EVERETT, Wash. -- When Frontier Bank branches reopen Monday, they'll have a new name: Union Bank.
Frontier Financial Corp., the parent company of the long-time Everett institution, was closed by state regulators Friday. In nearly seamless succession, the Federal Deposit Insurance Corp. immediately assumed receivership of the bank and sold it to Union Bank of San Francisco.
The sale marks the end of a long fight by Frontier. Under increased scrutiny from regulators for more than a year, the bank has long struggled to break free from bad real estate loans and find investors to stop large losses.
Regulators started pounding the final nails in Frontier's coffin earlier this year when it labeled the bank "critically undercapitalized" and told officials to turn things around by April 15 or risk being sold to the highest bidder.
Brad Williamson, director of the state Department of Financial Institution's Division of Banks, said Frontier executives put up an admirable fight to recapitalize the bank. But large loan losses related to construction projects coupled with the state's economic climate was too high of a mountain to climb.
"I think in all cases, management tries desperately to bring the bank back to a safe condition," Williamson said. "But (Frontier CEO) Pat Fahey and the management at Frontier they really made a tremendous effort to recapitalize the institution."
Effective immediately, all Frontier depositors are customers of Union Bank. Frontier branches will be closed on Saturday for restructuring. Customers can still use their accounts by writing checks, using ATMs and debit cards and doing other banking through Frontier's website.
Branches will reopen Monday morning as Union Bank.
Frontier is the sixth Washington-based bank to close this year, according to FDIC data. City Bank of Lynnwood just two weeks ago landed on the failed-bank list, when regulators sold the foreclosure-plagued institution to Oak Harbor-based Whidbey Island Bank.
In 2009, 140 banks were shuttered across the U.S, the highest number in nearly two decades. FDIC officials predict more banks will close this year than last year.
Williamson is hesitant to say if that prediction will be true of Washington state.
"Nationally, I tend to agree with the FDIC," he said. "I don't really like to talk about local closures because we're starting to see shift in the capital markets."
Speculation about the bank's forced sale sent Frontier's stock soaring during the past week. But stock prices dropped 22 percent in trading Friday, ending the day at $3.57.
In after-hours trading before news of the closure, the stock continued to decline.
The drivers probably didn't know they were some of Frontier Bank's last customers when they pulled their cars through the drive-through at the branch on Highway 99 in Lynnwood on Friday evening.
It was business as usual.
The green 'open' lights above the lanes blinked over to red at 5:58 p.m. then they went dark.
The branch's doors locked at 6 p.m. Most of the interior lights went out.
A similar scene played out after closing Friday in downtown Everett. Branch employees gathered for meetings, visible through windows along Colby Avenue.
Jim Kavaney of Marysville used the cash machine outside the branch and said he was disappointed to hear about the closure.
"I've banked with them forever," he said. "I feel bad because I like Frontier, I like the people."
Last year, the scene looked different.
For several months in 2009, it appeared the bank had found a way to break free from the downward spiral: a group of investors headed by a New York hedgefund manager hoped to take over the company.
The deal would have injected Frontier with a $427 million cushion. That wouldn't only have saved Frontier, it could have meant expansion as it bought other failed banks through forced-sales.
Regulators didn't approve the deal in time for a deadline. Frontier CEO Pat Fahey relaunched a search for new investors, but didn't find a suitable match in time.
Frontier has been an Everett institution since 1978. It was conceived in a Black Angus restaurant over in a dinner meeting that brought founder Bob Dickson together with future Everett Mayor Ed Hansen.
Dickson ran the bank as CEO for decades, handing the reins over to his son, John Dickson, in 2003.
When bad real estate loans started taking a toll on the bank in 2008, John Dickson moved from CEO to bank president. And Frontier's board of directors voted to appoint retired banker Fahey to the top position.
Fahey fired John Dickson in March when he refused to cancel a family vacation to Hawaii despite the looming FDIC deadline.
When reached at his home Friday, John Dickson declined to comment.
On Tuesday, he sold thousands of Frontier shares worth more than $39,000, according to filings with the U.S. Securities and Exchange Commission.
Bob Dickson, 76, was more contemplative about the death notice delivered to the bank he helped found.
Frontier was a victim of recession, he said. The bank was not making subprime loans, Dickson pointed out; it was loaning money to builders.
Frontier took a massive blow when builders defaulted on their loans after the housing market collapsed.
"It's not only Frontier Bank," Dickson said. "Many other community banks were hit hard by this."
Union Bank went on a buying spree in April.
A subsidiary of UnionBanCal Corp., Union Bank recently acquired $600 million in assets from Tamalpais Bank after the FDIC seized that bank, based in San Rafael, Calif.
Union Bank's presence dwarfs Frontier's: 346 banking offices in California, Oregon, Washington and Texas and two international offices.
Union Bank's assets total $85.2 billion. It acquired $3.2 billion in total assets from Frontier and $2.5 billion in deposits, along with Frontier's 50 branch offices in Washington and Oregon.
A big incentive for Union Bank was the FDIC agreeing to a loss-share transaction on $3.04 billion of Frontier's less-desirable assets.
"I think it's a good match," said Williamson, the state director of banks. "Union Bank doesn't have a lot of presence in Washington state. And Frontier Bank gives them an immediate presence."
In a prepared statement, Union Bank CEO Masaaki Tanaka agreed: "We have been looking for the right opportunity to expand in the region for some time and Frontier Bank's commercial and consumer businesses match well with our own, particularly in retail and corporate banking, and wealth management."
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Wednesday, May 5, 2010
India Alternatives debuts with Rs 28 cr deal in education
Frameboxx Animations and Indian Institute of Financial Management come together as part of this deal.
Interesting niches in education continue to attract the alternative asset class. India Alternatives Investment Advisors Private Limited, sponsored by the promoter of Centrum Group Chandir Gidwani, has made its debut investment of Rs 28 crore in the education sector.
The investment follows the creation of a platform by way of a merger between Frameboxx Animations, an animation training firm, and the Indian Institute of Financial Management (IIFM), which offers MBA programmes and vocational training in financial services.
The PE firm is investing in the combined entity, which will provide training and higher education courses in diverse fields ranging from media to financial services.
Shivani Bhasin Sachdeva, CEO of India Alternatives, said, in a statement, “The education sector in India is an $80-billion dollar opportunity. We have created this exclusive transaction by combining two players to form a unique platform in the education sector.”
Talking to VCCircle, she said, the PE firm would hold a significant minority stake in the combined entity. She says, India Alternatives would look at opportunities in the higher education niches which focus on training for high employability.
India Alternatives has also roped in Anjani Jain, Vice Dean of The Wharton School, to provide strategic guidance to portfolio companies in the education sector.
The Framboxx-IIFM merger will create an entity that will provide training and higher education in diverse fields including MBA, financial services as well as media and animation.
It will have over 50 centres offering animation training and more than 20 offering vocational programmes in finance (wealth management, financial planning and insurance management) and a pan-India presence of MBA centres.
Rajesh Turakhia, promoter of Frameboxx, said, “This is an exciting deal which allows Frameboxx to diversify into the fast-growing financial services sectors”.
Jagmohan Bhanver, promoter of IIFM said, “The existing international tie ups of IIFM and Frameboxx coupled with strong industry involvement in all the programmes will deliver world class education with high employability”.
The venture capital and private equity industry have been keenly following recession-proof and non-cyclical themes particularly in the wake of the global economic slowdown.
According to VCCircle’s Deal Outlook Survey conducted in December last year, 71% of the participants said, they wanted to invest in the education space this year. The sector has already seen some traction in terms of deals.
The largest recent deal in this space has been PremjiInvest' investment of $43.32 million (about Rs 214 crore) in Manipal Universal Learning Pvt Ltd. Other ventures that got funded this year include Pathways World School, Resonance Eduventures Pvt Ltd, Speakwell English Academy, IL&FS Education & Technology Services Ltd and Career Point Infosystems Ltd.
Interesting niches in education continue to attract the alternative asset class. India Alternatives Investment Advisors Private Limited, sponsored by the promoter of Centrum Group Chandir Gidwani, has made its debut investment of Rs 28 crore in the education sector.
The investment follows the creation of a platform by way of a merger between Frameboxx Animations, an animation training firm, and the Indian Institute of Financial Management (IIFM), which offers MBA programmes and vocational training in financial services.
The PE firm is investing in the combined entity, which will provide training and higher education courses in diverse fields ranging from media to financial services.
Shivani Bhasin Sachdeva, CEO of India Alternatives, said, in a statement, “The education sector in India is an $80-billion dollar opportunity. We have created this exclusive transaction by combining two players to form a unique platform in the education sector.”
Talking to VCCircle, she said, the PE firm would hold a significant minority stake in the combined entity. She says, India Alternatives would look at opportunities in the higher education niches which focus on training for high employability.
India Alternatives has also roped in Anjani Jain, Vice Dean of The Wharton School, to provide strategic guidance to portfolio companies in the education sector.
The Framboxx-IIFM merger will create an entity that will provide training and higher education in diverse fields including MBA, financial services as well as media and animation.
It will have over 50 centres offering animation training and more than 20 offering vocational programmes in finance (wealth management, financial planning and insurance management) and a pan-India presence of MBA centres.
Rajesh Turakhia, promoter of Frameboxx, said, “This is an exciting deal which allows Frameboxx to diversify into the fast-growing financial services sectors”.
Jagmohan Bhanver, promoter of IIFM said, “The existing international tie ups of IIFM and Frameboxx coupled with strong industry involvement in all the programmes will deliver world class education with high employability”.
The venture capital and private equity industry have been keenly following recession-proof and non-cyclical themes particularly in the wake of the global economic slowdown.
According to VCCircle’s Deal Outlook Survey conducted in December last year, 71% of the participants said, they wanted to invest in the education space this year. The sector has already seen some traction in terms of deals.
The largest recent deal in this space has been PremjiInvest' investment of $43.32 million (about Rs 214 crore) in Manipal Universal Learning Pvt Ltd. Other ventures that got funded this year include Pathways World School, Resonance Eduventures Pvt Ltd, Speakwell English Academy, IL&FS Education & Technology Services Ltd and Career Point Infosystems Ltd.
Tuesday, April 13, 2010
e-Payment and the search for prudent management of public funds
Chairman, Federal Inland Revenue Service , Mrs. Ifueko Omogui-Okauru
One year after the introduction of e-Payment into the country, experts believe that the system needs to be fine tuned.
When the Federal Government mooted the idea of introducing the electronic-payment system in 2008, the decision was greeted by mixed reactions from experts in both the public and private sectors of the economy.
The system was officially introduced into the public sector in January 2009 to facilitate payment for goods and services, as well as minimise the level of interactions between contractors and government officials thus eliminating corrupt tendencies.
It was also meant to eliminate the use of cash to facilitate speedy payments of all transactions, fast-track the implementation of government policies through the elimination of delays in government’s payment system, enhanced real time reporting and improved quality of financial reporting system in the public sector, as well as elimination of risks associated with carrying large cash.
But one year after the flag off of the system, experts say a lot of improvement still needs to be done to enable the programme to achieve the desired objective.
The Federal Government was not unmindful of these facts when it organised a two day workshop on e-payment for Accountants-General and Auditors-General from the three tiers of government.
Speaking at the event, the Permanent Secretary, Ministry of Finance, Mr. Achi Achinuvu, admitted that there was still more work to be done to make the system achieve the desired result.
For instance, he said that as part of its ongoing reforms in the public sector, the Federal Government would from next year begin the implementation of an Integrated Financial Management Information System for the public sector.
The GIFMIS, which would be fully operational by 2011, would facilitate the end-to-end processing of the e-payment initiative.
The end-to-end e-payment initiative implies that all ministries, departments and agencies of government will be making e-payment directly to the beneficiaries from the infrastructure installed in their offices.
Already, the Office of the Accountant General of the Federation has been repositioned for the effective implementation of the system through the GIFMIS.
The move is coming on the heels of a series of complaints by contractors handling projects in remote areas over the difficulties associated with the e-payment model.
For instance, some contractors had in the past raised the alarm over information security, lack of regulatory framework, as well as infrastructural limitations associated with the payment mode.
But Achinuvu said that despite the bottlenecks associated with the mode of payment, the scheme had recorded huge success.
He said that the e-payment system, which was introduced a year ago, had helped to minimise the interaction between contractors and government officials thus eliminating corrupt tendencies.
To ensure an uninterrupted connectivity of the system, the Central Bank of Nigeria has been requested to champion the implementation of a national switch, which will serve as a platform to provide seamless interconnectivity for all banks.
He said that the workshop, with the theme, ”e-payment system and public financial management reporting system as tools for achieving transparency in government,” was coming at a time when the government budgeting process was undergoing phenomenal transformation.
He emphasised the need to kick-start the process, adding that the system would aid the computerisation of public financial management processes, from budget preparation and execution to accounting and reporting, with the help of an integrated system for financial management of line ministries, spending agencies and other public sector operations.
According to him, ”As the world moves in a direction of a global village, we cannot remain isolated within the mundane systems and practices of public sector accounting. We must keep pace with emerging trends in technological advancement.
”The present administration has continued to place emphasis on transparency, probity and accountability as a means of ensuring prudent and judicious utilisation of resources. While the commercial entities across the world are moving towards International Financial Reporting Standards, governments are harmonising with International Public Sector Accounting Standard. The Federal Government would be implementing the GIFMIS by next year.”
Speaking in the same vein, the Accountant-General of the Federation, Mr. Ibrahim Dankwaabo, urged the FG to approve the adoption of IPSAS as a form of reporting in the public sector.
”Adoption of a uniform global standard would ensure understandability of the financial statements on the part of international investors. In other words, adoption of IPSAS would increase the acceptability of accounts of Nigeria, internationally, ”he added.
But the Chairman of the Federal Inland Revenue Service, Mrs. Ifueko Omogui-Okauru said that sharp practices among Deposit Money Banks, as well as problems from switches in effecting transfers from one bank to another were major reasons why the Federal Government is yet to reaped the benefits of the e-payment system.
The FIRS boss, who spoke at the workshop, noted there was need to improve the system to enhance accountability and transparency
She said the diversion of some of the e-payment accounts, as well as the banks‘ inability to quickly reconcile the accounts when the need arose, were responsible for the complaints
According to her, ”Some of the problems we faced with e-payment at the FIRS, among others, have to do with reconciliation; being able to reconcile what is paid, what the banks received and ultimate basic account. The complaints and constraints facing accountants in FIRS are also the fact that e-payment has not been as fast as it should be.
”In fact, it‘s like we are doing the e-payment on the manual system; we have not seen the full benefits of e-payment. Another problem is the diversion of e-payment of taxes to accounts other than those designated at the banks. We noted that in some banks, this e-payment does not get to the designated accounts, but are posted to some accounts, even when we thought that e-payment should go direct.”
Speaking in a similar vein, the Director, Consolidated Accounts, Office of the Accountant General of the Federation, Mr. Oludare Osibote, also said that late returns in respect of unapplied funds, use of different Information Technology platforms by different banks, which had caused problems of interconnectivity, non uniformity of accounts numbers, since banks use different number of digits, as well as lack of regulatory framework on e-payment were other factors affecting the success of the scheme
One year after the introduction of e-Payment into the country, experts believe that the system needs to be fine tuned.
When the Federal Government mooted the idea of introducing the electronic-payment system in 2008, the decision was greeted by mixed reactions from experts in both the public and private sectors of the economy.
The system was officially introduced into the public sector in January 2009 to facilitate payment for goods and services, as well as minimise the level of interactions between contractors and government officials thus eliminating corrupt tendencies.
It was also meant to eliminate the use of cash to facilitate speedy payments of all transactions, fast-track the implementation of government policies through the elimination of delays in government’s payment system, enhanced real time reporting and improved quality of financial reporting system in the public sector, as well as elimination of risks associated with carrying large cash.
But one year after the flag off of the system, experts say a lot of improvement still needs to be done to enable the programme to achieve the desired objective.
The Federal Government was not unmindful of these facts when it organised a two day workshop on e-payment for Accountants-General and Auditors-General from the three tiers of government.
Speaking at the event, the Permanent Secretary, Ministry of Finance, Mr. Achi Achinuvu, admitted that there was still more work to be done to make the system achieve the desired result.
For instance, he said that as part of its ongoing reforms in the public sector, the Federal Government would from next year begin the implementation of an Integrated Financial Management Information System for the public sector.
The GIFMIS, which would be fully operational by 2011, would facilitate the end-to-end processing of the e-payment initiative.
The end-to-end e-payment initiative implies that all ministries, departments and agencies of government will be making e-payment directly to the beneficiaries from the infrastructure installed in their offices.
Already, the Office of the Accountant General of the Federation has been repositioned for the effective implementation of the system through the GIFMIS.
The move is coming on the heels of a series of complaints by contractors handling projects in remote areas over the difficulties associated with the e-payment model.
For instance, some contractors had in the past raised the alarm over information security, lack of regulatory framework, as well as infrastructural limitations associated with the payment mode.
But Achinuvu said that despite the bottlenecks associated with the mode of payment, the scheme had recorded huge success.
He said that the e-payment system, which was introduced a year ago, had helped to minimise the interaction between contractors and government officials thus eliminating corrupt tendencies.
To ensure an uninterrupted connectivity of the system, the Central Bank of Nigeria has been requested to champion the implementation of a national switch, which will serve as a platform to provide seamless interconnectivity for all banks.
He said that the workshop, with the theme, ”e-payment system and public financial management reporting system as tools for achieving transparency in government,” was coming at a time when the government budgeting process was undergoing phenomenal transformation.
He emphasised the need to kick-start the process, adding that the system would aid the computerisation of public financial management processes, from budget preparation and execution to accounting and reporting, with the help of an integrated system for financial management of line ministries, spending agencies and other public sector operations.
According to him, ”As the world moves in a direction of a global village, we cannot remain isolated within the mundane systems and practices of public sector accounting. We must keep pace with emerging trends in technological advancement.
”The present administration has continued to place emphasis on transparency, probity and accountability as a means of ensuring prudent and judicious utilisation of resources. While the commercial entities across the world are moving towards International Financial Reporting Standards, governments are harmonising with International Public Sector Accounting Standard. The Federal Government would be implementing the GIFMIS by next year.”
Speaking in the same vein, the Accountant-General of the Federation, Mr. Ibrahim Dankwaabo, urged the FG to approve the adoption of IPSAS as a form of reporting in the public sector.
”Adoption of a uniform global standard would ensure understandability of the financial statements on the part of international investors. In other words, adoption of IPSAS would increase the acceptability of accounts of Nigeria, internationally, ”he added.
But the Chairman of the Federal Inland Revenue Service, Mrs. Ifueko Omogui-Okauru said that sharp practices among Deposit Money Banks, as well as problems from switches in effecting transfers from one bank to another were major reasons why the Federal Government is yet to reaped the benefits of the e-payment system.
The FIRS boss, who spoke at the workshop, noted there was need to improve the system to enhance accountability and transparency
She said the diversion of some of the e-payment accounts, as well as the banks‘ inability to quickly reconcile the accounts when the need arose, were responsible for the complaints
According to her, ”Some of the problems we faced with e-payment at the FIRS, among others, have to do with reconciliation; being able to reconcile what is paid, what the banks received and ultimate basic account. The complaints and constraints facing accountants in FIRS are also the fact that e-payment has not been as fast as it should be.
”In fact, it‘s like we are doing the e-payment on the manual system; we have not seen the full benefits of e-payment. Another problem is the diversion of e-payment of taxes to accounts other than those designated at the banks. We noted that in some banks, this e-payment does not get to the designated accounts, but are posted to some accounts, even when we thought that e-payment should go direct.”
Speaking in a similar vein, the Director, Consolidated Accounts, Office of the Accountant General of the Federation, Mr. Oludare Osibote, also said that late returns in respect of unapplied funds, use of different Information Technology platforms by different banks, which had caused problems of interconnectivity, non uniformity of accounts numbers, since banks use different number of digits, as well as lack of regulatory framework on e-payment were other factors affecting the success of the scheme
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