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									                                              WSBI            •    April 2007 •2006
                                              The global voice of savings and retail banking

                                NEWS & VIEWS
                                The European Commission’s final report on the retail
                                banking sector: ESBG maintains its reserves and its
                                The European Commission’s Competition Directorate General (DG
   IN THIS ISSUE                COMP) dedicated a great deal of efforts and energy since 2005 to
                                investigating the functioning of the EU retail banking market. The “retail
                                banking sector inquiry” has consisted of two separate parts: one on
                                payment cards and one on core retail banking. The outcome of the two
                                inquiries was included in a joint Final Report, issued by the Commission
                                on 31 January 2007.
       Interview with
                                DG Competition’s main goal with its inquiry on retail banking was to          Chris De Noose
       new members
                                assess whether there are competition concerns in this sector, which
                                would deserve appropriate action. The final report states that the following areas will need to be
          page 3                followed up by the Commission and national competition authorities: the design and operation
                                of payment systems, including card payment systems; credit registers; cooperation between
                                banks; and the setting of banks’ prices and policies, including product tying. On these issues,
 The fight against card fraud
                                the Commission intends to identify potential infringements and, where appropriate, open an
in Europe: new environment,
       new challenges
                                The ESBG had the opportunity to submit its views on the work of the Commission throughout
          page 11               the process. In particular, the ESBG sent substantial contributions to DG Competition’s two
                                interim reports, i.e. the interim report on payment cards, issued for consultation in spring 2006,
                                and the interim report on core retail banking, issued for consultation in summer 2006.
 New developments in the
 review of the EU rules on
                                A general concern of the ESBG relates to the methodology followed by the Commission. While
     “Large Exposures”
                                we acknowledge that the goal of the exercise was not to provide the material in order to
                                open infringement cases, but rather to give a broad picture of the level of competition in the
          page 12               retail banking sector, we still have doubts regarding the accuracy of the picture delivered. The
                                numerous caveats pointed out by the Commission itself raise questions on the validity of the
                                conclusions drawn in the final report.

                                The ESBG also believes that particular care is needed as regards creating a link between an
                                observed high level of fragmentation in the retail banking market and a supposed lack of
                                competition. The fact that the retail markets remain largely local should not be interpreted as
                                evidence that these markets are not efficient or competitive, but rather that they are influenced
                                to a significant degree by local factors such as culture, history, language and tax considerations.

                                                                                                        ... continued on page 2

The European Commission’s final report on the retail
banking sector ... continued from page 1

Likewise, the differences observed in the sector inquiry in terms of some parameters (like profit
margins or prices) along national lines can to a large extent be explained by economic factors such
as differences in living standard. Against this background, the policy measures envisaged by the
Commission should not pursue the objective of reducing fragmentation but should rather be assessed
against their actual benefits as regards enhanced competition.

The Commission’s conclusions in the payments area also give rise to comments. In its description of
the payments landscape, the Commission fails to acknowledge the substantial progress made by the
European banking industry on the path towards a Single Euro Payments Area (SEPA). This leads to
biased conclusions, in particular as regards payment card systems. Likewise, it is regrettable that the
final report focuses on cashless payment transactions, ignoring the most important retail payment
instrument: cash. Payment cards should not be artificially separated from other cashless payment
instruments: it is a retail payment instrument and a regulatory approach should not discriminate
between payment instruments. More generally, as all market participants are currently revising
their plans for the future (in the context of SEPA), the ESBG wishes to stress that it is of the utmost
importance that potentially distorting regulatory intervention is avoided so that market participants
are allowed to make such critical decisions in a stable regulatory environment.

The Commission’s Final Report states that “cooperation between banks” is another issue that will
need to be followed by the Commission and the national competition authorities. In this context, it is
noteworthy that the Commission singles out certain categories of banks, i.e. savings and cooperative
banks, noting that these entities traditionally have even closer co-operative ties. It is not clear why
certain categories of banking institutions are mentioned in particular as featuring higher degrees of
cooperation, to the extent that it would trigger specific competition concerns. The sector inquiry has
not achieved conclusive results in this area. In addition, by privileging certain categories of market
participants above others, the Commission disregards the benefits which result from having pluralistic
markets. Such benefits include not only the fact that in pluralistic markets the degree of competition
is generally higher, but also the generally lower level of risk featured by pluralistic markets, or the fact
that in a decentralised business model customers in remote areas are also catered for.

As mentioned in the Communication, cooperation in the banking sector takes place at many
different levels. Cooperation is intrinsically related to the fact that banking entails the need to
develop infrastructures, which require economies of scale. Cooperation between credit institutions is
needed and beneficial to customers and is not an exclusive characteristic of certain types of market
participants. The Commission must therefore be neutral as regards banking structures, and not
orientate its investigations on cooperation towards one predefined direction.

It is our belief that DG Competition should be more concerned about markets with high degrees of
concentration, which in general are also those where the presence of savings and cooperative banks
is lower, than about pluralistic markets. High levels of concentration are undoubtedly the biggest
threat to competition.

As regards future developments in this field, we would like to reiterate again the willingness of
the ESBG to actively contribute to the work of the Commission, in order to meet the objective of
“improving competition in the financial markets”.

Chris De Noose
Chairman of the Management Committee


Several new members have joined WSBI and ESBG in the past months. We are particularly happy and
proud to welcome the following modern and dynamic financial institutions: Hrvatska Poštanska
Banka d.d. from Croatia, Banrural from Guatemala, PostBank from South-Africa, Hatton National
Bank Limited from Sri Lanka and VakifBank from Turkey. On the following pages, you can read a
short interview with each of them, presenting their institution, their activities and their strengths.

Croatia - Hrvatska Poštanska Banka d.d.
Situated on the cross-roads between Central Europe and the Mediterranean, along the eastern
coast of the Adriatic Sea, Croatia has 4.500 000 inhabitants. Main cities are the capital Zagreb, Split,
Rijeka and Osijek. With a market share of 3.7%, our new member, Hrvatska Poštanska Banka (HPB)
is placed seventh in the Croatian financial sector.

Interview with Mrs. Ana Klaric,                       to turn HPB into one of Croatia’s top performing
Senior Executive Director                             financial institutions. The main focus of our bank
                                                      is on retail banking. We concentrate on three
                                                      market segments: retail clients, SME customers
Ms. Klaric could you present us your                  and public authorities.
                                                      What type of new technologies do you use?
Hrvatska Poštanska Banka (Hrvatska is the
Croatian word for Croatia) has grown out of the       We are currently going through an important
Croatian post and has taken over the traditional      modernisation phase. Our old IT systems,
missions of the Croatian postal savings bank. Our     for example, are being replaced by modern
institution is independent of the Croatian post,      technology that will strengthen the bank’s
but has an exclusive cooperation agreement. This      competitive position by enabling innovation and
means that we distribute our products via our         greater process efficiencies as well as by meeting
own branch network, but also via the post offices,    the new regulatory requirements. We already
which are in some villages the only institution       implemented e-banking applications and we are
where financial transactions – mainly payments-       further planning to scale up our operations
can be done. At this moment, the distribution via     by leveraging on the postal network. These
the post is limited to payment products, but we       improvements will give us an extreme competitive
intend to upgrade the product offer. In the main      advantage and will help us emerge as a front
cities, Hrvatska Poštanska Banka runs branches        runner in the retail banking market.
and outlets with a full product and services range.
Our institution also operates an ATM network.         What specific products in microfinance do
                                                      you offer?
Hrvatska Poštanska Banka’s growth has been
impressive in the past years. How do you              Our bank is very active in product development
explain this? And which market segments are           for SMEs, and we plan to introduce this year
your main target?                                     additional SME packages for entrepreneurs. Last
                                                      year, we already introduced micro financing as
We have indeed witnessed a double-digit growth        a term and business model with two specially
of assets and profits. This is a reflection of the    designed products: Brzac - a fast short term
growth of our overall economy, but it is also         loan, up to 30.000 EUR, that can be arranged
due to the tremendous efforts we are making           within 48 hours; and Iskra – a micro, long term


loan up to 5 years). The short term loans can         network of Croatian Post (more than 1,100
be used as working capital or for resolving           postal offices), Hrvatska Poštanska Banka is able
solvency problems. The long-term financing can        to cover the whole territory of Croatia. We hope
be used for investments (purchasing machinery,        and plan to increase the level and quality of our
construction of production facilities, construction   products and services provided through post
of family hotels and the like).                       offices in the future. Our strategic partnership
                                                      with Croatian Post is strong and in the future
In cooperation with other institutions we take        we will use more this distribution channel. This
part in financing several incentive programs;         will be beneficial both for us and our partners as
such as supplying loans for tourism “Success          well as for the clients, even tough modernisation
Incentives”; for agriculture; credit lines from the   in IT infrastructure, banking know-how and sales
HBOR (Croatian Bank for Reconstruction and            skills is needed.
We are also very active in cooperating both           What do you expect from your membership
with governmental programmes that support             in the World Savings Banks Institute?
development of SME’s as well as with other
associations like the Croatian Craftsmanship          We believe that our membership will give us
association, the Croatian Exporters association       valuable insight into the international know-
etc.                                                  how. We expect to share business experience,
                                                      discuss concrete cases and develop best
Do you undertake socially responsible                 practices, while having the opportunity for active
activities? If so, in which fields (community         co-operation with other WSBI/ESBG members.
investments, environment, human resources             We hope to take advantage of the networking
etc.)?                                                possibilities One of the domains where we want
                                                      to make quick progress is remittances. We want
Hrvatska Poštanska Banka, as the biggest              to increase our market share in this segment
domestically-owned bank, is aware of its role in      and we are interested in concrete cooperation
our society and carefully evaluates and plans its     proposals especially from European members.
socially responsible activities. We are aware of      Indeed, Croatia has a large and financially strong
the importance of giving back to the community        diaspora, which lives mainly in Austria, Germany
a portion of its resources through donations and      and Switzerland, but also in the United States,
sponsorships.                                         Australia and Canada.
With its donation activities, the Bank underlines
its role of a socially aware and conscientious
member of the community. We endeavor to
participate in the realisation of humanitarian
projects, providing financial aid to those in
the greatest need. Hrvatska Poštanska Banka’s
donations are primarily targeted towards medical
institutions, centers for children with special
needs and institutions providing care for the sick
and the frail, but donations to cultural societies
and young talents in sports are not lacking

There is a general trend in carving out the
financial services from the general post
infrastructure. How is the situation in your

Croatian Post is our strategic partner and thus
we provide our customers with some of our
products through post offices. Due to its own
branches and outlets and the associated large


Sri Lanka - Hatton National Bank
Sri Lanka has a dynamic economy that has grown by 4.5% on average during the last ten years,
despite a short interruption during the global downturn in 2001 and severe human and material
losses due to the 2004 tsunami. Among Sri Lanka’s most dynamic economic sectors is the
insurance and banking sector.

Interview with                                         and a low percentage of non performing loans.
Mr. Chandula Abeywickrema,                             We currently have around 100 000 clients. It
                                                       is also very interesting to note that some of
Deputy General Manager                                 the MFI clients grow from the microfinance
                                                       customer segment to the SME segment or the
Mr. Abeywickrema, can you describe Hatton              private customer segment. The microfinance
National Bank briefly?                                 programme is thus a fully fledged product that
                                                       fits seamlessly in the total product range.
Hatton National Bank was founded in 1888 with
the original objective to cater to the investors       And what about remittances? Is this an
in tea plantations and to carry out additional         important instrument for you?
fee services, such as the transport of the pay
of the workers in these plantations. Over the          Well, you should be aware that about 2 million
years, our bank has evolved with the economy           Sri Lankans (about 10% of our population) work
of our country, which remained for a long              abroad, 90% of them in the Middle East. That
time dependent on the plantation economy but           is why we are present in the Middle East and
has since a few decades gone through a very            Europe but also in Gennai (India) and Karachi
important diversification. Hatton National Bank        (Pakistan). Our people send home about $ 2.6
has now become a modern financial institution          billion a year and our bank is the second biggest
that ranks first among the private owned banks         captor of this money. We have created a special
and third after the state controlled banks. Hatton     remittances programme and have also linked
National Bank has a market share of 10 – 12            these remittances to savings and microfinance
% of the banking sector. We are active in all          products. One of these products is a savings
banking segments: from investment banking to           programme that entitles the client to a microloan
merchant banking and above all retail banking.         of five times the saved amount over a certain
About half of our clientele is made up of high         period of time.
net worth individuals and big businesses, but
we also cater to the needs of small and medium         Does Hatton National Bank deploy any CSR
sized businesses and private individuals.              activities?
A specific element of our product range is made
up of agricultural loans, given the fact that an       We do. Hatton Bank is committed to the
important part of our population still works in        development of the Sri Lanka society. One of the
the primary sector.                                    projects we are developing is the equipment of
                                                       the schools in rural areas with modern libraries,
If I am correct, Hatton National Bank                  so that our children can access the latest and
also offers microloans and other specific              modern sources of knowledge. We have already
microfinance products ?                                participated in the equipment of 100 schools and
                                                       1000 more will follow in the next three years.
Yes indeed. We started offering these specific         Another project is situated in the agricultural
products 17 years ago as a concrete example of         sector, where Hatton Bank participates in the
our commitment to the Sri Lanka society, because       renovation of 50 000 water tanks that are of vital
the majority of our people – approximately 70%         importance to our farmers and the profitable
still do not have access to financial services. Very   execution of their activities, since they provide
quickly however, we noticed that microfinance          water supply during the harvests.
is a profitable business with good profit margins


What do you expect from your membership             maximum of relations with like-minded savings
of WSBI?                                            and retail banks in the rest of the world to
                                                    exchange experiences and success stories in the
We aim to create a savings culture among our        field of savings mobilisation and thrift culture.
population. The more we extend the percentage       We are convinced that the World Savings Banks
of our population that has access to finance, the   Institute and its members worldwide can help us
more our economy and living conditions in our       create and develop this savings culture.
country will improve. We want to establish a


Guatemala - Banrural
Guatemala is the most populous nation in Central America and is best known for its historical role
as a major seat of Pre-Columbian cultures, particularly the Mayans.
Guatemala’s economy is dominated by the private sector, which generates about 85% of GDP.
Agriculture contributes 23% of GDP and accounts for 75% of exports. Coffee, sugar, textiles,
fresh vegetables, and bananas are the country’s main exports. Also economically important are
remittances from Guatemalans working abroad.

Interview with Mr. Sergei Walter,                   solutions suitable to every sector of production in
Deputy General Manager                              Guatemala. Our credit portfolio covers more than
                                                    600 different economic activities, 90% of which
Mr. Walter, what position does your bank            are in rural areas and 4% in the capital.
occupy within your country’s financial
sector?                                             What kinds of new technology do you use?

We are a Guatemalan bank focussing on the           New technology gives us many tools to facilitate
rural and overall development of the country,       and broaden access to banking services. We
offering complete banking services and national     have cash dispensers that operate in Mayan
coverage. In terms of assets, BANRURAL is the       languages and use fingerprint identification to
third largest bank in Guatemala. Since it was       facilitate access for the whole population. It is not
established nine years ago, BANRURAL has risen      feasible to offer small, cheap credits without such
from the 32nd place to the 3rd place out of all     advanced technology.
Guatemalan banks. That said, BANRURAL is quite
different to other Guatemalan banks because         As for micro credits, we distribute them mainly
we are dedicated to working towards deepening       through our branches, with the help of technology
the financial market, with the aim of including     to get to know the customers and with field
the unbanked. Our credits and savings accounts      trainings for our staff. The most important thing
are primarily aimed at micro, small and medium-     is to empower people.
sized businesses and at the smaller customer.
Although we concentrate on this sector, which at    At the moment we do not use a centralised system
first glance could seem more costly and difficult   for distributing credits, but we are convinced
to service, BANRURAL has the largest relative       that the most important thing is to create a
growth of any bank in Central America. In 2006      combination of a presence on the field with a
it showed a 63% growth rate. In other areas,        system of parametric credit analysis.
such as deposits and credits, BANRURAL occupies
the second place. With 400 outlets, BANRURAL        What specific micro finance products do you
has a very substantial coverage throughout the      offer?
                                                    We offer all kinds of micro finance products in the
What are your most important market                 three main segments of micro, small and medium-
segments?                                           sized businesses. These products range from loans
                                                    and deposits to profitable investments in housing
Our principal customers are small farmers,          and remittances.
shopkeepers, craftsmen and owners of micro, small
and medium-sized businesses. We concentrate         We have made some forays into the field of
on productive credits and we are the only bank      insurance through partnerships, but we are
that operates mainly in this segment. As we are     currently in the process of acquiring an insurance
convinced that the economy is not only based on     company to offer new areas that are tailored to
one sector alone, we have specialised in offering   our customers.


Does your business operate solely on a                  to negotiate wholesale prices for medicines and
national level or does it also have working             examinations. We will also offer this health service
partnerships and/or branches abroad?                    to Guatemalan emigrants in the United States,
                                                        so that they can offer this medical cover to their
We only have branches within our own country, as        families.
the legal process of establishing branches abroad
is difficult. We have a few offices in the United       Another of our projects is the payment of
States of America that deal with remittances            retirement pensions, and we are the only financial
from Guatemalans who live there, and at the             institution in Guatemala that has offered this
moment we are opening offices to deal with the          service free of charge. We make payments to an
requirements of FEDECREDITO in El Salvador in           average of 160,000 retired people each month.
the framework of our cooperation.
                                                        Another project that we are carrying out in
Is providing remittance services one of your            cooperation with the Ministry of Foreign Affairs is
main activities?                                        called “mobile consulates”. As there are only nine
                                                        Guatemalan consulates in the United States and
In 2006 alone, more than 4 million individual           one and a half million Guatemalans immigrants,
payments were made, and 50% of all remittances          the “mobile consulates” bring the consular
destined for Guatemala pass through BANRURAL.           services directly to our fellow countrymen and
With one and a half million Guatemalans living          assist them with their assorted legal procedures.
in the United States, this is a very important area     BANRURAL has been financing this project for
for us.                                                 three years now and in 2007 we will organise 132
Are you involved in activities with a social
responsibility dimension? If so, in which               What expectations do you have of your
fields?                                                 membership in the WSBI?

It is very important to us that we support activities   We have great expectations of our membership
in the community with programmes such as                in WSBI. We share the aims of this international
equipping schools. The BANRURAL programme               association and we are aware that there are
with the highest social impact that has been fully      members who are focused on the same segment
functioning now for one and a half years is a           in which we work. There are various members
medical consultation service associated with the        in situations comparable to our own and we are
micro business/micro finance programme. Since           very interested in sharing experiences because
the Guatemalan health service is not ideal, the         this makes each one of us more effective. We
owners of micro businesses do not have health           are already working on specific programmes
cover. Micro business owners have the right to free     together with FEDECREDITO of El Salvador, while
medical consultations. The only requirement they        we have established contacts with the Spanish
have to fulfil is for their credit payments to be up    Confederation of Savings Banks in order to
to date. This programme covers 150,000 families         develop future projects together.
throughout the country. We have also been able


Turkey - Vakifbank
The Republic of Turkey is home to more than 70 million people and boasts a dynamic economy with
a real GDP growth that has exceeded 6% in many recent years. The country has a strong and rapidly
growing private sector, yet the state still plays a major role, among others in the banking sector.
Symbolic of this dual situation is the top five ranking of Turkish banks, where three privately owned
banks (Is Bank, Akbank and Garanti Bank) compete with two state-owned banks: Ziraat Bank and
our new WSBI member: Vakifbank.

Interview with                                        Does the presence of a lot of your compa-
Mr. Selcuk Gozuak, Head of                            triots in foreign countries – such as Austria
                                                      and Germany – mean that remittances are
International Banking and inves-                      important for you?
tor relations
                                                      Not really. The Turks that live abroad belong to the
Mr. Gozuak, how would you describe your               third generation. These people don’t send money
bank and its position in the Turkish banking          back home anymore; they are rather interested in
sector?                                               buying a holiday house in Turkey or want to invest
                                                      in a business. Don’t forget also that Turkey is a
Vakifbank, or Turkiye Vakiflar Bankasi, was cre-      fast-growing economy at the doorstep of Europe
ated in 1954 and is active in the retail banking      and that we have a strategic geographical posi-
segment. We cater to the needs of private indi-       tion. This means that a lot of investment money
viduals, small and medium businesses and local        flows into our country.
authorities. Even if we have our strongest market
position in Anatolia – where we represent 20%         Vakifbank has completed a very successful
of the market, we have a country-wide presence.       IPO in 2005. Did this change something at
Vakifbank has at least 1 branch in the main city of   your institution?
all 81 provinces. Our total network comprises 310
branches and 100 satellite offices.                   The IPO we did in 2005 strengthened our capital
                                                      base considerably. Our capital adequacy ratio
That is not so much for a big country like            is around 20%. 25% of our capital is now free
Turkey?                                               float, while the remaining 75% of the capital is
                                                      mainly in the hands of the state-controlled foun-
That is true, but alternative distribution channels   dations that were at the basis of our company.
are very important for Vakifbank. We have a high-     This combination of state ownership on the one
ly performing call centre and our Internet bank       hand and shareholder control on the other hand
is also a big success. Vakifbank also has a very      leads to a unique combination of stability and
wide ATM network: we own approx. 1800 ATMs,           a wide geographical outreach combined with a
which represents 12% of all the ATMs in our           high degree of shareholder orientation.
country. This option for a limited branch network
and a wide access to financial services via other     Why did you become a member of WSBI?
distribution channels has led to a very favour-
able cost/income ratio. We have 6 million retail      As a genuine retail bank, we want to establish
customers in Turkey and have a market share of 8      relationships with other, like-minded retail banks
– 9 % in any retail banking product, be it loans,     in Europe. In a globalising world where business
payments or savings products. We also cater to        relationships can be created between people in
the needs of Turks living abroad, via branches in     any country of the world, Vakifbank wants to
Vienna, Frankfurt, Köln and New York.                 increase its international presence. We are inter-
                                                      ested in discussing business cooperation possi-


bilities and synergies with WSBI members. This is    appreciate the knowledge of legal matters and
possible for example in the payments area, since     the lobbying power of your association. It is very
Vakifbank has a full VISA/Mastercard licence,        important for us to acquire a good understand-
has links with more than 1000 correspondent          ing of all international rule-making in the field
banks and can work in the field of clearing and      of finance.
settlement with other savings banks. We also

South-Africa Postbank
Located at the southern tip of Africa, with a total surface of 1,219,912 sq km and over 44 million
inhabitants, South Africa is dynamic, fast-growing economy that faces many challenges.

Emblematic of the dramatic changes the               post office is a Postbank and in addition to this,
country and its structures are going through is      Postbank has initiated the creation of its own
South Africa’s Postbank, one of the new WSBI         branded outlets.
members. Established in 1875 as state-owned
savings bank and integrated into the Post Office
in 1894 to take advantage of the extensive           These outlets will boast the latest technological
branch network, Postbank has been operating as       developments in the field of point-of-sale
a division of the Post office since 1991. Postbank   devices. An excellent example of technological
pursues a mission of making banking affordable       innovation is the biometric technology that is
and bring it to the majority of South Africans,      used to process payment transactions in a quick
who were historically unbanked. In this way, the     and secure way. This system was put in place
institution contributes to the Government’s plan     in a very short implementation period and is
to grow the economy in a balanced way that           emblematic for the objective to bring an up-to-
brings benefits to all the people.                   date product and services range to clients. The
                                                     development of internet and cell-phone banking
Reaching out to a maximum of clients, including      is another illustration.
the unbanked is not a handicap for the
profitability of Postbank. The institution shows
excellent profitability indicators and has reached   South-Africa Postbank is an excellent example
some impressive commercial successes. Postbank       of a mainly domestic orientated institution
has joined forces with the leading commercial        for retail banking operations that contributes
banks to offer the low cost “Mzansi Account”         substantially to the socio-economic development
with Postbank leading this market segment            of the country and the population thanks to a
with a share of 40%. The customer base of the        dense regional network, while at the same time
institution has grown in record time to nearly 4     operating in a competitive, market oriented
million clients.                                     environment and WSBI is honoured to count the
                                                     institution among its members.
The impressive distribution network of Postbank
is an important lever for the development of
the organisation. Indeed, every South-African


The fight against card fraud in Europe:
new environment, new challenges

                    Paving the road for the               outside, Europe. There are solutions to secure
                    Single Euro Payments Area             remote transactions, notably the use of card
                    (SEPA), the ongoing rollout           readers and one-time passwords. But as regards
                    of the EMV standard is                “skimming”, banks face a dilemma: remove the
                    entailing deep mutations in           magstripe and subsequently limit their cards’
                    the European cards market             acceptance worldwide (other regions of the
                    in general and with regard            world are not as advanced as Europe as regards
                    to card fraud prevention              EMV rollout), or leave it as a “fallback” solution
                   strategies in particular.              to the EMV chip on the card but face the risk of
                                                          increased counterfeiting fraud. Banks’ and card
The EMV standard (a new generation of chip,               networks’ commercial strategies differ widely in
normally used with a PIN code) has been                   this respect.
acknowledged as the supporting technology
going forward for SEPA in the cards area as               European regulators are closely following
well as an essential tool to fight against fraud.         the evolution of card fraud and moves by
Its implementation is now following a steady              the banking industry to curb its growth, as a
pace throughout Europe - in line with the                 persistence of high levels of fraud could have
commitment by banks to complete its rollout               the potential to undermine users’ confidence in
by end 2010. As of today about one out of two             payment systems - in particular in relation to new
payment cards and point of sale (POS) terminals,          technologies. However, whilst some issues can
as well as about 60% of ATM machines, are                 be addressed in a self-regulatory mode by banks,
already converted to EMV. And the results                 as currently done under the umbrella of the
in terms of fraud rate reduction are already              European Payments Council, others require an
visible in countries previously using less secure         effective cooperation between all stakeholders
authentication methods such as magnetic-                  (banking industry, merchants, law enforcement
stripes (magstripes) on the back of the card              agencies, regulators…) as well as regulatory
(easily “skimmed” and counterfeited). At the              assistance in some cases. For instance in the
same time, the rollout displaces card fraud to            field of data protection, national interpretations
the weakest link, i.e. less advanced countries,           of EU legislation put barriers to the development
which in turn encourages their own migration as           of pan-European databases, whereas national
the ‘liability shift’ rule puts the liability for fraud   borders are now irrelevant for fraudsters. Also,
losses on the party not having yet migrated to            the creation of centralised law enforcement units
EMV.                                                      with real operational responsibilities to fight
                                                          non-cash payment fraud would be instrumental
Nevertheless, card fraud will unfortunately not           in enhancing public/private partnerships in the
disappear altogether and, whilst EMV managed              fraud prevention area. Card fraud prevention
to eradicate certain types of fraud, card fraud is        demands efforts from all stakeholders, including
progressively taking new shapes. The main threat          cardholders and merchants.
lies with remote card payments (e-commerce,
mail orders, telephone orders), for which fraud is        Contact: Aloys.Rigaut@savings-banks.com
increasing at a rapid pace. But card “skimming”
at ATMs and POS terminals will also remain a
concern as long as cards will continue featuring
a magstripe - the data of which can be copied
and used at non-EMV terminals in, or most likely


New developments in the review of the EU rules on
“Large Exposures”

               In the European Union, a set           intense discussions held within the ESBG is that
               of rules on “Large Exposures”          the current regime has some merits in the eyes
               constrains credit institutions in      of a majority of these entities. In particular, it
               the extent to which they can           is regarded as easy to apply and as providing
               provide credits to a single            useful guidance. In addition, although there are
               customer. The regime is based on       differences in the application of the rules across
               a few quantitative limits, such as     Member States, they form a common framework
one provision that states that a credit institution   applicable throughout the EU.
“may not incur an exposure to a client or group
of connected clients the value of which exceed        Looking ahead, the ESBG believes that the first
25% of its own funds”. The Commission, the            step is to clarify the objective of any forthcoming
European Banking Committee (EBC) and the              “Large Exposures” regime. This should take
Committee of European Banking Supervisors             account of the fact that the concerns in relation
(CEBS) are currently in the process of reviewing      to the failure of small banks (i.e. mainly the
this regime, in the light of the new prudential
framework created by Basel II.
                                                      The ESBG very much welcomes the decision to extend the
At the end of 2006, the decision was taken to         deadline for the review of the rules on Large Exposures, as
extend the deadline for the review of the rules       changes to the existing regime should be proposed only after all
on Large Exposures from the end of 2007 to the        the available options have been weighted carefully.
end of 2008. The ESBG very much welcomes
this decision, as changes to the existing regime
should be proposed only after all the available       protection of depositors) are different from
options have been weighted carefully.                 those relating to large institutions (i.e. systemic
                                                      risk). The outcome of this exercise would help
A number of banking institutions, especially the      in deciding whether a differentiated approach
large, internationally-active banks, have taken       for small and large entities would make sense,
the opportunity of the review to highlight that       and under which conditions. The ESBG is also
the current regime does not match their internal      of the opinion that further work is needed to
risk management procedures. Likewise, the             assess how the risk-sensitivity of the current
risk addressed by the current framework, also         regime could be enhanced and the reporting
known as “single-name risk”, is regarded as just      burden cut.
one aspect of the more general “concentration
risk”, which large banks manage on the basis          The ESBG looks forward to further contributing
of internal models. As these models have to be        to the work conducted on this issue, in order
validated under the Supervisory Review Process        to ensure that the forthcoming rules on large
(the second Pillar of Basel II), these banks          exposures fulfil their objectives and are adequate
consider that the quantitative limits of the          for all types of institutions, whatever their size or
“Large Exposures” framework could just be             degree of complexity.
abandoned altogether.

Smaller entities have somewhat different views
on this issue. Specifically, the outcome of the       Contact: Nicolas.Jeanmart@savings-banks.eu


Mortgage Credit: publication of the final reports of
the MICD and of the MFEG

                   The European Commission            Green Paper on Mortgage Credit, the main
                   published last December            challenge in the creation of a pan-European
                   2006, two reports sum-             market in mortgage funding is related to the
                   marising respectively the          different rules, structures, habits, etc. in the
                   discussions held at the            Member States. The ESBG therefore particularly
                   Mortgage Industry and              endorses the recommendation according to
                   Consumer Dialogue (MICD)           which regulation should not favour one form of
                   and the recommendations            funding above another: lenders should be free
                   adopted by the Mortgage            to define their funding strategy, based on their
                   Funding Experts Group              business model and their specific circumstances.
(MFEG). Both groups were established by the
European Commission in 2006 following the             The outcomes of the MICD and of the MFEG
recommendations made by the Mortgage Forum            as well as the European Parliament’s own-
Group and the consultations launched after the        initiative report will be considered by the
publication of the Commission’s Green Paper on        Commission when drafting its White Paper on
Mortgage Credit.                                      Mortgage Credit, the publication of which has
                                                      been announced for June 2007. Commissioner
Mortgage credit is at the core of the business of     Charlie McCreevy, in charge of EU financial
savings and retail banks. Therefore, the ESBG,        services, has stressed that before proposing any
in its response to the Commission’s Green Paper       concrete measure, the Commission will analyse
on mortgage credit, expressed its willingness         carefully whether further integration will have an
to participate in the Commission’s initiatives        impact on the whole market or rather if it will
regarding the integration of European mortgage        affect only a small group of people. The ESBG
markets, stressing at the same time that any          fully supports this approach and highlights the
action in this area has to demonstrate the            risk that while the costs of integration will be
potential benefits for both the consumers and         paid by all market players, just a limited number
the industry.                                         of actors might benefit from it.

The MICD final report highlights the constructive     Contact: Leticia.Hernando@savings-banks.eu
and positive debate held by consumers and
industry representatives on how to improve
the current Code of Conduct. The report also
acknowledges the difficulties in achieving an
agreement on the design of appropriate rules
as regards duty to advise, early repayment and
the calculation of the Annual Percentage Rate of
Charge (APRC).

The MFEG report identifies the barriers
to integration for each funding model and
introduces some recommendations to the
Commission on the establishment of a pan-
European funding market. Although the ESBG
believes that the national mortgage funding
markets are already very efficient, it welcomes the
recommendations made by the funding experts
for both the primary and secondary markets.
This being said, it is worthy to mention that, as
pointed out in our response to the Commission’s


Review of the Lamfalussy Process

               The Lamfalussy process was            The main risk for the long-term success of
               introduced in 2001 with               the Lamfalussy approach is the risk of over-
               the aim to increase the               regulation. The ESBG is of the opinion that
               regulatory efficiency in the          this risk can be best counterbalanced by
               field of financial services.          ensuring full transparency of the process and by
               The process pursues the               comprehensive consultation with the industry.
               objective of ensuring that            Concerning the future, the ESBG believes that
               the legislative texts adopted         the European regulators should be encouraged
               are drafted and implemented           to make more use of impact assessments to
in a clear, consistent and transparent way           gain broader insight into the market. This in turn
across the European Union.                           would enable them to improve their proposals
                                                     already at the initial stage.
The Inter-institutional Monitoring Group (IIMG)
has been mandated by the European Institutions
to assess the progress made with regard to the        ESBG beliefs that one of the main benefits of the Lamfalussy
implementation of the Lamfalussy process. The         process arises from the fact that the main political framework
Group consisting of six experts published a           is defined first, followed by separate technical measures that
report on its interim findings in January 2007.       ensure a smooth implementation of the legal text.

Prior to publishing its interim report, the IIMG
conducted a comprehensive consultation with a
number of key stakeholders. Mr. Chris De Noose,      We are pleased to note that recommendations
Chairman of the Management Committee of              of the IIMG are generally in line with the views
ESBG-WSBI, contributed to this debate by             put forward by the ESBG. We look forward to
exchanging views with the Group in October           further contributing in a discussion which should
2006. On that occasion, Mr. De Noose recalled        ultimately serve to improve the functioning of
that the ESBG has always been supportive of          the Lamfalussy process.
the Lamfalussy process. In particular, he stressed
that it is ESBG’s belief that one of the main
benefits of the process arises from the fact that    Contact: Vlatka.Cini@savings-banks.eu
the main political framework is defined first,
followed by separate technical measures that
ensure a smooth implementation of the legal
text. Mr. De Noose noted that although in the
past the two types of rules (i.e. political and
technical) have sometimes been developed in
parallel as a result of the time pressure, this
should occur only in exceptional circumstances
and it should therefore not become the formal
decision-making process.


The European cards industry: a new business model?

                  The Single Euro Payments              and the Eurosystem have voiced the concern
                  Area (SEPA) will be launched          that the transformation of the European card
                  in January 2008, also for pay-        industry into SEPA translates into higher prices
                  ments and cash withdrawals            for cardholders and merchants.
                  with cards. When the “SEPA            The European Commission’s “Final Report of the
                  for cards” is completed accord-       Sector Inquiry into Retail Banking” released end
                  ing to plan by end 2010, there        January bases on the assumption that payment
                  should be no difference any-          cards operate in total isolation from other means
more for cardholders whether they use their             of payment and criticises the card industry for
card in their home country or somewhere else in         not already having delivered in today’s environ-
SEPA, and no card scheme designed exclusively           ment of justifiably fragmented national markets
for use in a single country, or exclusively for cross   what is expected by 2010 from a single market.
border use within SEPA, should exist any longer.        However, the Eurosystem’s “View of a SEPA
                                                        for Cards”, having acknowledged that “most
The transformation process of what today are            national card schemes have managed to offer a
quite efficient national card markets has already       very efficient service at low cost”, takes a much
been set in motion by banks as issuers and              forward looking stance that builds on the bank-
acquirers and shareholders in card schemes, by          ing industry’s efforts at self-regulation. In par-
processors and other providers of technical infra-      ticular the Eurosystem proposes criteria to assess
structure, and by the card schemes themselves.          SEPA compliance and signals its willingness to
They have begun to acknowledge and imple-               review card schemes’ progress in this respect.
ment the SEPA Cards Framework (SCF) agreed
by the banking industry in September 2005. The          Yet both the European Commission and the
SCF principles and rules are intended to operate        Eurosystem have expressed a strong wish to
as a policy framework so that:                          see one (or several) SEPA card schemes under
 Cardholders are able to pay or make cash              European governance emerge from the trans-
   withdrawals with their card with the same            formation process. Clearly, the perspective of
   level of ease and convenience, and the same          Europe being absent from a future select circle
   terms and conditions, anywhere throughout            of card schemes raises as much political unrest
   SEPA;                                                as an increase in market prices. Whilst one
 Merchants have the choice of which card(s)            initiative – the European Alliance of Payment
   they accept and with which acquirer(s) they          Schemes (EAPS) – is testing a model that would
   work – ultimately through a single point-of-         leverage the synergies of several existing nation-
   sale (POS) terminal.                                 al schemes and gradually deliver European-wide
                                                        reach under a new acceptance label, not all
Choice for cardholders and merchants will nota-         banks are convinced that this can be a way
bly be enhanced by a revision of card scheme            forward.
rules (in particular a single license to issue cards
and/or acquire transactions throughout SEPA,            The banking industry having in the co-operative
the removal of pricing differentiation for nation-      domain set its policy through self-regulation,
al and “cross border” services, and complete            and authorities having to a large extent re-
service pricing unbundling), and card scheme            affirmed the applicable competition principles
organisation (in particular the clear separation        and rules, time and space should now be left
between scheme management, and processing               to market players to review their strategies and
and other functions such as certification).             make the necessary choices.
Whilst to a large extent welcoming the principles
spelled out in the SCF, the European Commission         Contact: Norbert.Bielefeld@savings-banks.com


World Bank and BIS issue General Principles
for International Remittance Services

The World Bank and the Bank for International Settlements (BIS), through its Committee on
Payment and Settlement Systems, issued in January 2007 their “General Principles for International
Remittance Services”. These principles had been developed since 2004 by a multi-agency task force,
and a consultative version was released in March 2006 – to which WSBI responded with its “Call to
Overcome Asymmetry” Position Paper.

  The principles retained by the World Bank and BIS are
  to support the public policy objectives of achieving
  safe and efficient international remittance services:

  Transparency and consumer protection
  General Principle 1: The market for remittance services should be transparent and have adequate
  consumer protection.
  Payment system infrastructure
  General Principle 2: Improvements to payment system infrastructure that have the potential to
  increase the efficiency of remittance services should be encouraged.
  Legal and regulatory environment
  General Principle 3: Remittance services should be supported by a sound, predictable, non-
  discriminatory and proportionate legal and regulatory framework in relevant jurisdictions.
  Market structure and competition
  General Principle 4: Competitive market conditions, including appropriate access to domestic
  payment infrastructures, should be fostered in the remittance industry.
  Governance and risk management
  General Principle 5: Remittance services should be supported by appropriate governance and risk
  management practices.
  Roles of remittance service providers and public authorities
  A. Role of remittance service providers: Remittance service providers should participate actively in
     the implementation of the General Principles.
  B. Role of public authorities: Public authorities should evaluate what action to take to achieve the
     public policy objectives through implementation of the general Principles.

These General Principles must be welcomed as they provide for an a minima foundation for the
supervisory, legislative and regulatory framework that should be put into place in all countries where
remittances are originated, or to which remittance flows are destined. Equally these General Principles
provide yet another impetus to existing and potential service providers to continue and enhance their
environment whenever possible through self-regulation.
However the attention given by the World Bank and BIS to the remittance market could have been
the opportunity for these international organisations to apply further moral suasion in order for several
other critical dimensions of the remittance topic to be addressed, notably:
 The necessity for funds for and from remittances to be accrued in the form of bank balances – rather
  than cash - to enable leverage for economic development;
 The possibility for migrants to widely gain access to formal payment and financial services under
  proportionate legislative and regulatory dispositions;
 Recommendations that would motivate policy makers, international organisations and market par-
  ticipants to actively monitor annual progress towards the implementation of the General Principles.
WSBI will continue to promote these further dimensions whilst at the same encouraging co-operation
between Members to achieve the fuller inclusion of remittance flows into the balance of payments of
recipient countries and the balance sheets of recipient institutions.

Contact: Norbert.Bielefeld@savings-banks.com


WSBI is present in European and Belgian
microfinance platform

                 WSBI and its members                    and practitioners’ lessons learnt, and advance
                 are heavily involved in the             microfinance good; practices for the benefit of
                 microfinance sector. That is why        the low income people as well as for a more
                 WSBI is one of the founding             efficient implementation of European develop-
                 members of the “European                ment programs in both the North and South;
                 Microfinance Platform” (e-             Provide an open platform for microfinance ex-
                 MFP) that has been officially           perts, practitioners, researchers and policy
                 created in Luxembourg. The              makers in order to promote innovation, mu-
                 mission of this association is          tual interaction and seek for synergies within
to strengthen the dialogue among European                the sector;
microfinance actors working in developing               Facilitate exchange on microfinance policy is-
countries. Concretely, this implies:                     sues with European Institutions and Govern-
 Build a European multi-stakeholder group to            ments.
  enhance dialogue and competence in microfi-           WSBI has also joined the Belgian microfinance
  nance, building on the past and current experi-        network, which objectives are similar to the
  ences of European countries and their interac-         European Microfinance Network.
  tion with developing countries;
 Promote innovative and inclusive financial sec-
  tor development concepts based on research           Contact: Mark.Bienstman@savings-banks.com

New internet site for WSBI-ESBG

On the first of March, a new internet site for         allows for an easy and frequent update of the
WSBI and ESBG has been launched. The objective         information.
of the site is to offer optimal accessibility and to   Via the WSBI and ESBG website it is also possible
allow easy consulting of the available content.        to link through to a membership database that
To offer a clear distinction between the purely        lists the contact details and financial data of all
ESBG content and the specific WSBI topics, this        WSBI and ESBG members.
information has been stored on two different
– but closely linked – addresses: www.esbg.eu          This new website offers you extensive information
and www.wsbi.org respectively. This also allows        on new publications, position papers, press
people interested exclusively in ESBG or WSBI          releases, newsletters, research papers and all
matters to avoid ploughing through unrelated           scheduled events, from conferences and colloquia
content. A general landing page www.savings-           to regional group meetings. We hope the new
banks.com links the two organisations and gives        website will become a reference point for WSBI
general information about savings and retail           and ESBG members and everyone interested in
banking. Furthermore, it is possible to switch         savings and retail banking and we welcome all
from any page in the ESBG website to the WSBI          your remarks and suggestions. Don’t forget to
website and back.                                      bookmark the site in your favourites!

The wide range of information produced by WSBI
and ESBG can be accessed through thematic              Contact: Dirk.Smet@savings-banks.com or
searches and a content management system               Malou.Doumen@savings-banks.com


Demographic change: a threat or an opportunity?
Some remarkable thoughts and ideas from the
European Social Dialogue1

                    Ageing is affecting all              In Spain, the policies implemented by the Spanish
                    societies and, especially in         Savings Banks aim at reducing temporary and
                    Europe, unless retirement            precarious jobs through the promotion of
                    patterns      change,     the        permanent recruitment as well as the conversion
                    phenomenon will cause a              of temporary into permanent contracts. The
                    dramatic deterioration in            main idea is that, for one person partially
                    the balance between active           retiring, the company has to simultaneously
                    and retired people. This             recruit a new person, whose contract will be at
                    means that the financial             least equal to the working time reduction of the
sustainability of adequate social protection             employee who partially retired.
spending will be (or is already) challenged, with
pensions representing over 50% of the social             Swedbank has developed the “55+ concept”,
protection expenditure.                                  which gives all employees aged 55 or more a
                                                         personal development plan in order to secure
                                                         the attractiveness of the job to older staff.
The European Commission is positive that it is           The programme includes for example, a yearly
possible to cope with demographic change, and            physical exam with a special focus upon health
for this reason will continue to pressure Member         aspects typical to this phase of life. It also
States into taking the actions called for by the         provides the possibility to work from home and
Lisbon Strategy and in particular promoting              to follow training at work. Additionally, from the
active ageing. It is time for real implementation        age of 58 it is possible to reduce one's working
of policies to deal with ageing at regional and          volume from 100% to 80% - while keeping the
local level. What is exactly the situation in the        salary at 90% level.
banking sector and how is the demography
issue perceived and addressed in the different           In conclusion, the study highlighted to all
member states? This is the topic that the social         stakeholders involved in the financial sector that
partners of the banking sector have decided              demographic changes are going to influence
to analyse in 2006 with the support of the               policy in the forthcoming years. The study
European Commission. Some trends and good                gave a good picture of what is happening
practices came out of the analysis:                      throughout Europe in the banking sector thanks
                                                         to the provision of a quantitative and qualitative
In France, for example, recruitment is becoming          analysis. Eventually, it showed that banks are
an issue of concern as at the moment 1/3 of the          progressively putting in places policies in order
workforce in the banking sector is between 50            to adequately and timely address the issue of
and 59 years of age, which means that in the             demography.
short term new staff will be necessary. This is          Mr J. Morin - Head of Unit, DG Employment
the result of the lack of recruitment during the         and Social Affairs of the European Commission
last decade and could cause a real problem, as           - stressed that the Social Dialogue has a very
a growing need of young people will be felt              important role to play in addressing the issue
in industry, construction and public services as         of demography, as, among others, it constitutes
well.                                                    a remarkable source of thoughts and ideas
                                                         and allows confrontation between the different
In Norway, the Social Partners, together with            stakeholders, which proved to be the way for
the Government, signed a “Tripartite Agreement           the identification of good solutions.
on a more Inclusive Workplace”, aimed at
reducing sickness absence by 20%, improving
employment prospects for a bigger number of
employees and increasing participation rates for
older workers.                                           Contact: Laurie.Dufays@savings-banks.com

1 The full study is available on the ESBG website at www.esbg.eu


Winners of the 2006 European Stock Market Training
celebrate in Brussels, at the occasion of the
50th anniversary of the Treaty of Rome

                                                      at youngsters. It is coordinated by ESBG at
                                                      European level and encompasses currently 7
                                                      European countries and their respective savings
                                                      banks: Austria, France, Germany, Italy, Latvia,
                                                      Luxembourg and Spain.

                                                      The official 2006 award ceremony, taking place in
The European Savings Banks Group celebrated           Brussels on the weekend of the 50th anniversary
on 23 March the winning teams of the 2006             of the Treaty of Rome, was honoured by the
European Stock Market Training: students              presence of Baron Lamfalussy, one of the most
from Austria, France, Germany, Italy, Latvia,         prominent EU financial markets experts and
Luxembourg and Spain gathered for a week-end          patron of the initiative. He congratulated the
in Brussels and had a chance to get an onsite         students for their stock market interest and
overview of the EU and its institutions, in the       skills and saluted the staggering number of
context of the 50th anniversary of the birth of       participants as a great encouragement for the
Europe, get in touch with other cultures and          development of informed European consumers
forge new friendships. They were the winners          of financial services. Mr. Chris De Noose,
out of the 250 000 participants and 43 440            chairman of the management committee of
teams of the 2006 edition!                            ESBG, underlined how at this historical moment,
                                                      when Europe celebrates the 50th anniversary of
The European Stock Market Training consists in        the Treaty of Rome, the Stock Market Training
the management of a virtual portfolio of securities   is a perfect illustration of the European savings
from the Frankfurt, London, Madrid, Milan, Paris      banks’ ability to develop cross-border projects
and Vienna stock exchanges, over a period of          that bring concrete benefits to the society
ten weeks (www.stockmarket-training.com). It is       they are active in. He encouraged other ESBG
a unique education tool which enables students,       members to join the initiative to strengthen
acting as teams, to experience the functioning        further savings banks’ joint commitment to
of financial markets in real-life conditions, to      contribute to improving youngsters’ financial
make investment decisions and manage risks in         literacy, and help grow as informed citizens.
a prudent and sustainable manner. This initiative
is part of European savings banks’ collective
effort in favour of financial education, and one      Contact: Anne-Francoise.Lefevre@savings-banks.
of their socially responsible initiatives directed    com or Alessandra.Pertot@savings-banks.com

Baron Lamfalussy,                                     Chris De Noose, Chairman of the
Patron of the European Stock Market Training          ESBG Management Committee


Promoting access to finance through increased
cross-regional exchanges of experiences

Exchanging experiences between countries
with similar macro-economic backgrounds
and between organisations with comparable
institutional backgrounds and operational levels
was extremely appreciated by the WSBI members
who gathered for the seminar on Access to
Finance in New Delhi last December.

The seminar was hosted and supported by the
Indian Ministry of Finance and sponsored by
the Federation of the French Savings Banks
(FNCE). Forty participants from several Asian
countries (India, Korea, Sri Lanka, Thailand
and Vietnam) but also from Africa (Tanzania
and Uganda) gathered with the objective to
share good practices to facilitate access to
finance. Delegates reckoned that among the
top priorities are the maintaining and extending
of accessible distribution networks, the co-
operation with local specialised microfinance and
development institutions, providing targeted,
accessible, low cost, low risk products in a fully
transparent way, accompanying this provision of
products with financial literacy efforts. More in
particular, participants expressed their interest
in partnerships with microfinance institutions
(MFI) to increase synergies in terms of access to
capital for MFI and to credit technology and risk
management for savings banks. Delegates also           Consequently, as a way to foster exchanges of
shared experiences on diverse models of mobile         good practices and to generate opportunities
branches and mobile ATMs (installed on a boat,         for cooperation between African and Asian
functioning by minus 42°C, etc.) and several           members, the WSBI is working on a “cross-
financial literacy approaches. Eventually they         regional programme” that will include the
worked together on the design of innovative            above requests. More in particular, the WSBI is
products linking savings and credit schemes and        preparing a programme with a focus on mobile
expressed their keenness to continue working           banking including the use of cell phones and
on these products on the occasion of another           mobile branches. The WSBI would also like to
seminar.                                               propose sharing information as regards WSBI
                                                       members’ training programmes from different
Accordingly, participants suggested holding one        continents (Asia and Africa, to start with) in
seminar and a study tour every year with the           order to allow staff members to take part where
same countries and member banks. The National          and when relevant. This could take place on the
Savings Institute of India, in particular, expressed   internet or intranet site of the WSBI.
its interest to be invited to seminars and training
organised by WSBI members in Uganda, Tanzania
and/or Kenya for exchanges of experiences.             Contact: Laurie.Dufays@savings-banks.com


Can product packaging, branding and corporate
identity deliver an adequate answer to a changing
banking environment?

               These and other questions have       An important development has been the re-
               been addressed during a WSBI         branding of their insurance product, GSB life,
               workshop in Bangkok, hosted          following a notorious communication campaign
               by our member institution            that has been awarded several prizes and
               Government Savings Bank              customer recognition.
               (GSB) of Thailand with as overall
               theme: “Marketing strategies         In terms of mobilisation of domestic savings,
               in an evolving environment”.         GSB has witnessed high rates of success with the
The workshop was organized with the support of      31st edition of the Premium Savings Certificates
ESBG members FNCE (France), RSGV (Germany)          with the “Toyota Camry Lucky Draw”, which
and the ESBG subsidiary Euro-Sofac.                 has topped the initial goal by 180%. Moreover,
                                                    a new savings product has been launched
Product packages for low and high income            amongst teenagers.
customer segments were presented in detail
and a first assessment was made of packages         Finally, GSB has continued with its policy of
for card-based accounts and a Premium Savings       branch modernisation, aimed at adapting
Certificate package. Another important aspect       branches to the corporate identity and to the
in evolving marketing concerned the distribution    needs of customer segments. Mobile banking is
strategy. An optimal channel-mix for a retail       also enhanced with the acquisition of a second
institution was discussed and some novelties        boat-branch and ten additional mobile branch
were reviewed, such as distribution channels        vehicles.
for pensioners and for illiterate customers,
both based on smart card-based accounts with        GSB believes that the annual workshops held in
biometric identification, as well as developments   cooperation with fellow savings bank members
in e-banking, covering both ease of access and      is of much benefit for keeping abreast with
security elements.                                  new developments and benefiting from good
                                                    practices. In this framework, cooperation in the
An aspect developed in much detail was that         field of training is expected to continue in 2008,
of communication and branding. Branding was         with the organisation of a workshop which will
object of a particular debate as to whether         most likely deliver innovations and best practices
savings banks could benefit from a worldwide        in serving the needs of SME customers.
brand, complementary to their logo and
illustrative of the common worldwide savings
bank values worldwide. The institutional image,     Contact: Emma.Fernandez@savings-banks.com
based on the underlying values and traditions of
the savings bank as well as the merchandising
efforts, designed around the social identity of
the institution, were respectively presented by
French and German experts.

Mr. Yongyuth Tariyo, GSB senior executive
vice-president, delivered an overview of the
developments and recent innovations introduced
in the institution as a response to the changing
environment in which they operate.

The GSB corporate identity has been
made homogeneous in all of GSB’s assets,
communication and merchandising tools with the
very characteristic pink and gold identification.


WSBI joins forces with the United Nations specialised
agencies to promote the Building of Inclusive Financial
Sectors in Africa

                 Madagascar hosted two high         Dakar Declaration Steering Committee
                 level meetings in the framework    (DDSC) - on Building Inclusive Financial
                 of current efforts by the United   Sectors in Africa, 06 February
                 Nations Capital Development
                 Fund     (UNCDF)      and    the   The DDSC has been established as an ad hoc
                 United Nations Develop-ment        group to promote the Dakar Declaration issued
                 Programme (UNDP) to build          following a big UNCDF/UNDP conference
inclusive financial sectors in Africa.              held for the launching of the UN Bluebook in
                                                    Africa. This conference brought together in
Launching Ceremony for the “Blue Book               early June 2006 in Dakar (Senegal) around 320
on Building Inclusive Financial Sectors for         delegates representing governments, central
Development” in Madagascar, 05th February           banks, civil society organisations, private sectors,
2007                                                practitioners, donors, academics, etc.

Madagascar is the first Sub-Saharan African         The DDSC has the mandate to ensure
country to have formulated a National Strategy      follow-up, including the dissemination
for inclusive finance. This ceremony presided       and the implementation of the conference’s
over by the Prime Minister was convened by the      recommendations, maintain and develop the
National Microfinance Steering Committee and        network of relevant stakeholders with the
brought together more than 200 stakeholders         objective to mobilise financial and technical
with the underlying objective to raise awareness    resources required to build inclusive financial
at national level about the UN Bluebook             sectors in Africa.
                                                    At this first DDSC meeting it was decided to
The expansion of microfinance services              establish 3 working groups:
in Madagascar is constrained by difficulties         Advocacy and Communication (WSBI sits in
encountered by microfinance institutions (MFIs)       this group)
to raise money for financing projects with           Resource Mobilisation (will also assess the idea
maturity beyond twelve months. The WSBI took          to create an African Fund for Inclusive Fi-
this opportunity to point out that the “Caisse        nance)
d’Epargne de Madagascar - CEM” is by far the         Data collection and benchmarking (status and
financial institution with the largest customer       progress towards 2015 Millenium Develop-
base (800,000 depositors) in the country. CEM         ment Goals’ horizon).
invests its money in public debt instruments
(treasury bills mainly) and could be leveraged      The DDSC is to be chaired by the Banking
through linkages (partnerships) with MFIs           Commission/Central Bank of West Africa
whereby this money is reallocated as wholesale      (BCEAO) and the Association of Agricultural
commercial funds to sustainable MFIs. This          Bank and Rural Credit (AFRACA). The possibility
proposal is strongly supported by the UNCDF         to set up a regional Secretariat of the DDSC is
Executive Secretary and was well received by the    also under consideration and will be discussed at
National Microfinance Steering Committee.           the next meeting by May-June 2007.

                                                    Contact: Hugues.Kamewe@savings-banks.com


ESBG wins contract in Pacific!

                 ESBG has won the project “Short-term Technical Assistance for a Needs Assessment
                 Study at Vanuatu Financial Services Commission (VFSC)”. The objective of this
                 project is to identify weaknesses and formulate recommendations, so that Vanuatu
                 can achieve OECD/EU governance standards and show the international community
                 that it is committed to improving its financial regulatory and supervisory regime.

                 One expert, retained by the ESBG, has performed a 1-month mission throughout
                 February 2007, and has implemented the following activities:

 Reviewing existing & envisaged legislation, including executive orders and procedure manuals;
 Assessing VFSC capacity, including compliance, risk management, enforcement, supervision & train-
 Analysing data collection, data management, data integrity factors, IT tools in use;
 Assessing communication policy and systems, including customer information and guidance;
 Evaluating IT aspects of companies’ public files management system, including VFSC’s on-line ser-
 Reporting.

The above activities will lead to the development of a roadmap for resolving VFSC’s problems,
including proposals for modernisation / improvement with a SWOT analysis and an impact assessment
of proposed measures at national and regional level.

Contact: Conrad.Rupert@savings-banks.com


News and Views dedicates a series of articles on Corporate Social Responsibility strategy and
experiences developed by WSBI and ESBG members, as a bottom line of their business model and with
the objective to bring a return to stakeholders and to society.

            Corporate Social Responsibility in Spanish savings banks:
            Key to their success story and future commitment.

Dialogue with stakeholders and their involvement in the decisions of the institution, commitment to
the development of their environment and social action form part of the culture of Spanish savings
banks. Concern for the area in which they operate and a special social sensitivity have always been
their rationale, as they were created in the first place to meet the needs of their community. Moreover,
this culture has been the key to their success, as shown throughout their history, stretching back over
more than 150 years.
Having stepped firmly into the 21st century, the social responsibility of private institutions is no longer
a theme for debate. It is the mere illustration, in the area of business strategy, of the switch from
an economy based on tangible factors to one based on immaterial values. Spanish savings banks
fully identified with this new trend, which puts into words and conceptualises what they have been
achieving since their very beginning.
Spanish savings banks implement social responsibility in their everyday activities. One of their main
concerns is access to finance and their best weapon in combating exclusion is social microcredit. The
4,116 microloans granted to date have succeeded in creating over 6,000 jobs.
Thanks to the savings banks, Spain is one of the countries which has the highest per capita branch
offices. 97% of the Spanish population have access to a savings bank’s branch and in 13% of Spanish
municipalities, it is the only financial institution. To these data should be added the over 1,338 million
euros that were allotted by the savings banks in 2005 to finance projects in the field of culture, welfare,
education, research and historical and natural heritage. And the benefits of these actions are enjoyed
and shared with all citizens.
These figures correspond to the fundamental ideas on which Spanish savings banks’ principles are
based. In their eagerness for improvement, they remain on the lookout for new strategies that can
help them put these principles into practice. The dynamism generated by the new corporate culture
introduced by CSR provided a good opportunity, which prompted savings banks to lead the movement
in Spain, to encourage it and to participate in societal debates.
15 Spanish savings banks joined the European Commission’s Alliance for Corporate Social Responsibility.
Based on this EU initiative, CECA (Spanish Confederation of Savings Banks) initiated some practical
work on the environment and on the development of sustainability reporting. 18 savings banks report
individually on their achievements. The great interest aroused by these reports led to the publication of
a sectoral report that offers a comprehensive view of all savings banks' CSR related actions. At national
level, CECA participates in the CSR Forum of the Ministry of Labour and in the work of the Spanish
Congress, which recently produced a White Paper on CSR.
CECA also wanted to experience and take advantage of the synergies that arise on the fringe of public
institutions, for the benefit of the whole savings banks’ sector. For that reason, CECA became a key
partner (“Organisational stakeholder”) of the Global Reporting Initiative, a multistakeholder network
which drew up Sustainability Reporting Guidelines and enjoys a strong international reputation.
Furthermore, CECA is the only Spanish institution actively involved in the project to revise the financial
sector supplement which will be used as guidelines for developing sustainability reporting.
Based on their long track record, Spanish savings banks believe that, in the future, a company that
wants to move forward will have to integrate Social Responsibility criteria into its management. This
approach embodies the roots of our past success and our commitment to the future.

Contact: jmendez@ceca.es


Ten years of sharing innovations in the savings market

At the occasion of the publication of the            of the agency is to expand and facilitate access
study “ Ten years of sharing innovations             to pre-school and general education.
in the savings market” and the ten years
of training services offered by WSBI-ESBG,           In particular, the « sponsor a child » project
News & Views offers in each issue two inter-         consists in the identification and medical follow
views with representatives of the institu-           up on pregnant women in rural areas, whose
tions that have presented a concrete case            children will have little chances of accessing
study on savings mobilisation. After France          education. Moreover, the project aims at con-
and South-Africa in the January issue, it is         stituting a level of savings for the new born
now the turn of Thailand and Senegal.                child, during the seven years following the birth,
                                                     allowing him or her to access formal education.
                                                     And this is where Postefinances has initiated a
                                                     cooperation with the agency. According to this
                                                     agreement, Postefinances is responsible for the
                                                     management of the children’s accounts. We also
  Case study: Sponsoring children                    participate in the sponsoring.
  with difficulties towards a
  better future                                      Which future do you envisage for this type
                                                     of partnership?
  Interview with Mr. Diogal POUYE, General
  Director, PosteFinances                            The project « sponsor a child » ensures that
                                                     future customers of Postefinances will be identi-
                                                     fied from an early age, and that they develop a
                                                     savings culture. These future adults will develop
What is Postefinances’ mission in Senegal?           a long standing relation with Postfinances as
                                                     well as the postal network, leading to covering
Postefinances is the inheritant of banking serv-     future needs such as student credits or granting
ices of “La Poste” of Senegal. It is therefore       debit cards.
mainly responsible for ensuring the long term        Other structures such as primary schools, health
sustainability of the mission started by the         education foundations or NGOs would like to
National Savings Bank, which was created in          benefit from the same experience, with the
1920. The latter began operations through the        aim of developing a savings culture amongst
postal network, which constituted then, and          defavorised layers of the population. These
still does now, the most important distribution      types of partnership will allow on the one hand
network for financial services in our country. The   to develop national savings and on the other
mission of Postefinances consists in providing a     to respond to the savings bank’s social dimen-
strong contribution to collecting savings and to     sion via targeted actions to promote education,
provide access to financial services to the popu-    health and other social services.
lation countrywide. A second but equally impor-      At the international level, such partnerships
tant part of Postefinances mission is to raise the   could serve as examples to nourish relations with
awareness on the importance of savings.              institutions, NGOs and foundations in targeted
                                                     actions. Postefinances holds in this respect three
What is the objective of the project «Sponsor        major advantages. We have more than 80 years
a Child» (project Parrainage Bébé): How              experience as a solid financial institution captur-
does it promote development in Senegal               ing and managing savings; we boast a proven
and why are you involved ?                           experience in accompanying groups or associa-
                                                     tions and we have the most extensive network
This project was initiated by a government-          in the country covering even the most isolated
owned body called « Agence Nationale de la           areas where the poorest customers live, these
Case des Tout Petits » (children’s kindergarten)     being a priviledged target of NGOs, foundations
dedicated to children in rural areas. The mission    and similar organisations.


Ten years of sharing innovations in the savings market1
... continued from page 25

                                                      and many other prizes. This very succesful
                                                      product perfectly fits the nature of Thai people.
                                                      They are more motivated by the prospect of
                                                      winning a prize than by the prospect of receiving
                                                      a high interest on their savings.
  Case study: Providing multi-
  functional products and
                                                      Because of our enormous success, other banks
  fostering financial literacy
                                                      also offer PSCs, but do not achieve the same
                                                      results as we do, since we have a long standing
  Interview with Mr. Yongyuth TARIYO, Senior          tradition of over 50 years offering this scheme.
  Executive VicePresident, The Government             This means that PSCs have been held at GSB
  Savings Bank of Thailand (GSB)
                                                      generation after generation, becoming like a
                                                      kind of tradition for Thai people. Moreover, they
                                                      have proved very successful as presents amongst
                                                      friends and family. Financing the prizes does pay
                                                      off if one takes into account the massive capture
GSB operates under the Thai government’s              of domestic savings with this product.
mandate of stengthening the grassroots
economy. How does GSB reconcile this                  The school and community bank projects are
mandate with achieving financial and                  perfect examples of how financial literacy
institutional sustainability in the long term?        can be increased whilst enlarging the bank’s
                                                      outreach. Is GSB the only institution in
According to the government’s mandate and             Thailand undertaking these projects? And
to its own philosophy, GSB aims at preventing         how have these two projects impacted the
overindebtedness among the lower income strata        bank’s customer base?
of the population. In this respect, GSB prevents
abusive informal lending by offering microloans       GSB is the only institution in Thailand undertaking
to the grassroots economy. These loans make the       such projects. The school bank was created by
whole difference to the target segment while for      GSB to cater to the savings needs of students and
GSB they only represent a small percentage of         to reduce the cost of mobilising agents within
the total loan portfolio. Indeed, our customer        schools on a regular basis. Each school opens
base is very diversified and includes top of the      up a savings account within GSB and therefore
pyramid segments of the population as well            holds a single passbook with the students’
as corporates. In addition, GSB compensates           consolidated savings. GSB pays a 0.25% higher-
the cost of employing intensive manpower for          than-the-market rate to each passbook held by
serving this customer segment by charging             each school. The school then sets up its own
higher than market rates (1% per month).              operations, including internal book-keeping and
The grassroots customers served by GSB under          management. Interest rates given to students are
the People’s Bank project are generally financially   generally lower than market rates and any profit
excluded customers. It is important to mention        made in the overall operations is reinvested in
that GSB applies credit scoring techniques to         the school. GSB provides every participating
determine whether the customer will have              school with equipment, training and related
enough repayment capacity.                            material (such as IT equipment or passbooks).

Which is GSB’s most successful product?               Investigations have shown that over 80% of
                                                      students that saved under the school bank
Without a doubt, the most successful savings          scheme remained loyal to GSB after their
product in GSB’s portfolio is the Premium Savings     graduation. They also maintain a special relation
Certificate (PSC). These savings deposit services     with the bank in that they can access loans at
offer higher returns than other types of savings.     priviledged rates, provided the bank has access
The returns are given in the form of prizes. On       to the students savings history in the school.
February 20th 2007, a Bonus prize draw for PSC
holders was organised, on top of the regular          The community bank is somewhat different in
draws. Among the prizes several Toyota Camrys         that it is the continuation of the village fund,


a government programme under which the                  into productive investments. In order to gain
government would borrow funds from GSB to               a presence in the villages and as part of its
grant subsidies to certain villages (1.000.000          corporate social responsibility efforts, GSB has
Baht – approx. 22500 euro - per village). These         further involved itself in this project by providing
funds would be given to a person responsible            training and equipment to the villagers. In terms
for the village, who would invest these funds           of customer base impact, GSB is confident that
in the village’s overall benefit. The funds were        once they save enough money many of these
generally administered in the form of a village         villagers become GSB customers, mainly on the
cooperative. The results obtained would be              grounds of the trust, security and reputation that
assessed by the government as to whether                our institution has projected in their respective
further subsidies would be granted or not. It           villages.
was therefore in the interest of the villagers to
optimally administer and invest the resources           Contact: Emma.Fernandez@savings-banks.com

1   “Perspectives 53: Ten years of sharing innovations in the savings market”, available by sending an e-mail
    to info@savings-banks.com”

Postal Savings Banks Reform

                        Some 40% of the WSBI members are                              postal branch network can play an important role in
                        Postal Savings Banks, or have their                           improving access to finance in developing countries.
                        roots in the Postal environment.                              Building on this momentum, WSBI has issued a
                                                                                      “Roadmap for Postal Savings Banks Reform”.
                        This means that WSBI has
                        a rich experience in the field of                             This Roadmap lists a number of critical key success
                        financial services in a post services                         factors, if governments want to provide modern
                        infrastructure.                                               financial services via the postal branch network.

During frequent informal contacts and at the                                          Offering financial services via the branch network of
occasion of the annual WSBI Postal Savings Banks                                      the post is not only important from a pure business
Forum, this experience is broadened and enriched                                      point of view, i.e. to generate additional revenue for
on a continuous basis. Thanks to this expertise,                                      the overall postal organisation. It is also important
WSBI was requested by the Global Information and                                      in the Access to Finance debate. If one takes into
Communication Technology Department (GICT) of                                         account the fact that the total number of Postal
the World Bank to cooperate in the preparation of a                                   branches worldwide is approximately 600.000 -
Discussion Paper on: “the role of Postal Networks in                                  twice as much as all outlets from commercial banks
expanding Access to financial services”.                                              - this represents a unique distribution channel, even
                                                                                      in rural and remote areas, to reach the unbanked
This document is available at www.worldbank.                                          people in all countries.
org/ict or at info@savings-banks.com and concludes
that postal financial services offered through the                                    Contact: Mark.Bienstman@savings-banks.com

WSBI (World Savings Banks Institute) is one of the largest international banking associations and the only global representative of savings and retail banks. Founded
in 1924, it represents savings and retail banks and associations thereof in 89 countries of the world (Asia-Pacific, the Americas, Africa and Europe – via the European
Savings Banks Group).

It works closely with international financial institutions and donor agencies and facilitates the provision of access to financial sectors worldwide – be it in developing
or developed regions.

ESBG (European Savings Banks Group) is an international banking association that represents one of the largest European retail banking networks, comprising about
one third of the retail banking market in Europe.It represents the interests of its members vis-à-vis the EU Institutions and generates, facilitates and manages high
quality cross-border banking projects.

WSBI-ESBG members are typically savings and retail banks or associations thereof. They are often organised in decentralised networks and offer their services
throughout their region. WSBI and ESBG member banks have reinvested responsibly in their region for many decades and are one distinct benchmark for corporate
social responsibility activities throughout Europe and the world.

  Editor in Chief: Chris De Noose, Chairman of the Management Committee.
  For editorial comments and queries, please contact alessandra.pertot@savings-banks.com on 32 2 211 11 91.
  Lay-out: Malou Doumen
  This newsletter is distributed to 3000 people in over 90 countries, including all member organisations of the WSBI
  and ESBG.
  Published 4 times per annum by the joint secretariat of the WSBI and ESBG, Brussels, Belgium.

International not-for-profit associations
Rue Marie-Thérèse, 11  B-1000 Brussels Tel: +32 2 211 11 11                                                                    Fax: +32 2 211 11 99
info@savings-banks.com   www.savings-banks.com

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