RBC Bank Looking at Growth Strategies

Reporting by Scott Wolf News Observer

"Everything is on the table," CEO Gordon Nixon told Bloomberg News during an interview in New York on Wednesday. He said acquisitions or a merger with another bank are two ways to "maximize return." He said concerns about bank balance sheets and U.S. banking regulations make it difficult to value potential acquisition targets. Royal Bank's last U.S. purchase was the $1.6 billion takeover of Alabama National Bank in February 2008.

There will be opportunities "for years to come" to buy rival banks and expand the U.S. business, Nixon told Bloomberg."The first thing we're going to do is fix it," Nixon said. The biggest question is whether "that business is going to be as attractive as other opportunities for us to deploy capital."
Royal Bank last year reorganized RBC Bank after the subsidiary began losing money during the recession, hurt by its exposure to real estate and deteriorating commercial loans. That effort included cutting hundreds of jobs and replacing top managers.

RBC Bank is now led by CEO Jim Westlake, a Canadian who took over the top spot from Scott Custer last fall. Westlake didn't directly contradict anything his boss told Bloomberg News, but he said RBC Bank officials are not now discussing the possibility of a sale. "You wouldn't ever want a CEO who wouldn't consider all options," he said in a telephone interview Thursday. "Any conjecture about what we might do is exactly that. We are very focused on building a good bank here."

Westlake spoke from his car at Raleigh-Durham International Airport, where he was waiting to fly to Toronto to visit his bosses at Royal Bank.
To fix RBC Bank, officials have consolidated all the branding across its territories under the RBC Bank name and are working to improve the company's balance sheet and loan portfolio, Westlake said.

RBC Bank, with about 430 branches, now employs 500 people in the Triangle, mostly at its headquarters tower in downtown Raleigh. Company wide, RBC Bank has about 5,000 employees, down from 6,000 a year ago.
Royal Bank entered the U.S. market with its $2.1 billion purchase of Rocky Mount-based Centura Bank in 2001.The company's shares, which have nearly doubled in the past year, rose 53 cents Thursday to close at $58.96.

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Accountants Look to Cloud Computing For Cost Cutting

Article from CFO.com

Unlike the development curve of many business trends, the use of cloud computing to lower accounting costs has gained an early foothold among smaller companies. There is practically limitless room for growth; what almost everyone regards as the most successful cloud software provider to date, salesforce.com, started out at the lower end but now continues to find a berth in larger and larger companies.

The American Institute of Certified Public Accountants is pushing to accelerate adoption of cloud solutions among its 350,000 members, focusing especially on small and midmarket companies as well as CPA firms. The AICPA's first official endorsement of a cloud vendor, payroll solutions provider Paychex, came several years ago. But the institute has rolled out more such partnerships with increasing frequency, including with bill.com for invoice management and payment in 2008, financial management and accounting software maker Intacct a year ago, and tax-automation supplier Copanion at year-end 2009.
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Another cloud vendor will receive the institute's stamp of approval this spring, according to Erik Asgeirsson, chief executive of CPA2Biz, an AICPA subsidiary that provides the parent with technology and marketing services and advocates the use of accounting automation by small businesses.

The pitch is that the cloud offers a steep drop in information-technology costs, since applications are hosted by the vendors and provided on demand, rather than via physical installations or seat licenses. "It is extremely important for CFOs, controllers, and CPA firms to leverage this new way of doing business," says Asgeirsson. "Putting these solutions in place provides sustainable competitive advantages."

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Hanover Insurance Appoints New CFO

The Hanover Insurance Group, Inc. (NYSE: THG), a leading provider of property and casualty insurance, today announced that Ellen M. Rizzo has been appointed chief financial officer of its property and casualty business. In this role, Rizzo is responsible for financial oversight of The Hanover’s personal lines, commercial lines and claims organizations.

Rizzo joins The Hanover from The Travelers Companies, where she served as senior vice president and chief financial officer of business insurance since 1999. With more than 25 years of service to Travelers, she has established a reputation as an accomplished and insightful financial executive.

“Among the many ways we deliver distinctive value as a company is by attracting and retaining talented and committed professionals,” said Marita Zuraitis, president of The Hanover’s property and casualty business. “Ellen is one of the most talented and committed financial professionals in our business, and we look forward to benefiting from her extensive experience as we continue our journey to be the best partner for winning independent agents.”

“Ellen has a very successful track record leading financial organizations for property and casualty businesses,” said Steven J. Bensinger, executive vice president and chief financial officer of The Hanover Insurance Group. “We are confident that her broad industry knowledge and insight will be great assets to our organization as we continue to deliver on our promises to our agent partners and their customers.”

Ellen holds a master’s degree in finance and a bachelor’s degree in accounting from the University of Connecticut.

Reorganization of Divisions at SunTrust Banks

SunTrust Banks Inc (STI.N) said on Tuesday it was creating a new unit to oversee all of its consumer banking operations, and reorganizing its corporate and investment banking operations.

The Atlanta-based bank's newly created consumer banking organization will have oversight of all consumer deposit and loan offerings, including mortgage and credit cards.

The change by one of the 10 largest U.S. banks mirrors shifts by other large U.S. consumer banks to streamline operations and give a few executives ultimate responsibility for basic consumer services, like deposits and loans.

C.T. Hill, 59, will run the new unit, SunTrust said. He previously ran the bank's Mid-Atlantic Banking Group and managed its retail business line.

Thomas Kuntz, 53, will oversee the bank's 1,700 branches spread through 16 divisions in the Southeast and Mid-Atlantic regions of the United States.

The bank is also moving some of its commercial executives.

Amy Medendorp, 48, will become business executive for SunTrust's commercial line of business. She previously worked as co-head of the corporate and investment bank with Hugh Cummins, who will take over full responsibility for the corporate and investment banking operations.

Jet Blue Subleases Space From Met Life

JetBlue Airways announced they have decided to keep its headquarters in New York City, and to combine the current Forest Hills, New York and Darien, Connecticut corporate offices,into one main support center to be located in Long Island City, Queens.

JetBlue's Darien, CT support center will be combined with the current New York office sometime in 2011. Seventy jobs will be relocated to New York. The carrier's Darien office provides transactional financial support for the value airline since 2000 and has been a key ingredient of the airline's success in its first decade.

Subleasing Space From MetLife

JetBlue will be subleasing the space from MetLife, who will continue to maintain a significant presence at the location with approximately 800 associates.Subject to execution of a lease with Metropolitan Life Insurance Co. (MetLife), JetBlue expects to occupy approximately 200,000 square feet by mid-2012 in the historic Brewster Building in Long Island City Queens. The Brewster Building, owned by Brause Realty, a New York City-based real estate company, is just six miles down the road from JetBlue's current support center location in Forest Hills, and is situated at the foot of one of the main gateways to Manhattan -- the Queensborough Bridge.

David Brause, President of Brause Realty Inc. and Chairman of the Long Island City Business Improvement District (BID), said, "We are very pleased that JetBlue Airways has chosen to lease our family's building in Long Island City for its new headquarters location. In partnership with our tenant, MetLife, Brause Realty looks forward to many years together with JetBlue as we accommodate this vibrant company's present space needs and their growth into the future."


"We are pleased that JetBlue, has made their decision to join us and establish their headquarters at our class A Long Island City facility," said John M. Vazquez, Vice President, Chief Procurement Officer, Vendor Sourcing and Corporate Services for MetLife. "Our mutual commitment to Long Island City is evidence that the area continues to grow and prosper with significant residential and business development. We are confident that JetBlue crewmembers will feel right at home in our headquarters quality building and will enjoy the full array of amenities available. We value this partnership with JetBlue and appreciate having such a well regarded and customer focused organization complement MetLife."

Subleasing is Not Always the Answer

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More Activity Predicted For Data Center Facilities

As the debt and equity markets begin to thaw, the initial public offering for the Telx Group is likely to be the first of many transactions to come in 2010 in the data center sector, according to analysts and industry insiders, who say the industry is poised for a flurry of deals – including IPOs, financings, and acquisitions of facilities and companies.

“There are lot of deals going on in the hosting and data center sector,” said Dan Golding, Managing Director of DH Capital, an investment bank that specializes in the hosting and telecom sectors. “The reason there will be so many deals is that many were already in the works in 2008 and early 2009. You’ve got all these deals that are lined up and waiting to go.”

“In the short term, we’re going to see a lot of equity come into this space,” said Jim Kerrigan, director of the national data center practice at Grubb & Ellis. “There will be a lot of new faces, and familiar faces in new roles. All these deals that got shelved in 2009 because the CFO said no … they’re going to happen. That’s going to be good for the business.”

Private Equity Firms Get Active

Telx filed papers Thursday for an IPO that could raise up to $100 million for the provider, which offers colocation and interconnection services. Telx is among the data center providers backed by private equity firms that continued to expand during the economic downturn, a group that also includes Corelink, Latisys, QTS, CyrusOne, Peak 10, Hosted Solutions, ViaWest and The Planet.

At the recent DataCenterDynamics New York and Data Center World conferences, there was chatter about potential “roll ups” in the colocation and managed hosting sectors, as emerging players seek to build a national footprint by acquiring providers and facilities with a track record of growth and solid management. The activity could provide exits for some investors, growth capital for some providers, and bring additional shifts to a competitive landscape bracing to absorb the pending merger of two major players, Equinix and Switch and Data.

The talk of a surge in transactions doesn’t signal a shift in sentiment, analysts and, but rather the ability to fund existing investor sentiments.

Strong Investor Interest

“The door hasn’t really been open because of the capital situation,” said Golding. “There’s tremendous interest in this sector from investors. Over the last two years most sectors have performed poorly. There really aren’t too many bright spots. But the data center and hosting sector has done well. I think there are a number of high-quality data center properties that investors find attractive.”

HSBC Opening New Bank Branches in US

Wall Street Journal Reports HSBC Branch banking Strategy
reporting by Sara Schaefer Muñoz at sara.schaefer-munoz@wsj.com

"...HSBC quietly opened 18 retail branches in the U.S. in 2009 and plans six additional locations this year, trying to use its widespread name recognition to win business from consumers with ties to Asia, Europe and Latin America.

In December, the London bank opened a branch in the Chinatown section of San Francisco. Redmond, Wash., the hometown of Microsoft Corp. and a slew of international employees, got a new HSBC branch in February. The bank's Koreatown office on Wilshire Boulevard in Los Angeles opened its doors March 4."

HSBC Currently Ranks 13th in Deposits

"...HSBC has long coveted the world's largest economy. The bank had $84.08 billion in U.S. deposits as of June 30, the latest date for which figures are available from the Federal Deposit Insurance Corp. But while deposits have grown more than 50% since 2004, HSBC ranks just 13th in deposits in the U.S., trailing U.S.-based rivals like Bank of America Corp. and J.P. Morgan Chase & Co., as well as the U.K.'s Royal Bank of Scotland Group PLC.

Since 2006, HSBC has opened nearly 100 branches in the U.S., most of them in major urban areas, expanding the company's presence beyond its roots in New York. HSBC's largest U.S. unit now has 382 offices scattered throughout the state, and an additional 102 branches in 11 other states and Washington, D.C., according to the FDIC."

HSBC Already has A Substantial Number of Local Branches in New York

"...In 2005, HSBC launched an online bank in the U.S., HSBC Direct, which has amassed $15.5 billion in savings deposits. The company also has lots of small-town brick-and-mortar branches, which some analysts worry aren't an ideal fit with HSBC's internationally focused push.

"The niche strategy itself is quite sensible," says Ronit Ghose, an analyst at Citigroup. "But they can't get rid of the fact they have all these legacy branches in New York state that don't seem to fit into their global strategy."

An HSBC spokeswoman says the presence in New York state helps provide scale and critical mass to compete in all segments of the market.

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