Page 1

BANKING NEWS FLASH 1st October 2013

Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 7 Technology .......................................................................................................................... 13 Strategy .............................................................................................................................. 17

2|Sutherland Insights Banking News Flash 01102013

Sales & Marketing Optimal Payments and Daon partner on biometric payments 01 October, 2013 | Finextra Optimal Payments, a leading global online payments provider, and Daon, a leading identity services provider, today announce that they have entered into an agreement to work together strategically on solutions that will leverage Daon's biometric authentication system with Optimal's NETBANX and NETELLER payment services. The combined capabilities are especially important for market sectors where a high degree of customer identity certainty is required, such as regulated gaming, governmental, and financial services. Since 1996 tens-of-thousands of businesses have relied on Optimal's payment services to allow acceptance of credit/debit cards, bank debits and alternative payments from around the world. Delivered from the cloud, the white-label services process over $11 billion a year and include merchant accounts, a secure payment gateway, multi-channel acceptance, configurable fraud rules, and customer accounts and mobile wallets. Transaction certainty is maintained at all times by comprehensive risk services, geo-redundant data-centres and PCI-DSS Level 1 certification. Certain market sectors require many businesses to always have a high degree of KYC (Know-YourCustomer) certainty over who they are dealing with. The Daon IdentityX biometric 2-factor authentication service, which was recently reviewed by the U.S. Senate Consumer Protection Subcommittee, allows the in-stream online re-verification of individuals as part of payment transaction flows, making it easier for business operators to meet their regulatory obligations. Joel Leonoff , President and CEO of Optimal Payments, commented: "Optimal Payments is at the forefront of technology innovation and Daon's world-class services are very complimentary to both the segments that we service and the kind of products we offer merchants and banks, such as remote payments, mobile wallets and cross-border remittance." Tom Grissen , CEO of Daon added: "Optimal Payments is an innovator in the customer-not-present payments sector and so we're delighted to be able to work with them to offer the market 'homeland security' grade identity services embedded right into payments."

Al Mawarid Bank unveils new Vibe credit card 01 October, 2013 | BBR Lebanese commercial lender Al Mawarid Bank has rolled out its new MasterCard branded credit card, in collaboration with Megastores of Lebanon, with a strategy to offer better services to its customers.

3|Sutherland Insights Banking News Flash 01102013

Dubbed as Vibe card, the new card is loaded with an array of facilities, and can be used at any ATM or point-of-sale, reported. Al Mawarid Bank chairman and general manager Marwan Kheireddine told the news portal, "Our goal is to ensure that our customers continue to enjoy an array of premium services. "We are determined to keep this strategy and bring the best offerings to the Lebanese market." Vibe card holders will receive a great deal of advantages and discounts at any branch of Megastores of Lebanon, according to the bank. The bank further provides three-month interest free on purchases at Virgin Megastore, fraud insurance, purchase protection insurance, prior sales notifications, an upgraded loyalty program, as well as exclusive promotions. Its Platinum card series offers exclusive privileges, including airport lounge access, extended warranty and birthday gifts. Set up in 1980, Al-Mawarid Bank provides customers with personalized assistance and high quality products.

ING may offload 43% stake in Vysya Bank 30 September, 2013 | BBR Amsterdam-based financial services conglomerate ING is planning to dispose of its 43% stake in Vysya Bank, as the lender finds it difficult to expand its banking operations in the country, amid fierce competition from local players. The Dutch company has been divesting its banking and insurance business in Asia and Europe to pay back the state aid it received during the financial crisis of 2008. Persons familiar with the development were quoted by the Economic Times as saying that the bank will exit the Indian banking business, which includes retail, corporate and treasury, to concentrate on corporate banking. It is expected that the deal may fetch approximately $600m at current market prices for the Netherlands company, which is looking to boost its core capital to comply with the Basel III regulations. The sources further said that the deal is in primary stage and it may or may not materialize. Some sources also said that Kotak Mahindra Group is likely to be among preferred bidders for the stake put up for sale. During the 2008financial crises, ING received â‚Ź10bn in bailout package, and since then it has been selling non-core assets globally

4|Sutherland Insights Banking News Flash 01102013

Fortune, Yakima National set to merge with HomeStreet 30 September, 2013 | BBR Fortune Bank's shareholders, a Washington state-chartered bank, and Yakima National Bank, have voted in favor of a merger with HomeStreet Bank, which is still pending receipt of regulatory approvals. In July 2013, HomeStreet entered into two separate merger agreements to acquire Fortune Bank, and Yakima National Bank, for nearly $27m and $10.3m, respectively. The proposed transaction is likely to complete during the fourth quarter of 2013, pending regulatory approvals. Following completion of the acquisition of the two banks, along with the pending acquisition of two retail deposit branches from AmericanWest Bank, will increase the net number of HomeStreet retail deposit branches to 29. Commenting on the agreement, HomeStreet Bank president and CEO Mark Mason said that beyond the growth in customers, loans and deposits, these acquisitions bring David Straus, CEO of Fortune Bank, and Jeff Newgard, CEO of Yakima National Bank. Straus commented, "We will have a wider range of products and a greater capacity to lend, and we will also be able to continue the same great customer service and active community involvement." Fortune Bank manages two branches in Seattle and Bellevue with total assets of nearly $142m, loans of $103m and deposits of $121m, as of 30 June 2013. Yakima National Bank currently operates four branches in Yakima, Selah, Sunnyside and Kennewick in Central and Eastern Washington, with total assets of $125m, loans of $94m and total deposits of $114m as of 30 June 2013

Basware collaborates with MasterCard to launch e-payment service 24 September, 2013 | BBR Basware, an e-invoicing and purchase-to-pay services provider, has joined hands with MasterCard to introduce an electronic payment service, which ensures suppliers are paid fast upon invoice approval, while extending payment terms for buyers. The new payment technology aims to prevent financial performance issues caused by long payment cycles, mainly when dealing with costly international payments. Through the new single global payment service, MasterCard and Basware will enable businesses to eliminate paper-based payments, labor-intensive processes, poor remittance data and low

5|Sutherland Insights Banking News Flash 01102013

confidence in cash flow management, which can even trigger supply assurance issues. The e-payment service will use Basware Commerce Network, which is linked to the MasterCard global payment network and leverages its unique suite of payments products, to offer instant cost and efficiency savings to all companies. Basware CEO Esa Tihil채 said that the service will deliver process efficiencies, to one that is able to deliver transformational commercial benefits to the business. "Solutions like this are the present and future of every corporation's financial strategy and this development has the potential to revolutionise business payment, which can even impact the economy at large," Tihil채 added. Basware's Commerce Network already processes more than 50 million invoices annually, involving over $420bn across 900,000 trading partners in 100 nations. It offers open, secure, cloud-based purchase-to-pay and e-invoicing services to organizations of all sizes, so that they can achieve better efficiencies in procurement, accounts payable and accounts receivable

6|Sutherland Insights Banking News Flash 01102013

Finance Wells Fargo to pay $869m to Freddie Mac to settle loan claims 01 October, 2013 | BBR Wells Fargo has agreed to pay $869m penalty to Federal Home Loan Mortgage Corporation (Freddie Mac) to settle substantially all repurchase liabilities on faulty loans sold to the government-backed mortgage firm prior to 1 January 2009. The settlement was reduced by approximately $90m due to credits for loans that Wells already had repurchased; subsequently it paid a one-time cash payment to Freddie Mac of nearly $780m. The deal was inked on 27 September, following a similar agreement between Citigroup with Freddie Mac, whereby the US lender agreed to reimburse $395m to settle the claims on nearly 3.7 million mortgages sold between 2000 to 2012. In July this year, Citigroup agreed to pay $968m fine to settle repurchase claims by Fannie Mae, while Bank of America (BofA) agreed to reimburse $3.6bn in January 2013. JP Morgan Chase is engaged in negotiations with US federal and state regulators to settle all the criminal and civil investigations into its residential mortgage-backed-securities (RMBS) wrongdoings, for a penalty of $11bn, media sources reported. The US Federal Housing Finance Agency (FHFA) accused the bank for willingly selling the subprime loans packaged into securities to Fannie Mae (FNMA) and Freddie Mac (FMCC), despite knowing that the assets were faulty in nature. In 2011, FHFA filed 18 lawsuits against financial organizations involving $200bn claim of residential mortgage backed securities (RMBS) sold between 2005 and 2007 to Fannie and Freddie by giving materially false statements about the quality of mortgages. During the financial crisis of 2008, Fannie Mae and Freddie Mac busted, subsequently US government infused nearly $187.5bn, to keep them floating. Currently, both are being managed by the FHFA

Money transfer service Azimo scores $1m funding 30 September, 2013 | Finextra London-based online money transfer service Azimo has secured more than $1 million in a seed funding round led by as it prepares to expand into Europe.

7|Sutherland Insights Banking News Flash 01102013

Launched last year, Azimo is bidding to take a slice of the huge remittance market, letting users send money to friends and family in 190 countries via the Web, mobile app or Facebook. Recipients can have the money sent straight to their bank account, a local cash collection site or to a mobile wallet as top-up credit. With a typical charge of between one per cent and two per cent, the start-up claims to be far cheaper to use than the more established players, such as Western Union, PayPal and the banks, which currently dominate the $500 billion global online money transfer market. Michael Kent, founder and CEO, Azimo, says: "Every year, people are wasting more than £50 million by paying over-the-top remittance fees. That's something Azimo is addressing, making it simpler and cheaper than ever to transfer money." Technology-focused PE firm is making the investment out of its German-based European office and is joined in the funding round by existing investors, including CapitalOne founder Matt Cooper. Secretary of State for Business, Innovation and Skills, Vince Cable, welcomed the news, saying: "This German investment into a British start-up demonstrates that the UK has the infrastructure, the skills base and the competitive edge to capitalise on our expertise in both financial services and digital technology and UKTI is working to ensure that the UK is leading the way in the FinTech revolution." During the summer, Kent spoke to Finextra about the service and how it has managed to "hack" into the banking network

USA Technologies swings to Q4 net profit 27 September, 2013 | Finextra USA Technologies, Inc. (USAT) ("USAT"), a leader of wireless, cashless payment and M2M telemetry solutions for small-ticket, self-serve retailing industries, today reported results for the fourth quarter and full fiscal year ended June 30, 2013. Fiscal 2013 financial highlights, compared to the prior year, included: •

29% increase in license and transaction fee revenues to $30.0 million, representing 84% of total revenues for the 2013 fiscal year;

24% increase in total revenues to $35.9 million;

Adjusted EBITDA of $5.8 million up from an Adjusted EBITDA loss of ($2.8) million;

GAAP net income of $0.9 million from a GAAP net loss of ($5.2) million; and,

Non-GAAP net income of $0.9 million, up from a non-GAAP net loss of ($3.8) million (fiscal 2013 excludes $0.3 million of Other income for change in fair value of warrants and $0.3 million in proxy expenses and fiscal 2012 excludes $1.8 million Other income for change in fair value of warrants and $3.2 million in proxy and separation expenses).

8|Sutherland Insights Banking News Flash 01102013

Total connections to USAT's cashless payment and M2M telemetry service, ePort Connect®, grew by 30% during fiscal 2013, with 18,000 net connections achieved in the fourth quarter. In addition, USAT's customer base expanded to 5,050 customers as of June 30, 2013, a 53% increase from the prior fiscal year, with 525 new customers in the fourth quarter. After accrual for preferred dividends, net earnings per common share, diluted, for fiscal 2013 was $0.01 compared to a net loss per common share of ($0.18) for Fiscal 2012. On a non-GAAP basis, net income per common share, diluted, was $0.01 for fiscal 2013, improving from a net loss per common share of ($0.14) for fiscal 2012. Cash generated from operations was $6.0 million for fiscal 2013 compared to $0.08 million for fiscal 2012, an increase due primarily to substantial improvements in operating performance over the course of fiscal 2013 when compared to 2012. Cash and cash equivalents stood at approximately $6.0 million as of June 30, 2013. Stephen P. Herbert, USA Technologies' chairman and chief executive officer, commented, "During fiscal 2013, we achieved tremendous improvements in profitability, while making great strides in developing new services and marketing partnerships that extend USAT's capabilities across multiple channels of the small-ticket, unattended market. We continued to lead cashless payment adoption in the sizable vending market with the industry's largest menu of cashless payment services, including our MORE loyalty program and the upcoming Isis Mobile Wallet "fifth vend free" promotion—relatively new value-added services that we believe are only beginning to shape how a cashless payment platform can be optimized in our market segment. "In addition, we took important steps toward leveraging USAT's ePort Connect service platform in several other, equally opportunistic markets such as laundry, transportation and amusement in fiscal 2013. For example, during the fourth quarter, we kicked off our new relationship with Setomatic Systems, a leading provider of cashless payment acceptance devices in the commercial and multiunit housing laundry markets, with the transfer of over 5,000 of their existing cashless connections to our ePort Connect service. We also coupled the appeal of our ePort Connect service with a unique solution for the taxi and for-hire vehicle industry, called ePortGO™, and we continue to experience a growing demand for our integration capabilities as self-service applications become more ubiquitous," said Herbert. Fourth Quarter Results Fourth quarter financial highlights, compared to the prior year, included: •

23% increase in total revenues to $9.7 million;

28% increase in license and transaction fee revenues to $8.2 million, representing 84% of total revenues for the quarter;

Adjusted EBITDA of $1.6 million, up from an Adjusted EBITDA loss of ($1.4) million;

GAAP net income of $1.7 million from a GAAP net loss of ($2.8) million; and,

Non-GAAP net income of $0.2 million, up from a non-GAAP net loss of ($0.4) million (fiscal 2013 excludes $1.5 million of Other income for the change in fair value of warrants and fiscal 2012 excludes $0.2 million of Other expense for the change in fair value of warrants and $2.2 million in proxy expenses).

9|Sutherland Insights Banking News Flash 01102013

Revenues for the fourth quarter of fiscal 2013 were $9.7 million, an increase of 23% from the same period a year ago. Revenue growth was attributable to a 28% increase in license and transaction fees to $8.2 million. Revenue from license and transaction fees, which grew to represent 84% of revenues for the fourth quarter of fiscal 2013 compared to 81% for the fourth quarter of the prior year, is driven by connections to USAT's ePort Connect service through monthly service fees, JumpStart fees and transaction processing fees. Equipment sales of $1.5 million were essentially flat compared to the fourth quarter of fiscal 2012 as growth in direct sales of ePort cashless payment devices was offset by a decline in sales of Miserbranded energy products. Gross profit was $3.7 million in the fourth quarter, a 15% improvement from $3.2 million for the same period in the prior year. Operating margin (both GAAP and non-GAAP) expanded to approximately 2% from (33%) and (5%) on a GAAP and non-GAAP basis, respectively, for the same period in the prior year, due largely to stronger revenues and resulting gross profit dollar contribution. GAAP net income was $1.7 million for the fourth quarter of fiscal 2013, which included a $1.5 million other income adjustment for the change in fair value of warrant liability related to the 3.9 million of warrants expiring in September 2016. The fair value of warrant liability adjustment is based, in part, on changes in USAT's stock price and other market factors that occur during the quarter. As a result, this non-cash adjustment can fluctuate substantially from quarter to quarter. For the same period in the prior year, GAAP net loss was ($2.8) million, which included a $0.2 million charge for warrant liability adjustment. Non-GAAP net income removes the impact of the fair value of warrant adjustment, in addition to other non-operational adjustments noted for the quarter (see Non-GAAP Reconciliation tables). For the fourth quarter, non-GAAP net income was $0.2 million compared to a non-GAAP net loss of ($0.4) million for the fourth quarter of fiscal 2012. GAAP and non-GAAP net income (loss) applicable to common shares were the same as GAAP and non-GAAP net income (loss). GAAP net earnings per common share, diluted, for the fourth quarter was $0.05 compared to a GAAP net loss per common share of ($0.09) for the prior year. Non-GAAP net earnings per common share, diluted, for the fourth quarter of fiscal 2013 was $0.00, up from a non-GAAP net loss per common share of ($0.01) for the fourth quarter of the prior year. Outlook "To date, growth in customers and connections to our ePort Connect service have delivered substantial improvements in our performance and our strengthened service model is delivering visible returns in terms of cash generation," said Herbert. "In fiscal 2014, our priorities include delivering 25%-30% license and transaction fee revenue growth, 20-25% total revenue growth and over 50% growth in non-GAAP profitability, even as we absorb deactivations to our service from a customer in the first quarter of the fiscal year. "New customers, a stronger presence in complementary market segments, expanded services and promising work underway that makes our ePort Connect service easily accessible to kiosk and other developers, gives us confidence that fiscal 2014 should be another exciting year of financial progress and value creation for USAT in the quickly evolving, small-ticket market for cashless payment," concluded Herbert

10 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

JP Morgan offers $3bn-$4bn to US regulators to settle RMBS probes 25 September, 2013 | BBR JP Morgan Chase is engaged in negotiations with US federal and state regulators to settle all the criminal and civil investigations into its residential mortgage-backed-securities (RMBS) wrongdoings, for a penalty of $3bn-4bn. The proposed settlement with the New York attorney-general, US attorneys' offices in California and Pennsylvania and the Department of Justice (DOJ), will enable the US lender to settle all outstanding mortgage-related cases, which are turning into a never-ending legal woe for JP Morgan. People familiar with the matter were quoted by media sources as saying that the bank offered nearly $3bn, although the DOJ outrightly rejected the proposal, saying that the amount is too low compared to the number of cases involved. The discussion is an early stage and might not be inked, as there are many issues such as admissions of wrongdoing and sum of fine, among others, on which the concerned parties have not reached an agreement. It is believed that the admission of liability for miss-selling or wrong doings in RMBs will ignite a number of private litigants. In August 2013, media sources reported that the US Federal Housing Finance Agency (FHFA) has demanded a $6bn fine from JP Morgan Chase, to settle cases over sale of bad mortgage bonds to government-backed finance companies. The housing regulators accused the bank for willingly selling the subprime loans packaged into securities to Fannie Mae (FNMA) and Freddie Mac (FMCC), inspite of being aware that the assets were toxic in nature. Most recently, the lender agreed to pay $920m (ÂŁ572m) penalty to the US and UK regulators to settle the case pertaining to its failures to supervise and manage 'London Whale' trading scandal, which forced the bank to suffer a $6.2bn loss. The US investment bank is facing a volley of legal cases, which cost nearly $10bn over the last two years and at the end of June 2013, the lender raised its estimate of losses to more than its reserves to $6.8bn compared to $6bn at the end of March 2013

11 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

US market regulators fine TD Bank $52.5m for violating securities laws 24 September, 2013 | BBR The US financial regulators have imposed a total of $52.5m in monetary penalty against TorontoDominion Bank (TD Bank), for violating the Bank Secrecy Act and securities laws pertaining to a Ponzi scheme in Florida. The Office of the Comptroller of the Currency (OCC) has fined $37.5m, while the Securities and Exchange Commission (SEC) ordered to pay $15m, to settle the charges. The US bank regulator accused the lender for failing to file suspicious activity reports (SARs) during April 2008 to September 2009, on activity in accounts belonging to Rothstein Rosenfeldt Adler, which operated a $1.2bn Ponzi scheme. As per the current OCC's SAR regulation, a bank must report SARs in 30 to 60 days, depending on the circumstances. The bank, which previously paid more than $600m in compensations to the affected investors impacted by Rothstein's Ponzi scheme, has agreed to deposit the penalty with the US Treasury. The SEC claimed that TD Bank and its then-regional vice president Frank Spinosa deceived investors by producing a series of misleading documents and making false statements about Rothstein accounts, which led to massive ponzi scheme. SEC enforcement division co-director Andrew Ceresney said, "TD Bank through a regional vice president produced false documents on bank letterhead and told outright lies to investors, failing in its gatekeeper role." Without accepting or rejecting SEC charges, the bank agreed to enter into an administrative order finding for violating Sections 17(a)(2) and (3) of the Securities Act of 1933

12 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

Technology HSBC to launch talking ATMs by 2015 01 October, 2013 | BBR London-based global financial services conglomerate HSBC is set to launch its talking ATMs, in the UK, in a bid help blind and visually impaired customers in banking transactions. The lender said that launch of the new ATM started in 2012, although new software which enables the ATMs to 'talk' with customers, will be installed in early 2015. Talking ATMs enables users to access their money securely and independently by plugging headphones into the machine and receiving spoken instructions. HSBC UK retail banking and wealth management head Brendan Cook said that the bank is committed to ensuring banking services are accessible to all of its customers and members of the public who use them. "We will continue to invest in new technology both in branch and digitally so that all of our customers can manage their finances the way they want to," Cook added. A research reports highlights that currently, nearly two million people with sight loss are residing in the UK, which is likely to touch 2.25 million by 2020. It was also found that only 29% blind and partially sighted people are able to carry out their financial transactions, while a Royal National Institute of Blind People (RNIB) study indicates that 89% find it difficult or impossible to use an ATM independently

ANZ selects Wolters Kluwer's finance and performance technology suite 30 September, 2013 | BBR Australia and New Zealand Banking Group (ANZ) has chosen Wolters Kluwer's Finance and Performance technology platform, to boost planning, performance and analytics in its global markets business. One of the largest banks in Australia, ANZ will benefit from the modules, including centralized data model, product control and trading ledger, planning, profitability and performance and regulatory reporting. Wolters Kluwer Financial Services Asia-Pacific managing director Chris Puype said, "Through selection of Wolters Kluwer Financial Services' integrated platform for finance and performance, ANZ will benefit from our financial expertise, highly functional technology and experienced hands-on

13 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

consultants." ANZ markets finance system head Jack Cornford commented that the new system will provide a flexible platform to improve regulatory and management reporting in its global business, as well as the cost benefits. "A core issue for reporting is the mapping and categorization of the organization's data to the many different reports required by the various regulators and other stakeholders. "With this solution, core mapping is done once by Wolters Kluwer Financial Services, saving us and their other customers the time required to duplicate this high risk and high cost exercise," Cornford added. With more than 30 offices in 20 nations, Wolters Kluwer offers audit, risk, finance and compliance solutions that help financial organizations improve efficiency and effectiveness across their enterprise

Pinnacle Bank chooses Fiserv's Precision for improved banking services 27 September, 2013 | BBR Pinnacle Bank has chosen Fiserv's Precision bank platform with outsourced processing, to optimize processes and drive efficiencies for the company. The lender also selected many other technology platforms, including mobile banking, bill payment and cheque capture, due to their originality, scalability and easy integration with the bank's existing additional system. Pinnacle Bank executive vice president and group operations manager Donna Webb said, "Fiserv solutions will enable us to capitalize on innovative technology to match product delivery channels with customer preferences." In order to enable its consumers and small businesses to securely and conveniently deposit cheques from any location using a smartphone, the bank selected Fiserv's Mobile Source Capture. Furthermore, deployment of AccountCreate will provide online account opening capabilities, while Teller Source Capture offers real-time balancing of deposits at the teller line. The bank believes that the technology upgrade will enhance its back-office operations and organizational efficiency as well as operational costs savings. Additional technologies selected by the bank include Accel payments network and Card Services Debit Processing, Mobiliti, Branch Source Capture and Merchant Source Capture, CheckFree RXP and CheckFree Small Business, and WireXchange

14 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

Westpac releases new online banking platform 25 September, 2013 | BBR Westpac has introduced a new online banking platform, as part of its renovation program with an investment of $15m, to offer customers the best digital and mobile banking experience in New Zealand and Australia. Planned to complete the revitalization of online banking platform over the next 18 months, the bank aims to provide multiple firsts for banking in the countries, claims the lender. The bank said that development will be carried out in collaboration with customers, supplemented by a launch of progressive mobile applications. Initially, the application has been released to 5,000 employees, while a planned launch to customers will start in October and be available to all Westpac customers by early 2014. The responsive platform can be accessed through all internet-enabled devices, including desktop, smartphone and tablet, and users can execute all transactional activity, payments and can acquire and amend products and services. The bank said that it has more than 280,000 logins per day and payments and transfers have increased 21% per month over the last year, which underpins the requirements of an improved digital banking platform. Westpac retail bank general manager Ian Blair said that the customer uptake of new technology is changing business models around the world and banking is no exception. In December 2012, the bank unveiled a A$240m ($253m) banking transformation program 'Bank Now', to offer better banking experience to its customers and support its expansion in the country

UniCredit taps First Data to launch mobile payment capabilities 25 September, 2013 | BBR Italy-based global banking and financial services company UniCredit has selected First Data’s Mobile Gateway to pilot QR codes for mobile and ecommerce payments, as part of its strategy to execute its mobile payments strategy. Leveraging First Data's Mobile Gateway, UniCredit will develop and pilot 2D Barcodes, also called as Quick Response or QR Codes, for mobile and eCommerce payments. The latest m-payment initiative will address the customers' demands for integrated shopping process, from marketing to payment, where transactions can take place anywhere, any time and on any type of device, claims the bank.

15 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

Currently carried out in Italy, the pilot allows the generation and exchange of QR Codes between merchants and consumers to process payments in a secure and PCI compliant environment. First Data's QR Code technology eliminates the risks associated with entering credit or debit card details for every transaction, while offering a bunch of value-added service applications, to enhance customer experience and encourage loyalty. UniCredit Business Integrated Solutions CEO Paolo Cederle said that First Data has proven itself to be a trusted partner for supporting mobile payments plans internationally. "In addition to developing and piloting QR Codeswe are looking forward to working with First Data's experienced team in developing new solutions for our clients," Cederle added. In partnership with First Data, the Italian lender also aims to market an array of products and services, to enhance the range of its payments services and assist in building an integrated payments experience for its customers

16 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

Strategy CI Financial to purchase 65% stake in Marret 27 September, 2013 | BBR Canadian-owned independent wealth management company CI Financial has inked an agreement to acquire 65% stake in Marret Asset Management, an alternative asset manager specializing in global and Canadian fixed income. Under the terms of the transaction, the wealth management company is acquiring 65% shareholding in Marret, with an option to purchase the remaining stake after three years. CI Financial president and CEO said, "This transaction is part of our strategy to continue to build that expertise by retaining the best available talent for our existing teams and by partnering with superior managers such as Marret." Toronto-based Marret is managed by Barry Allan, who has more than 30 years of investment experience. Financial terms of the transaction remained undisclosed. Allan said, "We look forward to new opportunities to offer our expertise to Canadian investors as part of the CI fund lineup." Established in 2001, Marret has a team of 11 portfolio managers and research analysts and concentrates on investing in investment-grade and high-yield corporate debt, and alternative strategies on behalf of institutional, high net worth and retail clients. As of 31 August 2013, CI Financial had nearly $108.8bn in assets and delivers various investment products and services

US banking group Banner to buy Home Federal Bancorp for $197m 26 September, 2013 | BBR US-based commercial bank holding company Banner has inked a definitive merger agreement to acquire Home Federal (Home), for $197m. Banner will pay $87.6m in cash to Home stockholders and option holders and 2,904,000 shares to Home stockholders. Home Federal Bancorp had tangible common equity of $168.1m as of June 30, 2013. Post integration, the combined company will have nearly $5.2bn in assets as well as an enhanced deposit market share in Washington, Idaho and Oregon, BANR expects its improvement in its operations in the Pacific Northwest region.

17 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

Banner, currently, manages commercial banks Banner Bank and Islanders Bank in Washington, Oregon and Idaho. Banner president and CEO Mark Grescovich said the transaction creates tremendous synergies while offering Home Federal customers a broader product offering, increased lending limits and an expanded branch delivery system that stretches throughout the Pacific Northwest. "It significantly improves our market share in the Boise market, which is the 3rd largest metropolitan market in the Pacific Northwest, while also expanding our presence in several key Oregon markets, including Bend/Central Oregon, Eugene, Medford and Grants Pass," Grescovich added. The transaction, which has already been unanimously approved by the boards of both companies, is pending regulatory and Home's stockholders approvals, as well as other customary closing conditions and will conclude during the first quarter of 2014. DA Davidson, and Keefe, Bruyette and Woods served as financial advisors to Banner and Home Federal, respectively

WorldPay US to acquire Century Payments 26 September, 2013 | BBR Financial technology company WorldPay US has entered into an agreement to acquire Century Payments, a leading provider of electronic payment processing services. WorldPay noted that the acquisition will boost its strategic partnership model and offer advanced sales tools and analytics. This transaction is the result of a long-standing relationship between WorldPay and Century Payments. As the businesses integrate, this deal will open up the future prospect of new and innovative services for customers in both the firms, according to WorldPay. Commenting on the acquisition, WorldPay US CEO Tony Catalfano said that the acquisition of Century Payments is a vital milestone in the company's continued US growth strategy. "Combining these two world-class businesses allows us to leverage the considerable strengths of both organizations to the benefit of our clients and further strengthens both our competitive positioning and overall value proposition," Catalfano added. Financial Technology Partners and FTP Securities acted as the exclusive financial and strategic advisor to Century Payments. In March this year, the company purchased global card payments service company YESpay, for an undisclosed sum, in a bid to boost its online and mobile payment capabilities in the UK. Headquartered in London, WorldPay processes over eight billion transactions annually worth over ÂŁ3bn, manages offices in the UK, Europe, US and Asia, and is able to accept payments in 120 currencies.

18 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

Headquartered in Frisco, Texas, Century Payments operates as an electronic payments company and processes nearly $12bn worth of transactions in annually

PayPal plans to acquire Braintree Payments 25 September, 2013 | BBR PayPal, an online payment company, is set to ink an agreement to acquire Chicago-based startup Braintree Payments Solutions, with a strategy to boost its mobile commerce offering. Sources familiar with the matter were quoted by the WSJ as saying that if the proposed transaction materializes, it will enable PayPal to access data and lucrative transaction fees from Braintree's expanding network, which currently processes over $10bn annually. Financial terms of the transaction have not been revealed. The deal will enable the online payment firm to tap maximum revenue from smartphone and tablet users, as researches have underlined that mobile payment is slated for rapid growth in future. A report by research firm Gartner claims that the mobile-payments market will expand by 31% this year and touch $235.4bn, and it will rise by more than three-folds by 2017. Set up in 2007, Braintree secured approximately $70m in funding in the last two years, from Accel Partners, New Enterprise Associates and others, and its payments service is being used by nearly 4,000 merchants. In September this year, PayPal rolled out its expanded Seller Protection policy in Asia Pacific (APAC) region, with a strategy to safeguard merchants from counterfeit transactions and situations where goods are not received by buyers. The company serves approximately 132 million active accounts in 193 markets and 25 currencies, across the globe

JC Flowers expresses interest to acquire Lloyds' TSB operations 24 September, 2013 | BBR New York-based private equity firm JC Flowers has reportedly shown interest to acquire Lloyds Banking Group’s TSB business that was spun off from the bank in earlier this month. The proposal is in early stage, although the bank's management is seriously contemplating on the plan, as reported by the Sunday Telegraph. Additionally, another private equity firm AnaCap has expressed interest in some form of trade sale,

19 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

the news agency reported. Lloyds, which is 32.7% owned by the British government, has been working for TSB's stock market flotation in the middle of 2014, but failed to execute the plan. Ultimately, the bank established TSB bank, with more than 600 branches, as per the agreement inked with the European regulators, when it received a financial package of ÂŁ20bn during the financial crisis of 2008. Most recently, the government divested 6% stake in the newly formed TSB at a transaction value at approximately ÂŁ3.2bn ($5.1bn). A Lloyds spokesman said, "We're progressing towards an IPO of TSB next year but will consider any offers that would provide greater certainty or value to our shareholders." Citigroup and JP Morgan are advising the British banking group on TSB

20 | S u t h e r l a n d I n s i g h t s B a n k i n g N e w s F l a s h 0 1 1 0 2 0 1 3

Sutherland insights banking news flash 01102013  
Sutherland insights banking news flash 01102013