Lloyds Banking Group was ordered by the European Commission to sell the branches

There was news last week that Lloyds Banking Group was ordered by the European Commission to sell the branches. The story is as follows:

The Co-op is close to scooping 632 branches from Lloyds Banking Group for a knockdown £1bn price tag - less than original market estimates.

The board of the mutual will meet next week and is expected to approve a plan to make staged payments to Lloyds over a number of years that would depend on performance.

When Lloyds, which is 40pc owned by the government, put the branches up for sale more than a year ago, it was expected to go for closer to £1.5bn.

The bank was ordered by the European Commission to sell the branches by November 2013 in order to comply with state aid rules after it accepted a £21bn government bailout.

Over the past 12 months bank shares have slipped, and the only other bidder for the branches, a cash shell called NBNK, is being wound up after Co-op and Lloyds entered exclusive talks for the second time last month.

The Lloyds package contains five million customers, which would triple the size of the Co-op's banking arm.

Due to the size of the deal the FSA had looked at regulating the whole of the Co-op, which contains a range of businesses from supermarkets to funeral parlours. However, it is understood to be moving towards just overseeing the banking operations.

My initial thoughts:
1. Not Nice
2. I think European Commission have no rights to sell bank branches even bank is 40% owned by the government.
3. This deal will be very muddy in near future.

Deposit checks by taking a picture of them on your smartphone

Canadian banks are so far behind in mobile banking. Mostly all major Canadian banks have new mobile banking apps for Apple iOS and Android smartphones today. However the functionality is still very basic. Like you can check your balances, bill payments and transfer fund.

eCheck Deposit : However other banks like Ally bank is going to introduce eCheck Deposit Via smartphones. This provides the flexibility to finally deposit checks by taking a picture of them on your smartphone and zapping it into the cloud.

Remote check deposit: Chase, Fidelity and PayPal provide ability to do remote check deposit via scanner.

But none of Big 5 banks in Canada provides this kind of mobile banking functionality. I’m so anxious to see this kind of functionality in Canada.

Some frequently used SAP Banking Services transactions codes

Some frequently used SAP Banking Services transactions codes(T-Codes):
BCA_ACBAL_ACC_S Execute Account Settlement

BCA_CN_ACCT_02 Change Account

BCA_CN_ACCT_02  Change Account to Remove Payout Date

BCA_CN_ACCT_03  Display Account

BCA_CN_KFG  Display Balances, Key Figures and Payment Item

BCA_DEH_EVENT_CHANGE Change PLM Document

BCA_DEH_EVENT_CRE_AC Create PLM Document for Account

BCA_PAYMITEM_CREATE Create Payment Item

BCA_PAYMITEM_MAINTN Reverse Payment Item

BCA_RC_FTD_COR_SNG Generate Maturity Notice

BCA_RC_FTD_FIX_SNG Fix Time Deposit

BCA_RC_FTD_REV_SNG Undo Time Deposit Action – Undo Calling

BCA_RC_FTD_REV_SNG Undo Time Deposit Action - Undo Fixing 

BCA_DATE_EOD_SET Set End of Day Date

BCA_DATE_POST_SET Set Posting Date

BCA_RC_FTD_DUECOR_PP Create Notices of Maturity _Generate Notice of Maturity (mass run)

BCA_ACBAL_REVS Reverse Interest Settlement

BCA_PAYMITEM_MAINTN Display Payment Item

BCA_PRENOTE_CREATE Create new Prenote

BCA_PRENOTE_DELETE Delete Prenote

BCA_PRENOTE_DISPLAY Display Prenote  

BCA_OR_TOC  Close Account

BCA_CN_ACCT_02_CLSD  Edit Closed Account 

BCA_OR_COP  Change Account Product 

BCA_OR_CAH  Change Account Holder 

BCA_CN_ACCT_21  Set Feature/Posting Lock

BCA_OR_DISB - Disburse Loan 

BCA_OR_CAPT - Capitalize Payments 

BCA_OR_PPC - Change Payment Plan 

BCA_OR_SKP - Skip Payments 

BCA_OR_EXTN - Extend Payments 

BCA_OR_DFRL - Defer Payments 

BCA_OR_WAIV - Edit Waiver 

BCA_OR_RENW - Manually Renew Loan 

BCA_OR_PAYF - Pay Off Loan Early 

BCA_OR_CNCL - Cancel Loan 

BCA_OR_RESC - Rescind Loan

BCA_BL_AL_DISP_SCHED - Display Billing Dates 

BCA_BL_AL_DISP_ITEMS - Display Billing Items 

BCA_BL_AL_REV_LAST - Reverse Account Billing for Account   

FSPRD3_Y  Display Account Product  

/N/FSPDM/CREATE_ADD Create One-Time Payment

/N/FSPDM/DIRECT_LIST Create Payment Agreement (Registered Plans only)

/N/FSPDM/CREATE_ADD  Create One-Time Payment

/DMLCA/MIN_CHECK_RRIF Min Check and Reconciliation

/DMLCA/PDM_MIN_ADJ Adjustment of Standing Order

/N/FSPDM/RAMOUNT_RUN Calculate Plan Key Figures

MIN_AMT_CHNG Min Amount Change

SQ01_Balance Daily Work 

/N/DMLCA/MC_REASSIGN_MC Reassignment (Flip)

CMS_INS_01 - Create Insurance Policy 

CMS_INS_02 - Change Insurance Policy 

CMS_INS_03 - Display Insurance Policy 

A credit score alone may not sufficient to predict default risk

During the recent economic meltdown, many banking and securities institutes realized that just a credit score alone may not sufficient to predict default risk. The multifaceted economic environments require additional KPI (Key Performance Indicator) to correctly forecast default. Banks should develop investigative model and process flow to evaluate the default tendency of each loan and to find a concrete strategy to know if a loan falls into arrears. By identifying the KPI, they can appropriately mitigate risk and resources.  

My recommendations model includes the following KPI, but that also depends on what’s your business model is:

1.     Credit score: Clearly we can’t ignore credit scoring; this is one of the important parameter in predicting default risk.

2.     Single Name Common Risk: SNCR is vital factor, which help banks to find a risk mitigation measurement. In SNCR banks can list out single customer with many loans along with default loan.  

3.     Borrower demographic: off course this can be bit controversial, however I think this really help in correctly forecast default.

4.     Products: do you ever analysis the history of your products. Some products are so favorable to default tendency.

5.     Evaluate customer standing: based on your business rules it consists of reviewing the customer figures, like total commitment, collaterals… etc. Mostly banks do this process after loan become default but I recommend it should be done periodically.  

Banks can add and change more KPI as per their business. SAP Banking covers all these KPI and others.

Cash flow calculator in SAP Banking Services

In this blog I want to discuss little of function and usage of Cash Flow Calculator in banking services from SAP. Before we get into functions and usage of Cash Flow calculator we need to understand what is Cash Flow Calculator.

The Cash Flow Calculator is a controller which controls the calculations of Interest, settlement charges, installments, effective interest, transaction charges, event charges and obviously Cash Flows. So in other words the foundation for interest and charge calculation in SAP banking services is the Cash Flow Calculator.

All your “financial conditions” gets and saves all data required for calculation and assessments of transactions is bring in to the cash flow calculator, so that calculations can be made. Cash flow calculator decides the results.

SAP created Cash Flow calculator exclusive for banking services. Only application other than banking services use Cash Flow Calculator is FIMA. In banking Deposits Management, Loans Management and Bank Analyzer use the Cash Flow Calculator.