As reported by Vincent Ryan in CFO Magazine
Two years after the fall of Lehman Brothers, the immense overhaul of the banking system is just beginning, and it is far too early for companies to breathe a collective sigh of relief. The banking system is safer — but not by a lot. Banks now have larger capital buffers, and the complex collateralized debt obligations (CDOs) that wrought so much destruction are nearly extinct. Yet 11% of retail banks remain at risk of failure, says the Federal Deposit Insurance Corp. (FDIC).
The passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act represents not a regulatory finish line so much as the firing of a starter's pistol that will kick off a marathon of rule-making and second-guessing. Key questions remain about how much reform will come to pass, when, and what it will ultimately mean for companies. "Regulation is always in catch-up mode — there's no way around it," says Cory Gunderson, managing director of the U.S. financial services and global risk and compliance practices at Protiviti.
As for what has been settled and what hasn't, three key areas of uncertainty deserve watching: whether public bailouts of megabanks can be avoided in the future, what regulators have done to return commercial lending to normal, and whether Wall Street has been reined in too much, too little, or just enough.
CFO Best Practice Sponsor: Cambridge Consulting Group was formed more than 10 years ago to help large financial organizations reduce their costs by eliminating their leasing obligations for excess commercial real estate space. Founded by Dave Worrell, a former Corporate/Facility Director, Cambridge Consulting Group offers companies a better option than subleasing office space they no longer need or use. Using a newer financial strategy- Negotiated Lease Buyouts, Cambridge Consulting has saved Fortune 500 companies millions of dollars in commercial lease obligations. For more information please visit their website- www.ccgiweb.com or call David Worrell at 888.472.5656
Too Big to Fail?
Dodd-Frank created the Financial Stability Oversight Council, a mandated team of traditionally autonomous financial regulators who now are expected to work together to ensure that the financial system does not develop pockets of dangerous dependency. The group, which held its first meeting last month, has the daunting goal (given recent history) of eliminating "expectations on the part of shareholders, creditors, and counterparties of [large banks] that the government will shield them from losses in the event of failure," the U.S. Treasury says.
Dodd-Frank attempts to ensure that by imposing greater regulatory supervision on bank holding companies with assets greater than $50 billion. It also requires nonbank financial firms and systemically important firms within the next 18 months to develop plans for rapid, orderly unwinding of their businesses in cases of severe financial distress. But will this and any of the other proposed measures prevent the U.S. government from lavishing taxpayer funds on failed banks and being the arbiter of which banks fail and which get life-saving injections of capital?
http://www.cfo.com/article.cfm/14533054?f=search
Showing posts with label bank real estate. Show all posts
Showing posts with label bank real estate. Show all posts
Monday, November 1, 2010
Thursday, June 10, 2010
Companies Should Avoid Subleasing Office Space
THE TRUTH ABOUT SUBLEASING
Subleasing is not the Solution for Surplus Office Space
WHY IS SUBLEASING THE ONLY RECOGNIZED OPTION FOR
MITIGATING THE LOSS OF SURPLUS OFFICE SPACE?
Up until the savings and loan scandal of the eighties, real estate developers enjoyed some latitude with lenders as to the value and potential pro-forma of their office projects. Since that time regulations on lending practices have forced developer/landlords to a much tighter qualification process. Before, developer/landlords had more latitude in deciding the best alternatives for empty space, the lenders leaving much to the discretion of the landlords.
Today, lenders almost exclusively base the quality of their loans on the “income approach” to valuation. Therefore, to lose a percentage of a loan’s income can, and will de-value the loan forcing the lender to require additional equity in the project – or justify the loss to their stockholders.
Since then, landlords have required tenants who no longer need or are using space in their buildings to “sublease” the space themselves. This gives the landlord the luxury of maintaining the income and guarantees from the tenant, even if they find a subtenant. It also creates a tremendous loss for the tenant needing to sublease the space.
If your company has surplus space and time remaining on the lease, what are you to do? If you call your landlord you are likely to receive the answer – “Sublease it”. They will probably offer their own brokers services which will seem reasonable. But the landlord’s broker works for your landlord. The landlord will see to it that any potential tenants are shown their own empty space before yours.
Once You Begin The Sublease Odyssey – Keep This in Mind:
1. A Surplus Lease Is Not A Real Estate Issue – It's A Cash-Flow Issue.
Finding a subtenant is not the issue at hand. Timing and speed of execution are the true issues. Every month the space sits vacant costs your company thousands in lost after-tax income. The goal should be to find the fastest and least expensive method of mitigating this loss. Subleasing is neither.
2. A Sublease Is Perceived By The Market As A "Fire Sale"
According to the Business Post, “Most commercial real estate brokers will advise a potential tenant wanting to sublease their space that their space will trade in the 50 cents on the dollar range.” (Business Post, Subleasing Can Be Painful, February 2005). After leasehold improvement allowances, broker commissions, and numerous other costs – some known and some hidden, a sublease will rarely return more than 37 cents on the dollar – and that’s a best case scenario.
3. Subleasing Attracts Bottom Feeding Tenants
High credit companies do not seek sublease space. Subleases attract cash and credit poor tenants who usually are unable to qualify for a new lease. Also, once their sublease ends – the new tenant is subject to a new rental rate which the landlord controls. But more importantly, what happens when your new subtenant can't pay the rent?
4. Financial Regulations Specifically Target Sublease Accounting
According to GAAP financial rules (FASB 13 – Interpretation 27), surplus space must be written off at the time you intend to vacate the space. If you sublease the space and the subtenant defaults, you may be required to immediately write off the entire remaining lease balance including all anticipated costs including the furniture, fixtures and equipment you may have installed. Furthermore, if you are trying to sublease and your reported sublease income expectations are below your expectations, you may be required to immediately write off that additional loss.
5. A Sublease Requires You To Put Up "AT RISK" Capital
A sublease typically requires an up front cash investment for leasehold improvements as well as your broker’s commission. These standard out-of-the-gate expenses are needed to attract what often ends up being a poor credit subtenant who is at great risk of default, essentially making it more of a gamble than an investment.
6. A Sublease Puts You In The Real Estate Management Business
Subleasing means you are now a landlord since the sublease is between your company and your new subtenant – not the landlord. Therefore any of your subtenant’s office building requests and requirements must be handled by you first, not the landlord. All requests for repairs and maintenance, collecting rent, parking lot accident liability, etc. are your responsibility. When the toilet backs up the subtenant must call you, not the original landlord – who is no longer directly liable for such repairs. This takes a lot more time and money than most expect and is a “dirty little secret” of subleasing.
7. The Value Of Your Sublease Decreases With Every Day
Every month that your space sits vacant it becomes less attractive to prospects. Subtenants know that shorter term subleases mean they will soon face large rent increases once the sublease terminates. History shows that opportunities to sublease fall dramatically when the lease term remaining drop below 36 months.
Alternatives to Subleasing:
20 years ago, Cambridge Real Estate Consulting pioneered a “new science” – A Professionally Negotiated Lease Buy-out. This “science” is based on the ability of the negotiator to “un-lock” the value of the vacant space – and then show it to the landlord.
Lease buy-out negotiation is a specialized exercise that requires a unique and expert knowledge of real estate leases; finance and investor expectations. But most importantly, it requires years of experience in this type of negotiation.
Surplus space can have great value to the landlord, which is often overlooked – even by the landlord. The landlord can earn far more for your space than you can under a sublease. They have the ability and expertise to more profitably market the property.
The challenge is to convince the landlord that it is in their interest to take back your space with a small cushion of cash now rather than leave the space vacant or have a less than desirable subtenant there.
A SUCCESSFULLY NEGOTIATED LEASE BUY-OUT:
A TYPICAL NEGOTIATED LEASE BUY-OUT PROCESS:
1. A SITUATION ANALYSIS
We dissect your lease; all additional bills and correspondence to determine the exact future obligation and any anticipated or written changes. We then develop a presentation outlining our findings.
2. PRE–PROCESS PLANNING
The most important and time consuming part of the buy-out process is pre-process planning. The reason for this planning is to gain knowledge of the landlord’s unique financial and market position. Once given the “go ahead”, we meet with the landlord to explain the situation and determine their financial and investor issues.
3. STRATEGY DEVELOPMENT
Once understanding your lease and business situation; meeting with the landlord and determining market conditions – we work directly with you to develop a strategy that fits your budget and timing.
4. TACTICAL NEGOTIATIONS
A negotiated buy-out is not just a simple meeting to convince the landlord to let you out of a large financial obligation. It requires several tactical negotiations to find the “buttons” that will help the landlord recognize the potential gain – or at least no potential loss.
5. EXECUTE THE BUY-OUT
This is the most critical and delicate part of the process. More buy-outs are lost during the final legal negotiations and documentation than any other part of the process. We actively participate in this process through execution.
Although considered the “tried and true” method for dealing with surplus space – subleasing is also the most futile in mitigating the loss from surplus space. There are alternatives which can more quickly and less expensively END the liability.
To learn more about Cambridge’s services, call 888.472-5656. Or visit our web site www.ccgiweb.com. We will happy to give you a free consultation on your situation and give you options that save money now.
Subleasing is not the Solution for Surplus Office Space
WHY IS SUBLEASING THE ONLY RECOGNIZED OPTION FOR
MITIGATING THE LOSS OF SURPLUS OFFICE SPACE?
Up until the savings and loan scandal of the eighties, real estate developers enjoyed some latitude with lenders as to the value and potential pro-forma of their office projects. Since that time regulations on lending practices have forced developer/landlords to a much tighter qualification process. Before, developer/landlords had more latitude in deciding the best alternatives for empty space, the lenders leaving much to the discretion of the landlords.
Today, lenders almost exclusively base the quality of their loans on the “income approach” to valuation. Therefore, to lose a percentage of a loan’s income can, and will de-value the loan forcing the lender to require additional equity in the project – or justify the loss to their stockholders.
Since then, landlords have required tenants who no longer need or are using space in their buildings to “sublease” the space themselves. This gives the landlord the luxury of maintaining the income and guarantees from the tenant, even if they find a subtenant. It also creates a tremendous loss for the tenant needing to sublease the space.
If your company has surplus space and time remaining on the lease, what are you to do? If you call your landlord you are likely to receive the answer – “Sublease it”. They will probably offer their own brokers services which will seem reasonable. But the landlord’s broker works for your landlord. The landlord will see to it that any potential tenants are shown their own empty space before yours.
Once You Begin The Sublease Odyssey – Keep This in Mind:
1. A Surplus Lease Is Not A Real Estate Issue – It's A Cash-Flow Issue.
Finding a subtenant is not the issue at hand. Timing and speed of execution are the true issues. Every month the space sits vacant costs your company thousands in lost after-tax income. The goal should be to find the fastest and least expensive method of mitigating this loss. Subleasing is neither.
2. A Sublease Is Perceived By The Market As A "Fire Sale"
According to the Business Post, “Most commercial real estate brokers will advise a potential tenant wanting to sublease their space that their space will trade in the 50 cents on the dollar range.” (Business Post, Subleasing Can Be Painful, February 2005). After leasehold improvement allowances, broker commissions, and numerous other costs – some known and some hidden, a sublease will rarely return more than 37 cents on the dollar – and that’s a best case scenario.
3. Subleasing Attracts Bottom Feeding Tenants
High credit companies do not seek sublease space. Subleases attract cash and credit poor tenants who usually are unable to qualify for a new lease. Also, once their sublease ends – the new tenant is subject to a new rental rate which the landlord controls. But more importantly, what happens when your new subtenant can't pay the rent?
4. Financial Regulations Specifically Target Sublease Accounting
According to GAAP financial rules (FASB 13 – Interpretation 27), surplus space must be written off at the time you intend to vacate the space. If you sublease the space and the subtenant defaults, you may be required to immediately write off the entire remaining lease balance including all anticipated costs including the furniture, fixtures and equipment you may have installed. Furthermore, if you are trying to sublease and your reported sublease income expectations are below your expectations, you may be required to immediately write off that additional loss.
5. A Sublease Requires You To Put Up "AT RISK" Capital
A sublease typically requires an up front cash investment for leasehold improvements as well as your broker’s commission. These standard out-of-the-gate expenses are needed to attract what often ends up being a poor credit subtenant who is at great risk of default, essentially making it more of a gamble than an investment.
6. A Sublease Puts You In The Real Estate Management Business
Subleasing means you are now a landlord since the sublease is between your company and your new subtenant – not the landlord. Therefore any of your subtenant’s office building requests and requirements must be handled by you first, not the landlord. All requests for repairs and maintenance, collecting rent, parking lot accident liability, etc. are your responsibility. When the toilet backs up the subtenant must call you, not the original landlord – who is no longer directly liable for such repairs. This takes a lot more time and money than most expect and is a “dirty little secret” of subleasing.
7. The Value Of Your Sublease Decreases With Every Day
Every month that your space sits vacant it becomes less attractive to prospects. Subtenants know that shorter term subleases mean they will soon face large rent increases once the sublease terminates. History shows that opportunities to sublease fall dramatically when the lease term remaining drop below 36 months.
Alternatives to Subleasing:
20 years ago, Cambridge Real Estate Consulting pioneered a “new science” – A Professionally Negotiated Lease Buy-out. This “science” is based on the ability of the negotiator to “un-lock” the value of the vacant space – and then show it to the landlord.
Lease buy-out negotiation is a specialized exercise that requires a unique and expert knowledge of real estate leases; finance and investor expectations. But most importantly, it requires years of experience in this type of negotiation.
Surplus space can have great value to the landlord, which is often overlooked – even by the landlord. The landlord can earn far more for your space than you can under a sublease. They have the ability and expertise to more profitably market the property.
The challenge is to convince the landlord that it is in their interest to take back your space with a small cushion of cash now rather than leave the space vacant or have a less than desirable subtenant there.
A SUCCESSFULLY NEGOTIATED LEASE BUY-OUT:
- COSTS FAR LESS THAN A SUBLEASE
- CAN BE ACCOMPLISHED IN 60 TO 90 DAYS
- ELIMINATES ALL RISK AND FUTURE LIABILITIES
- REQUIRES NO “AT-RISK” CAPITAL
A TYPICAL NEGOTIATED LEASE BUY-OUT PROCESS:
1. A SITUATION ANALYSIS
We dissect your lease; all additional bills and correspondence to determine the exact future obligation and any anticipated or written changes. We then develop a presentation outlining our findings.
2. PRE–PROCESS PLANNING
The most important and time consuming part of the buy-out process is pre-process planning. The reason for this planning is to gain knowledge of the landlord’s unique financial and market position. Once given the “go ahead”, we meet with the landlord to explain the situation and determine their financial and investor issues.
3. STRATEGY DEVELOPMENT
Once understanding your lease and business situation; meeting with the landlord and determining market conditions – we work directly with you to develop a strategy that fits your budget and timing.
4. TACTICAL NEGOTIATIONS
A negotiated buy-out is not just a simple meeting to convince the landlord to let you out of a large financial obligation. It requires several tactical negotiations to find the “buttons” that will help the landlord recognize the potential gain – or at least no potential loss.
5. EXECUTE THE BUY-OUT
This is the most critical and delicate part of the process. More buy-outs are lost during the final legal negotiations and documentation than any other part of the process. We actively participate in this process through execution.
Although considered the “tried and true” method for dealing with surplus space – subleasing is also the most futile in mitigating the loss from surplus space. There are alternatives which can more quickly and less expensively END the liability.
To learn more about Cambridge’s services, call 888.472-5656. Or visit our web site www.ccgiweb.com. We will happy to give you a free consultation on your situation and give you options that save money now.
Wednesday, June 9, 2010
Cash Is King
With Treasuries at all-time lows and bank lending still declining, companies are reorganizing their treasury operations in record numbers as they strive to increase efficiency, reduce costs and make best use of their internal cash. According to a recent survey by JP Morgan Treasury Services, 61 percent of companies polled had either just completed a treasury restructuring, were in the process of restructuring, or were building the business case for a restructuring.
The poll of 182 treasury executives—primarily from large corporations--found that 35 percent were implementing systems that would allow the company to get a global cash balance, 25 percent were reorganizing their bank account structures to reduce their number of banking partners, and 19 percent were restructuring their cash concentration programs to make use of extra cash for self-funding or debt repayment.
The need to make more efficient use of existing cash balances has been a growing theme throughout the crisis and continues to be a big driver of corporate treasury reorganization, as we discussed last week. Swiss logistics company Panalpina, for example, recently went through a restructuring and treasury refocusing to reduce group-wide operating costs and better manage FX and interest rate exposures in the current market. The firm underwent a full review of its foreign exchange management and investment policies in order to more efficiently manage counterparties and instrument tenors, and better hedge FX exposures. The next step, according to the company, is to move to a single global treasury management system that is integrated with its ERP.
http://www.cfozone.com/index.php?option=com_myblog&show=Companies-restructure-treasury-to-reduce-costs.html&Itemid=713&newsletter=06092010_cfo
Blog Sponsor
The poll of 182 treasury executives—primarily from large corporations--found that 35 percent were implementing systems that would allow the company to get a global cash balance, 25 percent were reorganizing their bank account structures to reduce their number of banking partners, and 19 percent were restructuring their cash concentration programs to make use of extra cash for self-funding or debt repayment.
The need to make more efficient use of existing cash balances has been a growing theme throughout the crisis and continues to be a big driver of corporate treasury reorganization, as we discussed last week. Swiss logistics company Panalpina, for example, recently went through a restructuring and treasury refocusing to reduce group-wide operating costs and better manage FX and interest rate exposures in the current market. The firm underwent a full review of its foreign exchange management and investment policies in order to more efficiently manage counterparties and instrument tenors, and better hedge FX exposures. The next step, according to the company, is to move to a single global treasury management system that is integrated with its ERP.
http://www.cfozone.com/index.php?option=com_myblog&show=Companies-restructure-treasury-to-reduce-costs.html&Itemid=713&newsletter=06092010_cfo
Blog Sponsor
Sponsor:Cambridge Consulting Group was formed more than 10 years ago to help large organizations reduce their costs by eliminating their leasing obligations for excess commercial real estate space. Founded by Dave Worrell, a former Corporate/Facility Director, Cambridge Consulting Group offers companies a better option than subleasing office space they no longer need or use. Using a newer financial strategy- Negotiated Lease Buyouts, Cambridge Consulting has saved Fortune 500 companies millions of dollars in commercial lease obligations. For more information please visit their website- www.ccgiweb.com
Wednesday, June 2, 2010
200 Wachovia Branches in Atlanta Will Convert to Wells Fargo in October
As reported in Atlanta Business Chronicle
As the leaves change colors this fall, Wachovia’s familiar blue and green logos will change into Wells Fargo’s red and yellow in Atlanta.
San Francisco-based Wells Fargo & Co. (NYSE: WFC) said Wednesday Wachovia signs and systems will convert to Wells Fargo in late October at almost 200 bank branches in Atlanta and nearly 280 locations across Georgia.
After the conversion, Wells Fargo will be the second-largest bank in metro Atlanta with $21.6 billion in deposits and a 19 percent market share. Wells Fargo also noted it has hired more than 200 tellers and bankers across Atlanta and more than 300 across Georgia in a shift to the Wells Fargo model.
Atlanta will remain headquarters for the company’s Southeast region, which includes Alabama, Tennessee and Mississippi. The three neighboring states to Georgia will change to Wells Fargo in late September. Other states in the East will follow.
Wachovia merged with Wells Fargo on Dec. 31, 2008. Wachovia Securities has already become Wells Fargo Advisors and Wachovia Mortgage is now Wells Fargo Home Mortgage.
Wells Fargo’s first-quarter profit dropped 16 percent to $2.55 billion. The company has $1.2 trillion in assets and provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 10,000 stores and 12,000 ATMs.
As the leaves change colors this fall, Wachovia’s familiar blue and green logos will change into Wells Fargo’s red and yellow in Atlanta.
San Francisco-based Wells Fargo & Co. (NYSE: WFC) said Wednesday Wachovia signs and systems will convert to Wells Fargo in late October at almost 200 bank branches in Atlanta and nearly 280 locations across Georgia.
After the conversion, Wells Fargo will be the second-largest bank in metro Atlanta with $21.6 billion in deposits and a 19 percent market share. Wells Fargo also noted it has hired more than 200 tellers and bankers across Atlanta and more than 300 across Georgia in a shift to the Wells Fargo model.
Sponsor:Cambridge Consulting Group was formed more than 10 years ago to help large organizations reduce their costs by eliminating their leasing obligations for excess commercial real estate space. Founded by Dave Worrell, a former Corporate/Facility Director, Cambridge Consulting Group offers companies a better option than subleasing office space they no longer need or use. Using a newer financial strategy- Negotiated Lease Buyouts, Cambridge Consulting has saved Fortune 500 companies millions of dollars in commercial lease obligations. For more information please visit their website- www.ccgiweb.com
Atlanta will remain headquarters for the company’s Southeast region, which includes Alabama, Tennessee and Mississippi. The three neighboring states to Georgia will change to Wells Fargo in late September. Other states in the East will follow.
Wachovia merged with Wells Fargo on Dec. 31, 2008. Wachovia Securities has already become Wells Fargo Advisors and Wachovia Mortgage is now Wells Fargo Home Mortgage.
Wells Fargo’s first-quarter profit dropped 16 percent to $2.55 billion. The company has $1.2 trillion in assets and provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 10,000 stores and 12,000 ATMs.
Friday, March 26, 2010
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.
To read full article please click here
"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.
To read full article please click here
Sunday, March 21, 2010
IBM CFO Study- Larger Role In C Suite for CFO
Leadership From Forbes.com
The Big New Role Of The CFO
William Fuessler,
Global Leader of IBM's financial management practice.
The global economic downturn has put a bright spotlight on chief financial officers and the finance organizations they preside over. Amid all the world's volatility and uncertainty they have been drawn ever more often into the boardroom discussions where decisions are made. Their bosses, chief executive officers, no longer want mere number crunchers; they want them to provide forecasts, manage risks and provide insight into issues ranging from pricing to production. As a result, CFOs are emerging with far greater clout and responsibilities than before.
IBM's new 2010 Global CFO Study, based on input from more than 1,900 CFOs and senior finance leaders worldwide, attests to this shift. Although the importance of core finance tasks hasn't diminished in any way, CFOs have had to sharply increase their focus on company-wide concerns. The IBM study indicates that they are seriously struggling to come to terms with the dramatically altered economic landscape, and only half of those surveyed said they feel they're effective in giving their CEOs adequate business insight. An overwhelming majority are planning big changes.
CEOs and boards of directors are counting on their CFOs to be fact-based voices of reason and insight, but those expectations are rising faster than the ability to deliver. However, the study identified one group of finance organizations that have a particular combination of capabilities that buck this trend. We call them the value integrators. Value integrators' businesses have outperformed their peers on every common financial measure we examined. These leaders have stepped up to their new roles helping their businesses make all manner of enterprise-wide decisions better, faster and with more certainty about end results.
How have they done it? First, through efficiency. They have reduced complexity by sticking with common processes, for example using the same definitions across the organization for financial terms like gross margin and revenue. That may sound like a small, obvious thing, but it's huge. Many organizations use multiple terms to describe a single financial function, making reconciliation across the business a nightmare. Common terms make it far easier to consolidate data from the local to the regional and global levels, allowing more time for analysis. Less efficient companies consider it a victory merely to reconcile all their information at all.
Value integrators also have far greater analytical capabilities, enabling them to generate business insights that can help them spot market opportunities, react faster and ultimately predict changes in the business environment. They've even figured out how to drive sustained business outcomes in times of market instability.
This has happened, for example, at Banco Bradesco, one of Brazil's largest private banks, which has total assets of $253.5 billion. Bradesco provides a wide range of banking and financial products and services both in Brazil and abroad. Its leaders recently recognized the importance of more effective financial management and went to work standardizing its accounting processes and revamping its governance model to ensure that all departments had clearly articulated responsibilities. It also built a performance management system that allows it to evaluate risks and view profitability in many different ways, for instance by geography, customer or branch. The system also allows managers to build forecasts into their planning processes. As a result Bradesco is now much faster at gathering, compiling and reconciling data. It has the time for sophisticated analysis and is better able to provide decision support for its undertakings.
That's the kind of commitment and vision it takes to become a value integrator. How can a CFO get started on the journey? There's no one-size-fits-all method; it varies from organization to organization. But you can start by asking these few key questions:
--Do I have all the information I need from all parts of the enterprise at all times?
--Is the company focused on the right business metrics, the ones that truly drive business performance?
--How accurate are our crucial forecasts, such as the ones for customer demand and unit costs?
--Does the organization have sufficient analytical skills?
The answers to these questions will start to point a CFO to gaps in his or her finance organization, and awareness of those gaps will guide the creation of an action plan--an absolutely crucial activity that must be undertaken with great care, as the decisions made for it will have great ramifications down the road.
One thing is certain: CFOs cannot return to the pre-crisis days when they were little more than information clearinghouses. The era of the CFO as a key influencer in the C-Suite has arrived, and those who are ready for it will reap the rewards for their organizations--increased competitiveness and greater profits.
Blog Sponsor: Cambridge Consulting helps CFO increase profits fro their firms by helping then review commercial real estate assets and creating negotiated lease buyouts for unused real estate. Many organizations are looking at their unused office space as an under utilized physical and financial asset. Millions of dollars of capital can be created by eliminating real estate obligations. Foe more information please visit www.commercialleaseterminations.com
The Big New Role Of The CFO
William Fuessler,
Global Leader of IBM's financial management practice.
The global economic downturn has put a bright spotlight on chief financial officers and the finance organizations they preside over. Amid all the world's volatility and uncertainty they have been drawn ever more often into the boardroom discussions where decisions are made. Their bosses, chief executive officers, no longer want mere number crunchers; they want them to provide forecasts, manage risks and provide insight into issues ranging from pricing to production. As a result, CFOs are emerging with far greater clout and responsibilities than before.
IBM's new 2010 Global CFO Study, based on input from more than 1,900 CFOs and senior finance leaders worldwide, attests to this shift. Although the importance of core finance tasks hasn't diminished in any way, CFOs have had to sharply increase their focus on company-wide concerns. The IBM study indicates that they are seriously struggling to come to terms with the dramatically altered economic landscape, and only half of those surveyed said they feel they're effective in giving their CEOs adequate business insight. An overwhelming majority are planning big changes.
CEOs and boards of directors are counting on their CFOs to be fact-based voices of reason and insight, but those expectations are rising faster than the ability to deliver. However, the study identified one group of finance organizations that have a particular combination of capabilities that buck this trend. We call them the value integrators. Value integrators' businesses have outperformed their peers on every common financial measure we examined. These leaders have stepped up to their new roles helping their businesses make all manner of enterprise-wide decisions better, faster and with more certainty about end results.
How have they done it? First, through efficiency. They have reduced complexity by sticking with common processes, for example using the same definitions across the organization for financial terms like gross margin and revenue. That may sound like a small, obvious thing, but it's huge. Many organizations use multiple terms to describe a single financial function, making reconciliation across the business a nightmare. Common terms make it far easier to consolidate data from the local to the regional and global levels, allowing more time for analysis. Less efficient companies consider it a victory merely to reconcile all their information at all.
Value integrators also have far greater analytical capabilities, enabling them to generate business insights that can help them spot market opportunities, react faster and ultimately predict changes in the business environment. They've even figured out how to drive sustained business outcomes in times of market instability.
This has happened, for example, at Banco Bradesco, one of Brazil's largest private banks, which has total assets of $253.5 billion. Bradesco provides a wide range of banking and financial products and services both in Brazil and abroad. Its leaders recently recognized the importance of more effective financial management and went to work standardizing its accounting processes and revamping its governance model to ensure that all departments had clearly articulated responsibilities. It also built a performance management system that allows it to evaluate risks and view profitability in many different ways, for instance by geography, customer or branch. The system also allows managers to build forecasts into their planning processes. As a result Bradesco is now much faster at gathering, compiling and reconciling data. It has the time for sophisticated analysis and is better able to provide decision support for its undertakings.
That's the kind of commitment and vision it takes to become a value integrator. How can a CFO get started on the journey? There's no one-size-fits-all method; it varies from organization to organization. But you can start by asking these few key questions:
--Do I have all the information I need from all parts of the enterprise at all times?
--Is the company focused on the right business metrics, the ones that truly drive business performance?
--How accurate are our crucial forecasts, such as the ones for customer demand and unit costs?
--Does the organization have sufficient analytical skills?
The answers to these questions will start to point a CFO to gaps in his or her finance organization, and awareness of those gaps will guide the creation of an action plan--an absolutely crucial activity that must be undertaken with great care, as the decisions made for it will have great ramifications down the road.
One thing is certain: CFOs cannot return to the pre-crisis days when they were little more than information clearinghouses. The era of the CFO as a key influencer in the C-Suite has arrived, and those who are ready for it will reap the rewards for their organizations--increased competitiveness and greater profits.
Blog Sponsor: Cambridge Consulting helps CFO increase profits fro their firms by helping then review commercial real estate assets and creating negotiated lease buyouts for unused real estate. Many organizations are looking at their unused office space as an under utilized physical and financial asset. Millions of dollars of capital can be created by eliminating real estate obligations. Foe more information please visit www.commercialleaseterminations.com
Thursday, March 18, 2010
Bank of West Hires New CFO
Bank of the West announced today that Duke Dayal has joined the bank as Chief Financial Officer. Dayal has more than 20 years of experience in international finance and was most recently a Managing Director of Brysam Global Partners, a New York-based private equity firm focused on investing in financial services. “Bank of the West’s history of sound financial management and its strong reputation in the market for outstanding service position it well to capitalize on growth opportunities,” Dayal said.
“Duke Dayal joins our team with a an impressive record of leadership in growing organizations, which, together with his strong finance and strategic skills, makes him a great addition to our executive management team,” Bank of the West Chairman and CEO Michael Shepherd said.
Prior to Brysam, Dayal was an executive with Citigroup serving in finance roles in the U.S., Europe and Asia. Among those roles was CFO of Citibank West, where he led the integration of Golden State Bancorp. Dayal also held senior finance roles in North America, Europe and Africa at Diageo, a leading consumer products company.
Dayal received a degree in Accounting and Finance from Nottingham Trent University, England and is a member of the Chartered Institute of Management Accountants in England.
Sponsor: Cambridge Consulting Group specializes in providing cost containment strategies to Financial Institutions. They have specific expertise in tax, finance and commercial real estate issues. For more information please visit their website- www.commercialleaseterminations.com
“Duke Dayal joins our team with a an impressive record of leadership in growing organizations, which, together with his strong finance and strategic skills, makes him a great addition to our executive management team,” Bank of the West Chairman and CEO Michael Shepherd said.
Prior to Brysam, Dayal was an executive with Citigroup serving in finance roles in the U.S., Europe and Asia. Among those roles was CFO of Citibank West, where he led the integration of Golden State Bancorp. Dayal also held senior finance roles in North America, Europe and Africa at Diageo, a leading consumer products company.
Dayal received a degree in Accounting and Finance from Nottingham Trent University, England and is a member of the Chartered Institute of Management Accountants in England.
Sponsor: Cambridge Consulting Group specializes in providing cost containment strategies to Financial Institutions. They have specific expertise in tax, finance and commercial real estate issues. For more information please visit their website- www.commercialleaseterminations.com
Wednesday, January 13, 2010
CFO Shifts To Head Division at Bank of America
Bank of America Corp. promoted Chief Financial Officer Joe Price to head consumer banking, as new Chief Executive Officer Brian Moynihan announced his management team . Price will be president of the consumer, small business and card banking unit, according to a company statement today. Price, 48, has held positions in finance, risk management and corporate strategy. He was president of consumer finance from 1999 to 2002.
The CFO position will be handled by Neil Cotty on an interim basis after Feb 1. The Bank has started an external search for a new CFO
The CFO position will be handled by Neil Cotty on an interim basis after Feb 1. The Bank has started an external search for a new CFO
Monday, December 28, 2009
Small Banks May Have A Tough Year in 2010
The New Year is shaping up to be a rough one for community lenders.
By Colin Barr
Senior Editor
Fortune Magazine
Dozens if not hundreds of small banks figure to disappear in 2010, as a weak economy and regulatory pressure lead to more failures and mergers.
President Obama met Tuesday with eight community bank executives, including the chiefs of German American Bancorp (GABC) and Monadnock Bancorp. Obama hailed the bankers as playing a "vital function," and cited "enormous opportunities" for economic growth if they keep lending.
The community bankers surely made for a more receptive audience than the big-bank CEOs Obama addressed last week. Small-business lending, after all, is what smaller banks do best. The Independent Community Bankers of America trade group notes that community banks account for almost a third of small business loans under $1 million.
But the smallest banks have been dropping like flies for years, as they labor to master expensive new technologies and regulatory changes -- at a time when giant banks spawned in a rash of megamergers are expanding their reach.
The consolidation trend should only strengthen in the coming year. Dozens of banks will fail as their customers retrench in a weak economy. Meanwhile, regulators will keep pressuring bankers to lend cautiously -- prompting weaker banks to merge into stronger ones as growth remains elusive.
"A lot of the regional and community banks are going to struggle to remain independent," said Terry Moore, a managing director at Accenture. "We're going to see those numbers shrinking."
They have shrunk a lot already. The number of commercial banks with assets of $50 million or less has dropped by more than 3,600 since 1994, to 1,198, according to recent Federal Deposit Insurance Corp. data.
At the same time, the deposits held by the biggest banks have soared, following years of megamergers punctuated by last year's bailouts. The five biggest banks -- Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citi and PNC (PNC, Fortune 500) -- held 37% of all deposits at June 30. That's triple the top five's share 15 years ago, according to the FDIC.
Questions about concentration at the top of the industry have been intensified by a steady drumbeat of small bank failures. This year has brought 140 bank failures, and nearly four times as many institutions are now classified by regulators as troubled -- meaning failures in 2010 are likely to reach into triple digits again.
Given those daunting numbers, the FDIC appears to be focusing on closing weak banks rather than luring in new capital from the likes of private equity investors.
Yet at the same time, even troubled megabanks such as Citi have been able to raise staggering sums in the marketplace, in part because it has become clear the government won't let them fail. This apparent disconnect chafes some observers who say private investors could be helping to rebuild small banks.
"What Citi tells you is there are enormous pools of capital willing to take risk, given the right circumstances," said Hal Reichwald, a lawyer at Manatt Phelps & Phillips in Los Angeles who represents investors.
With tens of billions of dollars of souring construction and commercial real estate loans on their books, regional and community banks could use some of that capital. But the weak economy and the wave of bank failures have made it hard for smaller banks to raise new funds.
Of course, economic stress spells opportunity for stronger community banks. Ted Peters, CEO of Bryn Mawr Bank Corp. (BMTC) in suburban Philadelphia, said he sees the wide-open merger landscape in financial services as "a once-in-a-career opportunity" for him and his $1.2 billion firm.
Bryn Mawr agreed last month to acquire First Keystone Financial, a Media, Pa., savings bank, and Peters said he's considering possible tie-ups with investment firms and other financial institutions.
Peters said the fact that community banks didn't help blow up the economy with derivatives has resonated with lawmakers and now creates another selling point with customers.
"Right now, the big banks are being portrayed as the bad guys and the other 8,100 banks are being seen as the good guys," he said.
He expects this perception to enable his bank to continue to grab market share over the next year. But he isn't expecting any miracles.
For instance, Obama pledged Tuesday, in response to complaints from the Independent Community Bankers of America about heavy-handed regulation, to "see if there are possibilities to cut some of the red tape."
But Peters remains skeptical. "I've been a bank president for 25 years, and I'm still waiting for them to cut red tape for the first time," he said.
Bank CFOs should look to their branch locations for savings through real estate Lease Terminations or Buyouts. Financial Institutions employing this strategy have saved millions of dollars in lease obligations. An expert in this field is Cambridge Consulting Group. For a white paer onthis subject please go to www.commercialleaseterminations.com
By Colin Barr
Senior Editor
Fortune Magazine
Dozens if not hundreds of small banks figure to disappear in 2010, as a weak economy and regulatory pressure lead to more failures and mergers.
President Obama met Tuesday with eight community bank executives, including the chiefs of German American Bancorp (GABC) and Monadnock Bancorp. Obama hailed the bankers as playing a "vital function," and cited "enormous opportunities" for economic growth if they keep lending.
The community bankers surely made for a more receptive audience than the big-bank CEOs Obama addressed last week. Small-business lending, after all, is what smaller banks do best. The Independent Community Bankers of America trade group notes that community banks account for almost a third of small business loans under $1 million.
But the smallest banks have been dropping like flies for years, as they labor to master expensive new technologies and regulatory changes -- at a time when giant banks spawned in a rash of megamergers are expanding their reach.
The consolidation trend should only strengthen in the coming year. Dozens of banks will fail as their customers retrench in a weak economy. Meanwhile, regulators will keep pressuring bankers to lend cautiously -- prompting weaker banks to merge into stronger ones as growth remains elusive.
"A lot of the regional and community banks are going to struggle to remain independent," said Terry Moore, a managing director at Accenture. "We're going to see those numbers shrinking."
They have shrunk a lot already. The number of commercial banks with assets of $50 million or less has dropped by more than 3,600 since 1994, to 1,198, according to recent Federal Deposit Insurance Corp. data.
At the same time, the deposits held by the biggest banks have soared, following years of megamergers punctuated by last year's bailouts. The five biggest banks -- Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citi and PNC (PNC, Fortune 500) -- held 37% of all deposits at June 30. That's triple the top five's share 15 years ago, according to the FDIC.
Questions about concentration at the top of the industry have been intensified by a steady drumbeat of small bank failures. This year has brought 140 bank failures, and nearly four times as many institutions are now classified by regulators as troubled -- meaning failures in 2010 are likely to reach into triple digits again.
Given those daunting numbers, the FDIC appears to be focusing on closing weak banks rather than luring in new capital from the likes of private equity investors.
Yet at the same time, even troubled megabanks such as Citi have been able to raise staggering sums in the marketplace, in part because it has become clear the government won't let them fail. This apparent disconnect chafes some observers who say private investors could be helping to rebuild small banks.
"What Citi tells you is there are enormous pools of capital willing to take risk, given the right circumstances," said Hal Reichwald, a lawyer at Manatt Phelps & Phillips in Los Angeles who represents investors.
With tens of billions of dollars of souring construction and commercial real estate loans on their books, regional and community banks could use some of that capital. But the weak economy and the wave of bank failures have made it hard for smaller banks to raise new funds.
Of course, economic stress spells opportunity for stronger community banks. Ted Peters, CEO of Bryn Mawr Bank Corp. (BMTC) in suburban Philadelphia, said he sees the wide-open merger landscape in financial services as "a once-in-a-career opportunity" for him and his $1.2 billion firm.
Bryn Mawr agreed last month to acquire First Keystone Financial, a Media, Pa., savings bank, and Peters said he's considering possible tie-ups with investment firms and other financial institutions.
Peters said the fact that community banks didn't help blow up the economy with derivatives has resonated with lawmakers and now creates another selling point with customers.
"Right now, the big banks are being portrayed as the bad guys and the other 8,100 banks are being seen as the good guys," he said.
He expects this perception to enable his bank to continue to grab market share over the next year. But he isn't expecting any miracles.
For instance, Obama pledged Tuesday, in response to complaints from the Independent Community Bankers of America about heavy-handed regulation, to "see if there are possibilities to cut some of the red tape."
But Peters remains skeptical. "I've been a bank president for 25 years, and I'm still waiting for them to cut red tape for the first time," he said.
Bank CFOs should look to their branch locations for savings through real estate Lease Terminations or Buyouts. Financial Institutions employing this strategy have saved millions of dollars in lease obligations. An expert in this field is Cambridge Consulting Group. For a white paer onthis subject please go to www.commercialleaseterminations.com
Thursday, December 24, 2009
New CFO Named at Carrollton Bancorp
Carrollton Bancorp, (NASDAQ: CRRB) the parent company of Carrollton Bank has announced the appointment of Mr. Mark A. Semanie as the Senior Vice President/Chief Financial Officer effective January 4, 2010.
Mr. Semanie brings a wealth of experience in the banking industry to Carrollton Bancorp and Carrollton Bank and will serve as the top financial officer and as a member of the executive team of Carrollton Bancorp and Carrollton Bank.
Mr. Robert A. Altieri, President and Chief Executive Officer, stated that “Mark will be a key member of our team as we continue to work to build a major community banking presence in the Baltimore region.”
Mr. Altieri and Mr. Albert R. Counselman, Chairman of the Board of Directors also extend their deep appreciation to Mr. Francis X. Ryan, member of the board who served as Interim CFO during the latter part of the fourth quarter. Mr. Ryan returns solely to the Board of Directors.
Carrollton Bancorp is the parent company of Carrollton Bank, a commercial bank serving the deposit and financing needs of both consumers and businesses through a system of 11 branch offices in central Maryland. The Company provides brokerage services through Carrollton Financial Services, Inc., and mortgage services through Carrollton Mortgage Services, Inc., subsidiaries of the Bank.
CFO Best Practice Sponsor:Unused or under-utilized Real Estate can be a tremendous drain on cash positions and profits for companies and institutions. CFOs have options beyond subleasing. A Negotiated lease buyout has saved financial institutions millions of dollars. For more information please go to www.commercialleaseterminations.com
Mr. Semanie brings a wealth of experience in the banking industry to Carrollton Bancorp and Carrollton Bank and will serve as the top financial officer and as a member of the executive team of Carrollton Bancorp and Carrollton Bank.
Mr. Robert A. Altieri, President and Chief Executive Officer, stated that “Mark will be a key member of our team as we continue to work to build a major community banking presence in the Baltimore region.”
Mr. Altieri and Mr. Albert R. Counselman, Chairman of the Board of Directors also extend their deep appreciation to Mr. Francis X. Ryan, member of the board who served as Interim CFO during the latter part of the fourth quarter. Mr. Ryan returns solely to the Board of Directors.
Carrollton Bancorp is the parent company of Carrollton Bank, a commercial bank serving the deposit and financing needs of both consumers and businesses through a system of 11 branch offices in central Maryland. The Company provides brokerage services through Carrollton Financial Services, Inc., and mortgage services through Carrollton Mortgage Services, Inc., subsidiaries of the Bank.
CFO Best Practice Sponsor:Unused or under-utilized Real Estate can be a tremendous drain on cash positions and profits for companies and institutions. CFOs have options beyond subleasing. A Negotiated lease buyout has saved financial institutions millions of dollars. For more information please go to www.commercialleaseterminations.com
Friday, December 11, 2009
FASB Rules Will Impact Bank Off Balance Sheet Assets
A minuet playing out now is showing that the answer is yes — but not in the way the banks want us to believe.
The issue is a couple of new accounting rules that are forcing banks to put back on their balance sheets some strange creations that bad accounting rules had allowed them to shunt aside in the past.
The banks have accepted the inevitability of that change. But they are asking the bank regulators to make the rules easier to live with by phasing them in. Otherwise, the banks say, they would need to raise more capital or cut back lending.
The logic of the off-balance sheet treatment of such things as structured investment vehicles, or SIVs, which banks created in order to get assets off their books, was that the bank did not control them, and so did not have to show the SIV assets, and liabilities, on its own books.
Sponsor: Banks can improve their cash position by reviewing their commercial real estate leases. Cambridge Consulting Group has saved financial institutions millions of dollars by consolidating or eliminating lease obligations. For more information please call 678-372-5656 or visit www.commercialleasetermination.com
That fiction evaporated early in the financial crisis. Some SIVs were among the first structures to fail, when they could not roll over loans to finance assets that had lost value. The banks chose to, or had to, rescue the SIVs. Maybe they did so to guard their reputations, or maybe they feared they would have been vulnerable to fraud allegations from those who lent to the leaking SIVs. In either case, it turned out there was a black hole that the regulatory rules had ignored in assessing how much capital the banks needed to hold.
Rest of Article at www.nytimes.com
The issue is a couple of new accounting rules that are forcing banks to put back on their balance sheets some strange creations that bad accounting rules had allowed them to shunt aside in the past.
The banks have accepted the inevitability of that change. But they are asking the bank regulators to make the rules easier to live with by phasing them in. Otherwise, the banks say, they would need to raise more capital or cut back lending.
The logic of the off-balance sheet treatment of such things as structured investment vehicles, or SIVs, which banks created in order to get assets off their books, was that the bank did not control them, and so did not have to show the SIV assets, and liabilities, on its own books.
Sponsor: Banks can improve their cash position by reviewing their commercial real estate leases. Cambridge Consulting Group has saved financial institutions millions of dollars by consolidating or eliminating lease obligations. For more information please call 678-372-5656 or visit www.commercialleasetermination.com
That fiction evaporated early in the financial crisis. Some SIVs were among the first structures to fail, when they could not roll over loans to finance assets that had lost value. The banks chose to, or had to, rescue the SIVs. Maybe they did so to guard their reputations, or maybe they feared they would have been vulnerable to fraud allegations from those who lent to the leaking SIVs. In either case, it turned out there was a black hole that the regulatory rules had ignored in assessing how much capital the banks needed to hold.
Rest of Article at www.nytimes.com
Subscribe to:
Posts (Atom)
Posts
