Tag: banks

By Kaye Wiggins for Bloomberg / Fin24 

Barclays, Citigroup, HSBC, JPMorgan and three other banks are set to be fined by EU antitrust regulators in coming weeks for rigging the multi-trillion dollar foreign exchange market, two people familiar with the matter said.

JPMorgan Chase & Co. and UBS Group AG are among five banks being sued over allegations of foreign-exchange rigging in a class-action lawsuit seeking more than £1bn ($1.2bn or just over R17bn).

Barclays, Citigroup and Royal Bank of Scotland Group are also among the targets of the United Kingdom suit that will say pension funds, asset managers, hedge funds and corporations lost out because of market manipulation between 2007 and 2013 and should be compensated.

The lawsuit centers on collusion on foreign-exchange trading strategies, for which the European Commission fined Barclays, RBS, Citigroup, JPMorgan and Mitsubishi UFJ Financial Group, a total of €1.07bn in May. UBS escaped a fine because it was the first to tell regulators about the collusion.

JPMorgan and UBS declined to comment. The other banks didn’t immediately reply to calls or emails seeking comment.

Traders ran two cartels on online chatrooms, the European regulator said. Many of them knew each other, calling one chatroom “Essex Express n’ the Jimmy” because all of the traders but one met on a commuter train from Essex to London. Other names for rooms were the “Three Way Banana Split” and “Semi Grumpy Old Men.”

It’s the latest development in a case that’s already triggered regulatory probes around the world, and billions of dollars in fines as well as $2.3bn (R32.69) in settlements in the United States last year.

“The message is really clear – we want markets to work fairly,” said Michael O’Higgins, a pension fund chair who’s spearheading the UK suit. “People involved in markets will argue the case for free markets. They’ve got to make sure they’re fair as well as free.”

The case will be filed in the Competition Appeal Tribunal in London by Scott+Scott Europe, whose US arm Scott+Scott Attorneys at Law led the class action that ended with $2.3bn in settlements.

O’Higgins, who chairs the Local Pensions Partnership, a UK public sector pension fund, and the Channel Islands Competition & Regulatory Authorities, said that on a conservative estimate the banks may have to pay out £1bn (R17.5bn) if he wins.

The lawsuit could take three to five years, he said, and thousands of institutional investors could be in line for payouts if it succeeds.

It’s one of the first cases to be brought under 2015 UK legislation that paves the way for US-style collective actions. The Consumer Rights Act rules mean any UK based investors who lost out will automatically become part of the claim. Investors based outside of the UK – except those in the US, Canada and Australia – can opt in.

A new advertising campaign is challenging the product transparency of South Africa’s financial institutions, and educating consumers in the process.

The #NothingToHide hashtag has been popping up all over the media lately, prompting consumers to question just how much local credit providers are keeping from them when it comes to credit life insurance pricing and terms & conditions.

The billboards anonymously challenged banks to be more transparent.

An unbranded teaser message ran for two weeks, before it was unveiled that the campaign was developed for Yalu Financial Services by advertising agency Think Creative Africa.

 

Yalu is challenging South Africa’s dominant financial brands to become more open about their products so customers are clear about every detail of the contract.

“Product transparency and consumer education go hand in hand,” says Tlalane Ntuli, co-founder and chief operating officer of Yalu. “Only when consumers are aware of how murky things are and how much money they are potentially losing will they demand greater transparency from banks – and only then will credit life insurance providers be forced to improve.

“It’s too easy to call for change, yet sit back and do nothing yourself,” concludes Ntuli. “At Yalu we see this campaign as our opportunity to set a new transparency benchmark in the South African financial sector. From strategic decisions through to product pricing and the way brands choose to communicate with consumers, change is very obviously required in our financial sector. We’re delighted to be the ones leading the process.”

By Lucinda Shen for Fortune

As of Monday’s market close, those who bought into Uber at its IPO are down roughly $1.4 billion.

But very early investors, and now, the bankers that helped take the company to market are in the green. Uber shelled out $106.2 million to a bevy of underwriters led by Morgan Stanley, per filings with the Securities and Exchange Commission. The group also includes Goldman Sachs, BofA Merrill Lynch, Barclays, Citigroup, and Allen & Company.

That comes as shares of Uber fell another 11% Monday—pulling its valuation down to $62 billion and representing a collective $1.4 billion loss for those who bought in at the company’s $45 IPO price. Assuming that Uber drivers took up all shares offered to them at the IPO price, they are collectively looking at paper losses of about $43.2 million.

On Friday, Uber CEO Dara Khosrowshahi sought to calm his employees regarding Uber’s stock price.

“Like all periods of transition, there are ups and downs,” he wrote in a note to workers.”Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since.”

In particular—Facebook’s IPO may echo strongly with that of Uber’s. That IPO too involved Morgan Stanley in the lead role. Following a lackluster first day of trading, the bank’s fees, as well as trades stemming from its role as the lead in the deal, were heavily scrutinized. A Massachusetts regulator later fined Morgan Stanley $5 million over the IPO, arguing the underwriter had selectively disclosed information to certain clients over others.

It remains to be seen whether similar investigations will follow Uber’s IPO. But for now, count the banks as one of the few parties that have profited from this deal.

By Roxanne Henderson for Business Day

From free burgers and ride-hailing services to hip-hop concerts and discounted petrol, SA banks are going all out to win customers as competition hots up.

The biggest lenders are facing an onslaught of entrants for the first time in 12 years. And they are responding before the newcomers find their feet by pushing loyalty programmes, revamping digital offerings for technology-savvy millennials, targeting existing customers with extra products and services and cutting fees.

Read the full article here: https://www.businesslive.co.za/bd/companies/financial-services/2019-04-24-banks-entice-millennials-with-free-food-and-new-offerings/

By Kevin Lancaster for MyBroadband

Discovery Bank, Bank Zero, and TymeBank – South Africa’s newest banks – are set to “disrupt” the local banking scene in 2019.

Disrupt – an almost meaningless word which is akin to “millennial” in terms of its flagrant use by anyone who wants to show they understand trends and marketing – is not enough, however.

The new banks must destroy everything in their path, particularly the banking fees South Africans pay today.

We recently showed that compared to Bitcoin and Ethereum, and their respective blockchains, local banks are slow and cumbersome.

Where it took Bitcoin and Ethereum under 10 minutes to send tokens from one account to another, a local bank transfer from Standard Bank to Absa took almost 12 hours.

The cryptocurrency transfers did accrue a small transfer fee while the bank-to-bank transaction was free, but there are no monthly fees for most cryptocurrency wallets – unlike a bank account.

The potential of cryptocurrency transactions is not truly realised with local payments, however, and where they truly shine is in international payments.

While maintaining fast transfer times regardless of where in the world you send tokens, the fees you pay do not change. If you send Ethereum to Durban or Dubai, it will take the same amount of time and you will be charged the same fee.

The same cannot be said for bank transactions. “International fees” are charged when you make a payment across a border.

A practical example of this is when you pay your Netflix subscription fee, you pay extra – as the money goes to the company’s operation in Amsterdam.

A Netflix Premium subscription costs R169, with a transfer fee of R4.65 added on top of this.

International fees
These bank fees extend to “currency conversion” charges, too, which means that if you make a payment in an international currency with your card, you will have to pay for the pleasure.

Nedbank, Absa, FNB, and Standard Bank all charge this fee, which ranges from 2% to 2.75% – depending on which bank you are with. Capitec told MyBroadband that it does not charge a currency conversion fee.

While 2% does not sound like much, this accumulates rather quickly when making multiple transactions.

I discovered this on a recent work trip to the US, where I used my South African credit card to pay for items in US dollars.

After checking my online banking a couple days into my trip, I immediately switched to drawing cash for the day and sucking up the once-off withdrawal fee as opposed to making all payments with my card.

And yes, there is an “international fee” when withdrawing cash from an ATM in a foreign country.

Before switching to cash, these are the international fees which I accrued on my card:

R5.47
R6.99
R16.03
R13.56
R4.60
R0.79
R8.01
R3.37
R5.48
R313.72

The total: R378.02.

Whether these fees are implemented by the local bank, international banks, or a combination of the two is irrelevant – as the consumer this is what you pay.

Admittedly, the example of international transactions is an extreme one but it nonetheless serves as a reminder of the culture of fees worshipped by local banks.

These fees extend far beyond international payments and see users being charged to send an email payment confirmation to a recipient.

Before you fill in the text box at the bottom of your online payment confirmation window, entering the beneficiary’s email address so the bank will send them a mail confirming your payment was made, first check how much it will cost.

For me it was R1.10. My bank charged me R1.10 to send an automated email confirming a payment – another discovery made during the fee investigation.

Discovery Bank, Bank Zero, and TymeBank have all talked a big game about disrupting the local banking scene when they launch.

Let us hope they can deliver on their promises and that they will do more than merely disrupt – they must destroy and replace.

Do credit card fees go beyond the law?

Source: Supermarket & Retailer

The National Credit Act (NCA) prohibits a credit provider from charging any fees or charges not listed in section 101 of the act. One of the permitted charges is a “service fee”. Regulations under the act cap this fee at R60 a month, unless an exemption applies.

So, is it legal for banks to charge credit card account holders a “card fee” or a “credit facility fee” over and above a monthly service fee? If not, why has the National Credit Regulator (NCR) done nothing to stop banks from doing so?

At the beginning of last year, Standard Bank started levying a “card fee” on anyone who has a standalone credit card, which is one that is not offered as part of an account with a bundle of transactions for a set fee.

The bank said the fee was to cover the costs of “the administration and maintenance of all the value-added services and features” associated with the credit card.

At the time, Nthupang Magolego, a senior legal adviser at the NCR, said the act provided a “closed list” of fees that a credit provider was allowed to charge under a credit agreement, and a card fee was not one of them.

She said the regulator would “investigate and take appropriate action” if an illegal fee was being charged.

More than a year later, the regulator will not say whether or not it investigated the issue. It has ignored requests for comment.

All of the big five banks are now charging either a card fee or a credit facility fee on some or all of their credit cards.

Ethel Nyembe, the head of card issuing at Standard Bank, also wouldn’t answer questions relating to an investigation by the regulator into the bank’s credit card fees.

Credit cards provide access to certain lifestyle offerings such as access to airport lounges and cinemas.

Customers who don’t want these benefits can use alternative credit offerings such as personal loans, overdrafts and certain credit cards from which such offerings are removed, says Nyembe.

Cilliers Kriel, CEO of the credit card division at FNB, says the bank’s credit card is more than a credit facility. It’s also a “financial services product”.

“The credit card account is a financial services product as defined in the Financial Advisory and Intermediary Services Act which can be used to make deposits, withdrawals, earn credit interest, make payments either by swiping at merchants or by debit order.

“The credit facility gives the customer the option to borrow, up to an agreed limit . The credit facility is attached to and maintained in association with the credit card account.”

Absa and Nedbank also separate the charges on the card account from those charged for a credit facility.

The NCA permits a credit provider to charge fees relating to the financial services agreement or account beyond those listed in the act for a credit agreement, says Kriel.

But Trudie Broekmann, an attorney who specialises in consumer law, says the act does not define a “financial services account”, so it’s not clear what the lawmakers intended by this.

Only if they intended to include a credit card account in the definition can the banks rely on the exemption and charge more than the R60-a-month service fee, she says.

In her opinion, the section of the act that treats the credit facility and the financial services account as separate components was drafted with an overdraft facility linked to a cheque or current account in mind. With an overdraft facility, it’s clear the credit facility (the overdraft) is secondary to the financial services account (the cheque/current account) and so regarding the two as separate components does not appear to be misplaced, she says.

“In the case of a credit card account, however, the credit facility and the financial services account are one and the same and it seems artificial to regard the account and the facility as separate components subject to separate service charges.”

No-one opens a credit card account without a credit facility and the primary function of a credit card account is to provide access to the credit facility, she says.

Treating them as separate components and charging you for each is like a supermarket charging you separately for an egg shell, egg white and egg yolk, she says.

Broekmann says it can be argued that the banks are in breach of the act when they charge you more than R60 a month on your credit card.

“This contention should be tested and I would be eager to represent a group of credit card holders . in taking the complaint to the National Consumer Tribunal to reach clarity on this aspect.”

Several European banks have been drawn into money-laundering allegations centered on dirty Russian money. Much of the information has been made available to media outfits by The Organized Crime and Corruption Reporting Project, or OCCRP. Investigations into the scandal are under way in the Baltic nations, the US, the UK and the Nordic countries. Below is a list of the main banks touched by the scandal.

Danske Bank A/S

Denmark’s biggest bank admitted in September that much of about $230bn that flowed through its tiny Estonian unit between 2007 and 2015 was probably suspicious in origin.

The lender is being investigated by the U.S. Department of Justice and the Securities and Exchange Commission, as well as by authorities in Denmark, Estonia, the U.K. and France.

Swedbank AB

Swedish broadcaster SVT alleged that almost $6bn in suspicious transactions flowed between Danske Bank and Swedbank in 2007-2015, linking the Swedish bank to Danske’s $230bn money-laundering scandal.

The bank is being investigated by the financial supervisory authorities of Sweden and Estonia. It’s also being probed by Sweden’s Economic Crime Authority for allegedly breaching insider information rules.

Nordea Bank Abp

The biggest Nordic bank allegedly handled about €700m in potentially dirty money, with funds arriving from failed Lithuanian bank Ukio Bankas and heading to shell companies in countries such as the British Virgin Islands and Panama, according to Finnish broadcaster YLE.

Investor Bill Browder filed complaints with Nordic authorities in October alleging $405m of suspicious funds flowed via the bank. Sweden decided not to investigate but Finland has yet to say if it will.

Deutsche Bank AG

More than $889m went from accounts at Deutsche Bank to those of the so-called “Troika Laundromat” between 2003 and 2017, according to German daily Süddeutsche Zeitung—part of the OCCRP journalist group.

The report comes on top of regulatory scrutiny of Deutsche Bank’s role as a correspondent bank in Danske Bank’s money-laundering scandal and a probe by German prosecutors of its involvement in a tax-evasion scheme unmasked by the Panama Papers in 2016.

Raiffeisen Bank International AG

The Austrian bank that’s among the biggest foreign lenders in Russia is the main target of a filing by the Hermitage Fund, detailing $634m allegedly transferred to it from Lithuania’s Ukio Bankas and from the Estonian unit of Danske Bank. Hermitage said the bank ignored signs that should have triggered money-laundering prevention measures.

Raiffeisen has launched an internal probe, yet also points out that Hermitage has filed similar allegations before and that they were dismissed by Austrian authorities.

ABN Amro Group NV

The Troika Laundromat moved about €190m through a unit of the Dutch bank that became part of Royal Bank of Scotland, Dutch newspaper Trouw and magazine De Groene Amsterdammer reported. All assets, data and clients of the unit became the legal responsibility of RBS in February 2008, ABN said.

The Dutch financial crimes police declined to comment on whether it was investigating the bank.

Cooperatieve Rabobank U.A.

About €43m were paid to the Rabobank account of Dutch yacht builder Heesen for construction of two boats for Russian senator Valentin Zavadnikov, according to newspaper Trouw and magazine De Groene Amsterdammer. The money came from the Troika Laundromat scheme, the media outlets said.

The Dutch financial crimes police declined to comment on whether it was investigating the bank.

ING Groep NV

The Dutch bank’s branch in Moscow worked until 2013 with a client who it suspected of involvement in money laundering, the media outlets said.

The Dutch financial crimes police declined to comment on whether it was investigating the bank. ING last year paid $900m to end a Dutch money-laundering probe.

Turkiye Garanti Bankasi A.S.

The Dutch unit of the Turkish bank processed €200m in transactions that came from two Lithuanian banks that were at the center of the Troika Laundromat, the Dutch media outlets reported.

It wasn’t immediately clear if it was being investigated.

Capitec announces fee cuts

By Angelique Arde for Business Day

Capitec is cutting its fees. The bank, which normally announces its fee increases in March, made the announcement a week before new digital bank TymeBank is due to host an investor day, upping the ante in what could be a banking fee price war.

From 1 March, the monthly admin fee on the bank’s one and only account, the Global One account, will decrease from R5.75 to R5. The price of electronic payments on mobile and internet banking will decrease from R1.60/transaction to R1. Debit order fees will decrease from R3.70 to R3.50. The cost of drawing cash at all Pick n Pay, Shoprite, Checkers and Boxer till-points will drop from R1.60 to R1. And the cost of immediate payments has also decreased from R10 to R8.

International and online card purchases, transfers between own accounts and e-mailing statements on mobile and internet banking will remain free.

The bank has increased a few fees: the fee for in-branch transfers and payments will increase from R5.30/transaction to R6. Cash withdrawals from Capitec-branded ATMs will cost R6 per R1,000, while all other bank ATM withdrawal fees will be lowered to R8 per R1,000. Capitec used to charge a flat fee irrespective of the amount withdrawn.

Capitec said in a statement on Tuesday that the bank had experienced its highest single-month uptake to date, with more than 266,000 new clients joining the bank in January 2019.

In addition to low fees, Capitec clients get access to four savings plans, offering from 5.1%-9.25% interest per year,” said Francois Viviers, the bank’s marketing and communications executive.

 

Did the banks collude with the Guptas?

Source: The Citizen 

The EFF has criticised South Africa’s major banks, calling them opportunistic and hypocritical “in their testimony given to the state capture inquiry”.

Standard Bank’s retired head of legal testified at the inquiry on Monday giving reasons that led the bank deciding to close the business accounts of the controversial Gupta family.

Former FirstRand Group – which First National Bank (FNB) is a division of – chief executive officer (CEO) Johan Burger is testifying at the commission today.

“These banks were very happy to do business with the Guptas until the unceremonious December 2015 removal of Nhlanhla Nene as finance minister when South African stocks were severely devalued,” the EFF said in a statement.

The red berets added that by the time of Nene’s axing, the Guptas and former president Jacob Zuma – who are commonly referred to as the Zuptas – were already carrying out corrupt activities “facilitated by the very same banks”.

The EFF said: “It is impossible that the banks only started to notice the suspicious transactions of the Guptas and their companies in 2016 as they now want us to believe.

“The truth is that these banks colluded in the looting of the country for as long as it was feeding into their profit maximisation motives and greed. These are the only driving forces behind the commercial banks. For them, it’s profit before people and the country.”

The party said it hopes the chair of the commission Deputy Chief Justice Raymond Zondo would not be fooled by the testimony of the banks.

“We call on the South African Reserve Bank (Sarb) and the Financial Intelligence Centre to launch a separate probe into the complicity of South African banks in the Gupta state capture and why they turned a blind eye towards an obviously suspicious transactions before 2016 and to hold them accountable for their part in state capture,” the EFF said.

The party added that if the Sarb fails to institute such a probe the party would take it upon itself to initiate a parliamentary probe into the matter.

Meanwhile, Burger testified on Tuesday that FNB had closed the accounts of the Guptas due to associated reputational and business risks.

The dangers of instant EFT services

By Jamie McKane for MyBroadband

Sending money to others over EFT is a common action, but these transactions can take some time if you do not pay an additional fee for express payment.

To circumvent express fees and improve the transfer time of EFTs, many South Africans opt to use third-party instant EFT services.

Using third-party instant EFT platforms requires the user to supply the provider with their online banking details, including their username and password.

The instant EFT service then logs into the user’s online banking account and makes the transaction on their behalf, with the user receiving an OTP confirmation.

While this can result in faster EFTs, it also places the user at risk of having their online banking credentials compromised – and can be a violation of a bank’s terms and conditions.

MyBroadband asked major South African banks about their stance on instant EFT services and the possible security risks involved in using these platforms.

Absa
Absa told MyBroadband it does not approve third-party EFT services.

“Absa does not approve of third-party service providers who utilise screen scraping to facilitate these EFT payments,” the bank said.

“Only approved vendors will be allowed to enter the Absa domain to facilitate third-party EFT services via secure API.”

Absa added that customers who use these services would be liable in the event of their credentials being compromised, as they provided them to the third-party service.

“Absa’s terms and conditions stipulate that customers should never provide their security information to anyone,” Absa said.

“Should customers knowingly provide third-party vendors with their online banking logon details, the customer will be held liable in the event of cybercrime.”

Absa added that it is in the process of enabling more secure connection models via the utilisation of secure API’s for use by third-party payment service providers.

FNB
FNB EFT Product House CEO Ravi Shunmugam told MyBroadband they do not support third-party instant EFT providers.

“FNB does not support the practice of third-party services providers requesting customers to enter their banking login credentials into third-party websites or applications,” Shunmugam said.

“The bank is working with the payments industry bodies, PASA and SABRIC to highlight this practice and potential risks to customers at an industry level.”

“These services are not PCI DSS-certified and we are working with the industry to have similar standards established and enforced,” he added.

Shunmugam said that customers should not share their online banking credentials with any third parties.

“We would like to remind our customers not to enter their login credentials into any third-party website or application and to safeguard their login credentials at all times.”

Shunmugam said customers who have entered their login credentials in any website or application other than their bank’s platforms are advised to change their passwords.

Nedbank
Nedbank Emerging Payments head of business development Clinton Leask said that clients voluntarily disclosing their banking credentials to third-party EFT services were putting themselves at risk.

“We continually advise our clients to ensure the safekeeping and confidentiality of their banking information and not disclose such information to unknown or unauthorised third parties,” Leask told MyBroadband.

“In instances where clients voluntarily disclose their confidential information to a third-party they put themselves at risk by giving third parties the ability to access information about their accounts, banking history, and other confidential information,” he added.

“Consumers currently have the ability to effect instant payments, other than instant EFT, with real time credit payments, which is accessible via Internet banking and with card via 3DSecure.”

Standard Bank
MyBroadband contacted Standard Bank for comment, but the bank did not provide feedback.

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