Banking and Financial Services

January 22, 2011

Grameen America to open California branch with Cheveron, Wells Fargo investments

Chevron Corporation has committed $1 million to Grameen America to fund the launch of its West Coast branch in the San Francisco Bay Area. Grameen America plans to help as many as 250 local borrowers and distributing more than $300,000 in microloans the first year of operation through its Bay Area branch. Grameen America will target low-income clients who cannot access traditional credit.

Since 2009, Chevron has committed $7 million each year through the California Partnership, increasing Chevron’s overall investment in the state to approximately $28 million year-over-year. Chevron has also partnered with Kiva.org and the Opportunity Fund to help support entrepreneurs in California and around the world.

“The economic slowdown has made it especially difficult to secure funding for Bay Area small businesses and entrepreneurs, often a catalyst for job creation and economic growth for the state,” said Stephen Vogel, CEO of Grameen America. “Chevron’s support will help hundreds of entrepreneurs realize their dreams of starting their own businesses.”

In addition to the investment by Cheveron, San Francisco based Wells Fargo has also invested $1 million into Grameen America to support the nonprofit microlender’s expansion into the Bay Area.

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February 9, 2010

Paypal suspends payment to India without explanation

PayPal, the online payment service provider that is a owned by eBay of San Jose, has shocked Indian nationals who rely on the service by suspending payment transactions to and from India for more than a week. Almost nothing was given in explanation for this abrupt action except a vague blog post on their website by Anuj Nayar, a PayPal spokesman:

Personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service

PayPal executives have been unavailable for comment on specific reasons why the service was discontinued. There is speculation that this may have something to do with new Indian government rules aimed at preventing money laundering. Last November, the Indian government introduced rules requiring financial institutions and other intermediaries to verify the identity of clients carrying out international money transfers.

Paypal has not just been blocking all their money transfer but has also not letting the Indian account holders withdraw money they already have in their accounts. For the past week, merchants have been unable to withdraw funds in Rupees to local Indian banks. shocking many Indians who have relyed on the service. The blocking started on January 28th and Paypal will only say that it is working to resolve the current situations in “the shortest span of time.”

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February 3, 2009

Wells Fargo planning lavish Las Vegas casino junkets

Wells Fargo & Co., which received $25 billion in taxpayer bailout money, is planning a series of corporate junkets to Las Vegas casinos this month, according to a report by AP and the San Francisco Chronicle. They have justified this by saying it is part of culture”. They won’t tell anyone what they did with our $25 billion, but as far as we know, they are still not using this money to help American companies:

Wells Fargo, once among the nation’s top writers of subprime mortgages, has booked 12 nights at the Wynn Las Vegas and its sister hotel, the Encore Las Vegas beginning Friday, said Wynn spokeswoman Michelle Loosbrock. The hotels will host the annual conference for company’s top mortgage officers.

The conference is a Wells Fargo tradition. Previous years have included all-expense-paid helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 employees and guests.

“I was amazed with just how lavish it was,” said Debra Rickard, a former Wells Fargo mortgage employee from Colorado who attended the events regularly until she left the company in 2004. “We stayed in top hotels, the entertainment was just unbelievable, and there were awards — you got plaques or trophies.”

While the nation’s recession has led other banks, such as Bank of America, to cancel employee recognition outings, Wells Fargo has not.  “Recognition events are still part of our culture,” spokeswoman Melissa Murray said. “It’s really important that our team members are still valued and recognized.”

Corporate retreats have attracted criticism since the bank bailout last fall. Congress scolded insurance giant American International Group Inc. for spending $440,000 on spa treatments for executives just days after the company took $85 billion from taxpayers.  AIG has since canceled all such outings.

Beginning Feb. 25, Wells Fargo’s insurance division is hosting a 40-person team meeting at the Mandalay Bay Hotel in Las Vegas, according to the Las Vegas Convention and Visitors Authority.  Murray did not immediately have details about the size or cost of the events or what was planned….

Rooms at the Wynn and the Encore are consistently among the most expensive in Las Vegas. The $2.3 billion Encore opened in December as sister hotel to the Wynn. Its decor includes a 27-foot Asian dragon made from 90,000 Swarovski crystals and artwork by Colombian artist Fernando Botero. One of the restaurants features Frank Sinatra’s 1953 Oscar.  Both properties have high-end retail stores, including Manolo Blahnik at Wynn and Chanel at Encore.

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January 7, 2009

San Francisco Federal Reserve names new Chairman and Deputy

The Federal Reserve Bank of San Francisco has named T. Gary Rogers as new chairman and Doug Shorenstein was named deputy chairman. Rogers is chairman of Levi Strauss & Co. and is the immediate past chairman of Dreyer’s Grand Ice Cream Inc. Rogers also sits on the boards of the Shorenstein Properties, Stanislaus Food Products, and the UCSF Foundation. Shorenstein is chairman and chief executive officer of Shorenstein Properties. He joined the family business in 1983 and became chairman and CEO in 1995. The Federal Reserve Bank of San Francisco provides wholesale banking services to financial institutions throughout the nine western states.

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November 23, 2008

CalPERS cuts 80 private equity funds

CalPERS has sold 80 private equity partnerships with a net asset value of $2.1 billion on the secondary markets, according to a report in Pensions and Investments

Leon G. Shahinian, senior investment officer, alternative investment management group, said in an interview that the $189.9 billion California Public Employees’ Retirement System, Sacramento, eliminated 60 partnerships from its alternative investment management program in July and August, he said. UBS assisted in the selection and sale of the private equity fund interests. Mr. Shahinian wouldn’t identify the funds or give selling prices. But according to CalPERS’ June 30 Alternative Investment Management Program Fund Performance review, funds missing from the June 30 list that had appeared on a year-end list run the gamut from buyout to venture capital to a few distressed debt funds and include the following: Technology Partners Fund VII, Thomas Weisel Capital Partners LP, Ticonderoga e-Services Fund II, TL Ventures V, Weston Presidio Capital IV, EuclidSR Biotechnology Partners, JPMorgan Partners Global, Thomas Weisel Global Growth Partners B, Thomas Weisel Strategic Opportunities, Provender Opportunities Fund II, Thomas Weisel Global Growth Partners II, Thomas Weisel Healthcare Ventures, Alta California Partners Fund II, Kohlberg Investors V, OCM Opportunities Fund V, OCM Principal Opportunities Fund III, Paladin Homeland Security Fund, Palomar Ventures III and Belvedere Capital II.

London-based private equity research firm Preqin estimated that funds sold for $2.1 billion in late 2007 in the secondary market — which trades private equity stakes between the pension funds and endowment funds that want to exit or buy. Preqin determined that the net asset value of funds sold equates to 9 percent of CalPERs overall portfolio, and calculates the remaining value of its private equity portfolio at $21.5 billion.

Calpers didn’t confirm Preqin’s calculations. The pension fund said it couldn’t specify how much more it gained from the sale in 2007, when the market was peaking, than if it had tried to sell it today.
But Leon Shahinian, Senior Investment Officer at CalPERS private equity program, said via an email from CalPERS spokesman: “In today’s market, we would have had hundreds of millions in losses.”

The pension fund said that its strategy dated back to late 2005, when its Alternative Investment Management program (AIM) presented a strategic plan to the CalPERS Board to lessen the administrative burden of having so many funds to oversee, and to optimize long-term private equity performance. In 2006, it hired UBS Investment Bank to scrub its private equity portfolio and develop a list to sell. At that time, it had investments in several hundred funds.

The inital sale of the $2.1 billion assets — which were sold in the secondary market and not all in one go — was in the third quarter of 2007, when the Dow was ranging between 13,000 to 14,000.
CalPERS said there were 80 partnerships in this portfolio and 60 different general partnership relationships, diversified over various private equity sectors such as venture capital, distressed, buyouts, etc. Sales were completed in the fourth quarter of 2007.

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Wells Fargo now the Nation’s largest bank

San Francisco-based Wells Fargo is now the nation’s largest bank in terms of value, with a market cap of $75.9 billion. In recent New York Stock Exchange trading, Wells moved ahead of J.P. Morgan Chase, which is now worth $75 billion. As reported in Bloomberg News, the San Francisco bank achieved the largest-bank status by being a contrarian in recent years, refusing to purchase mortgage assets at the peak of the market, issue millions of credit cards to those not already banking at Wells, trust that subprime paper blended together wouldn’t blow up or aspire to become a major player in investment banking, among other things. After Wells acquires East Coast rival Wachovia, it will also have the nation’s largest branch network. While there are other measures of bank size, Market cap reflects investor opinion on a bank’s operations and outlook and is considered the most reliable indicator.

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November 19, 2008

Bank of America donates $900,000 to Bay Area nonprofits

Bank of America has awarded grants totaling $900,000 to Bay Area nonprofits.  As reported in San Francisco Business Times, four organizations won $200,000 unrestricted grants as part of Bank of America Charitable Foundation’s Neighborhood Excellence Initiative. They are Community Housing Partnership and Renaissance Entrepreneurship Center in San Francisco and Urban Gardens and Oakland Ballet Company in the East Bay.  In addition to these large unrestricted funds winners, the bank honored five community leaders in both San Francisco and the East Bay with a $5,000 donation to the nonprofit of the winner’s choosing. The program also honors local high school students, five from both San Francisco and the east Bay with a paid eight-week internship and other leadership training support.  Starting in 2009, the bank has a 10-year goal to give away $2 billion to community nonprofits.

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November 18, 2008

PayPal starts supporting Mexican peso

Online payment service PayPal, a subsidiary of San Jose-based eBay Inc. has announced that it has expanded into Mexico. Mexican buyers will now be able pay for online purchases using their credit cards or bank accounts with pesos as currency. According to a report in the San Jose Business Journal, the peso is the first Latin American currency to be added to the PayPal system. PayPal also enables payments in the U.S. dollar, Canadian dollar, Australian dollar, euro, British pound, Japanese yen, Chinese yuan, Czech koruna, Danish lrone, Hong Kong dollar, Hungarian forint, New Zealand dollar, Norwegian krone, Polish zloty, Singaporean dollar, Swedish krona, Swiss franc and Israeli new shekel. PayPal is now accepted in 190 countries around the world, and the company said users in Mexico can now shop at retailers that include including, Mixup, Sears, Match.com, Blockbuster, Best Day Travel, PlazaVIP, and PC en Linea “PayPal’s goal is to provide consumers a secure, fast and convenient way to pay and get paid online and to give online shoppers in Mexico more places to shop quickly and securely,” said Fernando Moreno, director of PayPal Latin America. “The launch of PayPal Mexico is a significant step towards our next phase of growth.”

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November 15, 2008

Goldman Sachs conflict alleged in California bond sales

Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds this year despite having collected millions of dollars in fees to help the state sell some of those same bonds. According to a report in the Los Angeles Times, the giant investment firm did not inform the office of California Treasurer Bill Lockyer that it was proposing a way for investment clients to profit from California’s deepening financial misery. In Sacramento, officials said they were concerned that Goldman’s strategy could raise the interest rate the state would have to pay to borrow money, thus harming taxpayers. While it is not clear whether this is technically illegal, it is what gamblers call, “playing both ends against the middle” and California has been highly sensitive to the possibility of any major corporation gaming the system ever since Enron ran off with the entire State treasury in 2001. The full article can be read at this link.

Filed under Banking and Financial Services, California Economy, z9-Uncategorized by

August 13, 2008

Mitsubishi offers $3 billion for Union Bank of California

Japan’s Mitsubishi UFJ Financial Group has offered to purchase the 35 percent stake in San Francisco based UnionBanCal- parent of Union Bank of California, that’s held by the public. As reported in the San Francisco Business Times:

Japan’s largest bank my market cap sees the Union Bank branch network as a nice launch pad for its own banking ambitions in America. “We view this transaction as a first step of our growth strategies in the United States, and we will achieve greater management flexibility and aim to further strengthen our presence,” MUFG said.

MUFG unsolicited offer calls for the Japanese bank to pay $63 per share, or $2.7 billion, for the UnionBanCal shares in public hands. That was up from a previously undisclosed offer of $58 per share that the San Francisco bank’s board rejected in June as too low. The proposed transaction values the entire bank at $8.8 billion. Investors anticipate that the purchase price may be nudged higher, pushing the bank’s shares up 13 percent Aug. 12 to $65.50 at the close of New York Stock Exchange trading.

UnionBanCal operates 330 branches in California, Oregon and Washington state. Union Bank in recent years has adopted a strategy of courting business owners and affluent customers rather than trying to go head-to-head against California’s two-largest banks, Bank of America and Wells Fargo. The numbers don’t work for Union Bank to engage in that costly battle, given the larger banks’ ubiquitous branches and ATMs.

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June 17, 2008

Wells Fargo gives $100K to Hispanic chamber

Wells Fargo made a $100,000 grant to the California Hispanic Chambers of Commerce, of which $25,000 will be used to start a CHCC Foundation. Since 2000, the bank has given more than $1 million to the chamber. The CHCC says it represents the interests of more than 600,000 Hispanic-owned businesses and more than 60 Hispanic chambers and business organizations throughout California.

Filed under Banking and Financial Services, Business Associations, Governor Schwarzenegger, Philanthropy by

October 9, 2007

China Bank buys stake in United Commercial Bank

UCBH Holdings Inc., the parent company of United Commercial Bank, agreed to let China Minsheng Banking Corp. acquire a 9.9 percent stake in UCBH and have an option to buy 20 percent of the bank. According to report in San Francisco Business Times, this is “the first Mainland Chinese bank to successfully make a strategic investment in a U.S. bankment in a U.S. bank.” UCBH, based in San Francisco, with $10.7 billion in assets, several reasons for pursuing the investment: “the move increases UCBH’s access to capital, enhances the bank’s platform to conduct cross-border business and better positions UCBH for growth in China while becoming more competitive in the United States”. Minsheng, founded in 1996, has a market cap of $30 billion. The bank operates almost 300 branches and 1,370 ATMs in the wealthy coastal areas of China. UCBH itself announced plans to buy a bank in China earlier this year- Shanghai’s Business Development Bank Ltd. The Times reports that proceeds from this transaction will be used to fund that acquisition.

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June 6, 2007

Bank of America names California president

Bank of America Corp. has named Janet Lamkin, currently president and CEO of the California Bankers Association, as its California state president effective June 25, 2007.  Lamkin previously spent 10 years with Bank of America, where she led corporate communications and public affairs for the company, including the Bank of America Charitable Foundation. She left the bank in 2004 to lead the CBA.  As California state president, Lamkin will oversee Bank of America’s presence across all California markets and will provide state-level leadership for 15 California market presidents who represent the bank in local communities.  While no longer headquartered here, Bank of America is still the largest bank in California.

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May 23, 2007

Fremont sells real-estate unit for $1.9 billion

Fremont General Corp., whose loans to risky borrowers helped trigger the subprime mortgage crisis, will sell its commercial real-estate unit for $1.9 billion and bring in new managers led by billionaire banker Gerald J. Ford, according to a report in Bloomberg. IStar Financial Inc., a real-estate lending and leasing company, will buy the commercial loan operation. Fremont also will get $80 million by selling a minority stake in the remaining enterprise to investors headed by Ford, who once ran Golden State Bancorp Inc. Shares of Santa Monica, California-based Fremont surged 41 percent. The cash infusion lets Fremont stay in business as a retail bank with 22 branches in California. The Federal Deposit Insurance Corp. told Fremont in March to stop making home loans to unqualified borrowers and said executives didn’t effectively manage risks for mortgages and the commercial loans. Ford’s team helped build Golden State into the second-biggest U.S. thrift with 352 branches until it was sold in 2002 to Citigroup Inc.

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May 16, 2007

Allstate pulling out of California

“Allstate Corp., the state’s third-biggest home insurer, will stop selling new residential policies in California. The Northbrook, Ill., company announced the July 1 cutoff Thursday afternoon, saying it needs to better manage the risk of potential losses from wildfires and earthquakes that might strike the Golden State. ‘Allstate is taking responsible action now so that the company will continue to be in a strong position to help protect customers in California and across the country,’ said Robert Barge, the insurer’s field vice president for California… Advocates for policyholders say they want California Insurance Commissioner Steve Poizner to take a tough stance on Allstate if the company insists on limiting its California exposure. They want the commissioner to prohibit the company from returning to the market for at least 10 years. ‘It would be completely unfair to California customers if Allstate tries to treat the California market like an accordion, coming in when business is good and then walking out,’ said Douglas Heller, president of the Foundation for Taxpayer & Consumer Rights in Santa Monica.”

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April 17, 2007

Bank of America to market credit cards in China

“Bank of America Corp. will work with China Construction Bank Corp. to market credit cards in China… BofA will own 37 percent of the joint venture and launch the co-branded cards. BofA will buy the stake after approval from the Chinese government, which plans to change how it regulates joint ventures. ‘For Bank of America, this is a strategic collaboration in one of the fastest-growing economies in the world,’ said BofA CEO Ken Lewis… With a 20 percent market share, China Construction is the second-largest credit-card issuer in China. It has issued a total of 6.34 million credit cards, with 3.22 million cards issued in 2006. In June 2005, BofA bought a 9 percent stake in China Construction in a $3 billion deal. It was the largest purchase of stock in a Chinese bank by an overseas lender. BofA has an option to increase its investment to 19.9 percent. The two banks have since started more than 20 partnership projects, including no-fee cash withdrawals from BofA’s ATM machines in China and improved call centers and retail branches. Bank of America, California’s largest bank, was founded in San Francisco in 1904 as the Bank of Italy by A.P. Giannini. The bank was bought in 1998 by NationsBank, which took the Bank of America name and moved the headquarters to Charlotte, N.C.”

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March 29, 2007

United Commercial Bank may buy Shanghai’s Business Development Bank Ltd.

“United Commercial Bank plans to make history by purchasing a Shanghai financial institution and becoming the first Chinese American community bank to offer a wide range of services in China. With Business Development Bank Ltd., which United Commercial said Tuesday that it had agreed to buy for $205 million, the San Francisco-based bank could offer its customers a one-stop shop in the U.S. and China. Analysts said the purchase, which must be approved by regulators in both countries, would put pressure on United Commercial’s chief competitors, East West Bancorp Inc. and Cathay General Bancorp, to step up their activities in China. East West and Cathay have been more focused on expansion in California and in cities elsewhere in the U.S. with large Chinese American communities. The opening of China’s financial sector, a condition of the country’s entry into the World Trade Organization, has sparked fierce competition even though operating a bank in China carries notable risks, such as an uncertain regulatory climate, a lack of transparency and volatile real estate and stock markets… The Shanghai bank, which would become a unit of United Commercial, operates a branch in the city of Shantou and a representative office in Beijing. United Commercial operates 66 U.S. locations, mostly in California, plus a branch in Hong Kong and representative offices in Shanghai and Shenzhen, China, and in Taipei, Taiwan. The Shanghai bank is currently allowed to lend to only foreign-invested companies or individuals, but Downing said United Commercial would apply for permission to expand that service to locals.”

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March 13, 2007

Private equity industry not understood by lawmakers

That’s according to a brief report in San Francisco Business Times: “The new Private Equity Council, created last year to foster support among policymakers, says the industry is misunderstood. The group’s formation reflects the industry’s rising profile on both Wall Street and Capitol Hill. The Bay Area has long been a global center for venture capital and private equity. The group established by 10 of the largest private equity firms including TPG, formerly Texas Pacific Group, which maintains an investment arm in San Francisco. Kohlberg Kravis Roberts and the Blackstone Group also are founding members. “

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Subprime lender New Century may be going down for the count

“New Century Financial Corp. said today all of its lenders have cut funding or announced their intent to halt financing after the subprime mortgage lender failed to make payments, pushing the company further toward bankruptcy. ‘The company and its subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under the company’s existing financing arrangements,’ New Century said in a filing with the Securities and Exchange Commission.”

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March 9, 2007

California Banks failing small business

“Not one of California’s 15 major business banks did a good job of lending to small businesses, making it difficult for these critical businesses to access capital and provide much needed goods, services and employment in lower income neighborhoods” according to a report by the California Reinvestment Coalition.

Among its findings: Citibank was the only bank that did a satisfactory job in all six California counties, California’s largest bank- Bank of America offered the least access of any bank and received a failing grade for its small business lending, Wells Fargo Bank received a C grade- it lent more than its share of community deposits but was not good at lending to small businesses in California’s lower income neighborhoods, In Los Angeles U.S. Bank got a perfect score in offering access to small businesses, In contrast City National Bank received an F in its headquarters county of Los Angeles.

“This study highlights the institutional barriers that small and minority-owned businesses continue to face when trying to expand their businesses. Since small businesses are the key to opportunity and hope in lower income communities, these barriers cut the heart out of the American ideal of equal opportunity,” said CRC Executive Director Alan Fisher. “This is a situation that must be remedied by major financial institutions,investigated by the U.S. Congress and scrutinized by the federal regulators who are responsible for overseeing these lenders.”

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