI Assistant Vice President Frederick Faustino said mobile-banking financial transactions averaged 1.6 million transactions a month totaling Php12.6 billion. The transactions involve cash transfer and bill payments, Faustino said. He said most of the mobile-banking users were aged 20 to 45.

BPI’s leadership in Philippine mobile-banking was recently affirmed by two prestigious award-giving bodies in the financial services industry. The Asian Banker recognized BPI for the Best Mobile Banking in the Philippines award and the Bank Marketing Association of the Philippines awarded BPI as Best Electronic Delivery Channel.

The award honors the bank with a mobile-banking platform that demonstrates the use of the full range of current mobile device technology for financial transactions and services in the most intuitive and secure manner possible.

Earlier in the year, The Asian Banker also named BPI as the Best Retail Bank in the Philippines for 2015.

BPI sets new banking trend with Make the Best Happen Campaign

Bank of the Philippine Islands (BPI) is setting a new trend in banking with its Make the Best Happen campaign. Over and above offering its range of products and services, BPI first of all wants to support its clients by helping them focus on their life aspirations.

BPI, the first bank in the Philippines and in South East Asian region, has a wide range of consumer, corporate, and investment banking products and services. In a statement, Cezar P. Consing, BPI President, said the bank wants to focus on needs-based financial planning where individuals make decisions based not on returns but on the goals they want to achieve.

The process begins with helping clients identify their life needs and goals and then create a priority list based on those aspirations. Clients are then encouraged to make personal financial assessments, computing, among others, one's net worth, cash flow requirements, and even emergency funds.

Based on this initial assessment, BPI helps clients create a game plan, mindful of their budgets, goals, risk profile and investment options.

"BPI empowers Filipinos to make the best of their lives happen through its innovative and accessible financial solutions," Consing said. "We strive to know and understand the individual circumstances and financial needs of our clients, then offer financial advice. Only then do we propose certain solutions that are suitable and customized for each and every client."

Tricia Quiambao, Head of BPI's Strategic Management, said BPI's Make the Best Happen campaign is a different look on banking. "We put a premium on understanding our clients and their needs, whether it's to travel, or start a business, or fund their children's education," she said.

"As people become more and more aware of the world around them and the many possibilities and opportunities it offers, BPI would like to enable them to accomplish those goals and aspirations better, faster and more efficiently."

Rally Jereza, BPI Division head for Visayas and Mindanao,a dded: "Cebu has been a hub of out-of-the-box thinking, and BPI feels right at home with our trendsetting solutions. With Make the Best Happen, we aim to expand the conversation with our clients and friends, beyond solutions and into actual life and lifestyle choices."

The microsite devoted to the Make the Best Happen campaign - makethebesthappen.ph - addresses some of the top life and lifestyle goals of most individuals: travel, health, parenting, shopping, future, and dining. Its content is enriched every week with updated content derived from current areas of interests.

BPI Family Savings seeks to expand lending by 15%

BPI Family Savings Bank, the thrift banking arm of the Bank of the Philippine Islands, is seeking to expand its lending portfolio by 15% next year on the back of strong growth seen in the provinces and as mortgage and auto loans are seen to drive the growth.

The bank is currently “tracking Php200 billion” in loans and it targets to “cross” that level by yearend,” BPI Family Savings Bank, Senior Vice-President, Retail Loans Cristina L. Go told reporters in a briefing yesterday.

“Our numbers show really fast growth in the last five years, which mirrored -- double the size of retail loans... [for] 2016 we’re still targeting 15% loan growth,” Ms. Go said.

BPI Family ended 2014 with a Php173-billion loan portfolio, accounting for 25% of BPI’s total loan portfolio.

As of the first half, BPI Family’s retail loans were already up 20% with 54% or Php107 billion of the total coming from housing loans.

“Growth is more broad-based with loans more affordable -- housing, micro enterprises, auto dealership... in value, housing loans are big but in terms of volume, auto dealerships is higher,” Ms. Go said.

She noted that Php60 billion or 30% of the Php200-billion loan portfolio target for 2015 will come from provincial, attributed to real estate development booming outside Metro Manila, car dealerships rising in provinces and small and medium enterprises “more alive” in the countryside.

“We’ve seen growth in provincial -- at 25% -- outpace the general Metro Manila area, which is at 15-18%,” Ms. Go further said.

The bank continues to be “positive and optimistic” given the country’s current scenario where “forecasts are very positive” and as overseas Filipinos “have more propensity to avail of house, car, and business [loans], she added. “Home, car and business are their top priority in investments. They’re hoping to come here, retire here.” BPI Family has around 180,000 clients.

Moving forward, Ms. Go said BPI Family plans to put up 19 branches, mostly in areas outside Metro Manila to service the growing market in the provinces.

The thrift arm of Ayala-led BPI currently has 185 branches. Earlier, BPI Family Savings Bank President Natividad N. Alejo said putting up a single branch is estimated to cost the bank about Php8-10 million.

Although she declined then to disclose BPI Family’s net earnings in 2014, Ms. Go noted that BPI Family Savings Bank has always posted good earnings since it is BPI’s consumer unit and “the consumer market is very strong.”

BPI Family’s listed parent BPI posted Php9.3 billion in net earnings in the January to June period, up 16% from the year-ago level of Php8 billion.

Shares in BPI closed at Php86.10 each yesterday, up 50 centavos or 0.58%.

-- Business World

4 Mistakes you can make in Your Relationship with Banks

Although it is a necessity, working with banks can prove to be extremely exhausting and confusing at the same time. It is true that banks are there to help you when you cannot help yourselves. They give you a hand when you need it, but they also take everything from you when you cannot pay your debt.

There are two ways that your relationship with your bank works. On one hand, things work out smoothly, and your relationship is based on trust and respect. On the other hand, each of you tries to cheat on the other one and misunderstandings occur. Either way, here are the mistakes you should avoid when it comes to bank/client relationship.

Let the Bank Think for You

The health of your personal finance should be in your hand. No matter if you talk about your personal finance, or your businesses’ finance, you are responsible for your earnings and your expenses. Before signing any contract, even an account opening contract, make sure you read and understood all the terms, commissions, and risks involved. Once you signed the contracts, you cannot go back. And you all know how many times people have regretted not having read the contracts carefully before putting their signature on them.

Not Negotiating

It is true that some costs or terms cannot be negotiated under any circumstances. However, if the bank is trying to impose some conditions you do not really agree on, it is time you started negotiating. If you know how to address the problem, and if your character is strong enough, you will be able to negotiate even the simplest details. If your business grows and it works better and better, negotiation with your bank is a must.

Standing in Long Lines and Wasting Time with Cumbersome Bank Procedures

It is amazing how some people like to stay in line. No matter if they want to buy a shake, or if they are waiting at a red light, they just love to stay in line. However, when you have to run a business, time is money, and you cannot waste it standing in lines at your bank.

This is the reason why internet banking was invented. Internet banking allows you do any financial operations you want from paying your utility bills to sending money to your business partners and ordering your employees’ paychecks.

Keep a Destructive Relationship

No matter if you think about personal or professional relationships, people tend to like to be in a destructive one. The relationship with your bank is not an exception. If you do not like how your bank treats you, why do not you change it? It is your money, your time, and your nerves that have to suffer.

You can choose to have a bank to manage your personal accounts and another bank to take care of your businesses’ finances. Each bank focuses on something: profitable loans, low commissions, lower interests, etc. Think about your needs and choose the banks that fulfill them most suitably.
insurance claims.

When and how should we get Financial Advices?

We are all in need of someone who can cut our bills. For that we have to stop using Independent Financial Adviser. We have to know that from where and how we can get proper advice. If we have shortage of time in researching while searching for financial products which are complex, then the financial advice will seem worthwhile to us. We should take our full time for researching for the best products. Professional help has to be taken each and every time as paying the adviser is worth as it will ensure that we are getting all the things right.

Help from the experts are needed in some areas which are quite common. The first area which includes is the pensions. At the time of retirement we are supposed to get a pension which is the annual payment for the rest of the life. It is a financial transaction which is pretty big. For this, most of us would require an adviser as we have to acquire the best deal after searching in the market. The other financial transaction which is huge is mortgages. We should always remember that we will not be getting an instructor but an adviser. So it is important to know all the basics from before. The products which are complex include life insurance, protection of income, critical sickness, and also there are several exclusions. In some particular events, the adviser is not needed and it can be done cheaply.



Legally the advisors can be categorized into two parts. One is the Independent Financial Advisers which are absolutely unbiased and offer advice on all products found in the market. The other is the Restricted Advisers which can be located in the high street banks. The variety of products is limited to them.

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