New Money Transfer service enters Ghanaian market

A new money transfer service that caters for transfers from the US, enters the market on Wednesday with a package that organisers say is "an affordable way of remitting money to Ghanaians".

Liberty Transfer International, a Chicago-based company, would be the first ever flat fee money transfer service in Ghana, Mr William Adjovu, an official of the company, told the Ghana News Agency in Accra on Tuesday.

"Liberty Money Transfer offers senders in the United States an affordable way of remitting money to Ghana by charging a flat fee of just $6.95, irrespective of the amount being sent," he said.

"Liberty Money Transfer is the cheapest way to send money to Ghana from America," he added.

Mr Adjovu said Liberty Transfer International was registered with the US Department of Treasury and Illinois Department of Financial and Professional Regulation as a money transmitter adding that it was fully insured.

He said senders could use any of three ways offered when sending money - going on line www.libertytransfer.com, calling toll free US number 1-800-357-5837 or sending a text of the amount and the recipient's mobile number to US number 1-312-731-2294.

Mr Ajovu said the company also sent free SMS alerts to both sender and recipient when the money was sent and picked up.

He said recipients could pick up transfers from Ghana Commercial Bank or Merchant Bank with customers at these banks having their transfers directly deposited into their bank accounts. The company said there were 200 pickup locations throughout Ghana.

"We believe this new, convenient and affordable way to send money to Ghana will offer relief to Ghanaians from expensive charges incurred when remitting money to loved ones."

Oceanic Bank Attributes Cost Efficiency To Prudence

Oceanic Bank International Plc has attributed its cost efficiency to the managerial prudence of its management. The bank’s management in 2006 was lauded for its ability to drastically reduce its operating costs as against what obtains in the industry.

With the bank’s recently released results, it is obvious it is poised to maintain its standing among the most cost efficient banks in the country following its impressive profit before tax for the nine months ended June 30, 2007.

The bank made a pre-tax profit of N16.18 billion on gross earnings of N45.66 billion in the period. This is 53 per cent better than the N10.61 billion it returned on gross earnings of N29.33 billion in the same period last year. During its financial year ended September 30, 2006, Oceanic Bank similarly achieved profit before taxation of N11.61 billion on gross earnings of N44.68 billion. This compared with N7.26 billion pre-tax from N22.30 billion in 2005.

In terms of cost efficiency, the bank has maintained a consistency for keeping its operating costs low, evidently among the best in the industry. Oceanic Bank is said to have the second lowest Cost to Income Ratio among the top seven banks in the country, according to a 2006 analysis.

The third quarter pretax profit just released represent 35 per cent of the bank’s gross earnings. This means that Oceanic Bank earned a profit, though unaudited, of 35 kobo in every N1 of transaction done. The bank thus maintained its trend of cost efficiency from its operations. A cursory review shows that in the corresponding period a year ago, it also earned 35 kobo as the N10.61 billion gross profits constituted 36 per cent of gross earnings.

This is also the trend seen from the audited annual results for the past few years. For the financial year ended September 30, 2006, the profit before tax of N11.61 billion was 25 per cent of the gross earnings of N44.68 billion. This ratio compared with N7.26 billion which was 29 per cent of the gross earnings of N24.30 billion in 2005. The managing director and chief executive of Oceanic Bank, Dr. (Mrs.) Cecilia Ibru, ascribed the bank’s impressive nine months result to the strict adherence to its core values.

The bank’s core values are summarized in an acronym known as TEAMS, which stands for Transparency, Equal Opportunity, Accountability, Merit and Service Excellence.

Speaking in Lagos following the release of the third quarter figures, she particularly singled out the bank’s practice of Transparency and Accountability for the result. She noted that Oceanic Bank has once again justified its reputation as one of the most cost-efficient banks in the country.

Shareholders of Oceanic Bank International Bank Plc surely have good things to look out for in the current financial year as the bank grossed N46 billion in earnings for the third quarter ended on June 30, 2007. This was 55 per cent increase over the N29.4 billion earned in the corresponding period of 2006. While the bank’s gross earnings grew by 55 per cent, its profit before tax (PBT) rose by 53 per cent, from N10.6 billion to N16.2 billion.

In the same vein, the bank’s profit after tax (PAT) rose by 54 per cent to N13.4 billion percent as against the preceding year’s N8.7 billion. The bank had forecast a profit before tax of N18.9 billion for 2007 financial year and a profit after tax of N14.7 billion, during its recently concluded public offer.

The third quarter result has further consolidated Oceanic Bank’s position as a first rate financial institution buoyed by its aggressive business penetration strategy and efficient cost management. With the recently released results, market analysts believed the bank’s vision of becoming the most profitable bank in the country before 2010 is quite on course and evidently promising. The financial analyst lauded the bank’s contribution to the nation’s economic development, while maintaining that Oceanic Bank is capable of surpassing analysts’ forecast in its year-end result.

The bank’s profile has continued to rise both on the local level and the international level. It has recently been rated among the top 1000 banks in the world and has also received positive rating from renowned rating agencies. A very significant strategy of the bank is its determination to further expand its service offerings and revenue rolling out new business offices and initiatives.

Germany Ready For More Business With Nigeria

Regardless of European Union’s stance against Nigeria over its last election, the German government is ready to do more business with the country’s new government, which was inaugurated two months ago.

The EU, although chaired by Germany, had expressed reservations over the conduct of the general elections.

But to show its seriousness, the German Foreign Affairs Minister, Frank-Walter Steinmeier, will this week lead an 81 member-delegation, including parliamentarians, to hold talks on cooperation with President Umar Yar’Adua and Foreign Affairs Minister, Ojo Maduekwe.

The minister is expected to arrive Nigeria on July 31 and will hold talks with the new Nigeria’s foreign minister on August 1 while he is expected to meet with President Yar’Adua on August 2.

He is scheduled to leave Nigeria on August 2 for Ghana, which is the second and final leg of his visit to Africa.

Nigeria’s Ambassador to Germany, Abdul Bin Rimdap, who confirmed this in an interview with our correspondent in Berlin at the weekend, noted that issues such as cultural and social dimension would be looked into.

"The visit is a way of showing Nigeria that Germany is willing to continue doing business with the country. Germany is the third largest economy in the world and has put Africa at the centre of its development programme.

" Nigeria was chosen because of the importance Germany attaches to the country and also because of the commitment of the government to continuation of the reform programme in the country," Rimdap noted.

An official of the German Foreign Affairs Ministry, who spoke with our correspondent on condition of anonymity, however, noted that the visit would also enable the government to extend its "congratulations" to the Nigerian president for his victory during the election.

" Germany did not come out clearly to congratulate your president during the last elections. You know Germany chairs the presidency of the European Union (EU) at that time, and whatever position that was taken by the EU on Nigeria ’s election was that of the organisation," the official added.

Steinmeier’s visit to Nigeria and Ghana will be his second to Africa in less than two months. He was in Libya on June 10 as the Chief Negotiator on the side of Germany in the case of the imprisoned Bulgarian nurses and the Palestinian doctor.

The German EU Presidency and the European Commission exerted necessary influence on Libya to release the Bulgarian nurses and the Palestinian doctor.

The German G-8 Presidency during the recently held meeting of industrialised countries in June in Heiligendamm agreed to scale up partnership with the African continent in the areas of good governance, strengthening the partnership of reform between G-8 and pro-reform African governments, fight against HIV/AIDS, and peace and security.

At a meeting with African representatives, including President Yar’Adua and President John Kufour of Ghana, during the G-8 meeting, German Chancellor, Angela Merkel, assured that the G-8 was committed to the promises it made to Africa .

"We are aware of our responsibility and we will honour our commitments. US$60 billion has been pledged over the coming years to combat HIV/AIDS, malaria and tuberculosis in Africa," she stated.

Germany has earmarked 4.5 billion euros (about N810 billion) for developmental aid this year, with Africa as the main recipient.

Bumper payout

Shareholders of Bahrain-based Gulf International Bank (GIB) are to get a bumper payout of $127.8 million from last year's profits.The figure was approved as the bank ratified its consolidated accounts for last year at the 30th meeting of the general assembly yesterday.

GIB previously announced a record profit of $255.5m last year, up $52.5m or 26 per cent from 2005.

GIB chairman Shaikh Ibrahim bin Khalifa Al Khalifa said last year proved to be the most successful year in the bank's history.

"This is the third consecutive year in which the bank has reported a record profit," he said.

"Record financial results and sound strategic progress were supported by significant business achievements and organisational developments.

"The overall year-on-year advance is all the more impressive when viewed in relation to GIB's very conservative risk profile, and the increasingly competitive nature of the regional and international markets in which the bank operates.

"This clearly illustrates the soundness of the bank's merchant banking strategy focused primarily on the Gulf states, which has successfully contributed to a diversification of earnings and sustained growth and profitability."

Last year, he said, GIB continued to provide shareholders with enhanced returns, while maintaining favourable recognition from clients, counter parties, supervisory authorities, international credit rating agencies and market monitors.

Shaikh Ibrahim added an important achievement during the year was the upgrade in GIB's long term foreign currency rating from A- to A by Fitch Ratings, which reinforced the bank's status as one of the highest-rated financial institutions in the Middle East.

BOC Could Open Merchant Market for Remote Deposit Capture

A new point-of-sale payment option that converts checks to electronic debits, available starting next month, will open the retailer market for remote deposit capture, a leading payments executive says. The new option, called back-office conversion (BOC), allows merchants to scan consumer checks in bulk and process them through the automated clearing house network rather than through image exchange. “BOC will open up the whole retailing community, which has been shut out from Check 21,” predicts Danne L. Buchanan, chief executive at NetDeposit Inc., a Salt Lake City, Utah, provider of processing software for remote deposit capture, a process by which businesses convert checks into electronic items at the point of capture before sending the items to their banks for settlement.

With that opening, says Buchanan, who is also executive vice president at Zions Bancorporation, NetDeposit’s parent company, banks may find themselves selling electronic transaction services once again to a market they long ago ceded to third parties, such as processors and independent sales organizations. “Banks have kind of abandoned the retail payment marketplace,” he says. “For the most part, ISOs have controlled that.” As for NetDeposit, Buchanan says the company will “absolutely” work with interested ISOs to help sell BOC to merchants.

While the market for remote capture has heated up over the past two years as banks have become increasingly aggressive about selling it to corporate clients, Buchanan says most merchants have not seen a strong case to adopt it. This is chiefly because remote capture relies heavily on the substitute checks, or image-replacement documents (IRDs), provided for in the 2004 Check Clearing for the 21st Century Act (Check 21). These IRDs, which are printouts of check images, allow paying banks that can’t handle electronic images to settle items. For businesses accepting a good many high-dollar-value checks, Buchanan says, the expense created by processing IRDs makes some sense. But for low-value checks, which most consumer-oriented retailers accept, the faster clearing time offered by Check 21 could be more than offset by the IRD cost. “For a retailer, a day’s float on a $150 item is going to be less than the cost of an IRD, so there’s not much of a benefit to a retailer,” he notes.

But with BOC, which goes on stream March 16, merchants will be able to use the ACH rather than image-exchange networks and IRDs, cutting costs for remote capture dramatically, Buchanan says. Pricing information for BOC is still sketchy, but Buchanan says if banks price it comparably to accounts-receivable conversion (ARC), the e-check code that allows billers to convert consumer checks at lockboxes, the cost will fall between a penny and 3 cents per item, Buchanan figures. By contrast, he says, an IRD-based transaction can cost a business anywhere from 11 cents to 20 cents. “Retailers will see pretty meaningful declines [in transaction costs] with BOC,” he says.

But merchants won’t be able to convert all checks they accept. Though viewed by some merchants as superior to another point-of-sale ACH option known as point-of-purchase (POP) conversion, BOC like all e-check options comes with the limitation that only checks drawn on consumer accounts are eligible. Buchanan also points out that merchants will assume the risk of signature fraud on checks they convert, whereas with paper checks and image exchange exchange this liability rests with the paying bank.

As with many remote-capture vendors, business is rapidly mounting for NetDeposit. It claims about 9,000 corporate seats, or enabled workstations, so far for its product, roughly twice the number it had at the end of 2005, according to Buchanan. “There’s still a lot of growth to go,” he says. “There’s still a lot of empty corporate seats out there.”

Barbados economy drops slightly but still ranks high among the Americas

The Barbadian economy has maintained its ranking among the top 30 countries in the annual Index of Economic Freedom, standing as the 28th freest economy in the world. With a slight drop from its 26th ranking last year, the small island economy of Barbados has been described by the joint publishers of the report, The Heritage Foundation and The Wall Street as 70.5 per cent free.

The Index, released only a few days ago, has created a global portrait of economic freedom and established a benchmark by which to gauge a country's prospects for economic success. The report highlights that the overall score for the services based on Barbados economy is 4.7 percentage points lower than last year, partially reflecting new methodological detail.

With respect to the region, Barbados is ranked 6th out of 29 countries in the Americas, and its overall score is well above the regional average. Barbadoss business freedom, property rights, and labour freedom all rate highly, as do financial and monetary freedoms, although to a lesser extent. This global study explains that the business regulations are clearly laid out in commercial laws and generally followed, and are simple and not cumbersome. It describes the labour market as highly flexible and open. A focus on transparency levels the playing field for domestic and foreign businesses alike, though certain restrictions on foreign investment and moderately high taxes exist.

A strong legal system allows for the effective adjudication of business disputes, as well as a relatively low level of corruption and the protection of private property. Despite a healthy respect for law and a relatively positive economic environment, Barbados does levy tariffs on non-CARICOM goods. Average tariff rates are similarly high, and non-tariff barriers are a hindrance to a more efficient flow of goods.

The 2007 Index places Business Freedom in Barbados at 90 per cent, with 100 per cent being viewed as the most free in the ranking. According to study, Barbados business climate makes starting, operating, and closing a business easy and free from burdensome regulation. The business environment which is created with transparent policies and effective laws have enhance competition and establish clear rules for foreign and domestic investors. The Company Act ensures flexibility and simplicity for establishing and operating companies in Barbados. Trade freedom is only ranked at 47 per cent with the simple average tariff rate in Barbados standing at 16.5 per cent in 2003. The index highlights that the government requires permits, licenses or permission prior to importation and maintains restrictive sanitary and phytosanitary policies.

Consequently, an additional 20 per cent is deducted from Barbados's trade freedom score to account for non-tariff barriers. According to the Index Fiscal Freedom in Barbados, it is among the highest in the region standing at 78.3 per cent. The report notes that Barbados has a high income tax rate and a moderate corporate tax rate.

The top income tax rate is 37.5 per cent, and the top corporate income tax rate is 30 per cent. Other taxes include a value-added tax (VAT) and a tax on interest. In the most recent year, overall tax revenue as a percentage of GDP was 30.9 per cent. Freedom from government as analysed by the experts who created the Index is 64.4 per cent. It describes total government expenditures, including consumption and transfer payments, as high. In the most recent year, government spending equalled 38.1 per cent of GDP, and the government received 5.1 per cent of its total revenues from state-owned enterprises and government ownership of property.

Monetary freedom is seen as high according to the experts who compiled this index placing the percentage at 76.5. Inflation is moderate, averaging 4.5 per cent between 2003 and 2005. Relatively moderate but unstable prices explain most of the monetary freedom score. Although prices are generally set by the market, an additional 10 per cent is deducted from Barbados's monetary freedom score to adjust for price control measures that distort domestic prices for basic food items and fuel.

For a country that is continually making strides to improve its investment climate and trying to make it easy for investment freedom, Barbados permits 100 per cent foreign ownership of enterprises and treats domestic and foreign firms equally; but the government is more likely to approve projects that it believes will create jobs and increase exports. Foreign investors can be subject to performance requirements. Central bank approval is required for both residents and non-residents to hold foreign exchange accounts. Foreign currency transactions and current transfers are restricted by quantitative limits. Exchange control approval is required for direct investment and real estate purchases, and the central bank must approve all credit operations.

Barbados Financial Freedom has been placed at 60 per cent and according to the study, Barbados has a smaller financial sector than other Caribbean financial hubs. Commercial banking is dominated by foreign banks, including Canadian, British, and Caribbean banks based in other countries. Citicorp Merchant Bank initiated operations in 2001.

In recent years, the government has intervened in the domestic credit market to influence interest rates, restrict the volumes of funds and borrow funds. Domestic financing is generally restricted to Barbadians or permanent residents.

As of 2004, the offshore financial sector included over 4 500 international business companies, exempt insurance companies, and offshore banks. Legislation passed in 1998 tightened the controls against money laundering. The securities exchange is small, listing about two dozen local and foreign Caribbean companies in 2005. Sagicor, the largest local insurance company, controls 75 per cent of the eastern Caribbean market.

European Commission says retail banking in many member states including Ireland is lacking genuine competition

By Finfacts Team
A European Commission report has found that retail banking in many member states, including Ireland, is still lacking genuine competition.

The Commission's final report of its competition inquiry into the retail banking sector, published today, shows that there are a number of competition issues in the markets for credit cards, payment systems and retail banking products.

The report says the rules in the Irish market are still obstructing foreign banks who wish to break into the market and that credit card charges may be higher than they should be.

Competition Commissioner Neelie Kroes said: “The inquiry has found widespread competition barriers which unnecessarily raise the cost of retail banking services for European firms and consumers. The Commission will make full use of its powers under competition law to tackle these barriers, in the market for payment cards and elsewhere when they result from anticompetitive behaviour.”