CAST Management Consultants, Inc.

CASTing an on Banking - Nov 10

1: CAST SERVICE HIGHLIGHT

Sales and Distribution Strategy Development
Significantly increase production through independent channels

The financial services industry is in the midst of both major change as well as short term challenges. From new legislation to industry consolidation and convergence, new approaches, products and operational changes are required. CAST believes the industry remains challenged by several key factors. Each requires specific action on the part of industry leaders to remain competitive.

Factors Driving Distribution Effectiveness

Targeting the appropriate segments
Proper positioning of offerings and product elements
Appropriate service delivery mechanism
Understanding of customer needs and behaviors
Consistency of service delivery
Understanding of channel costs and profitability

Why CAST for Sales and Distribution Strategy Development

Extensive experience in strategy development
Demonstrated experience in cost and profitability analysis
Proven tools for monitoring and measuring performance
Extensive knowledge of successful service delivery procedures, tools and techniques
Understanding of detail sales, service and operations activities for the insurance and banking industries
Knowledge of the inter-relationships of various insurance and financial service products
Proven, fact-based approach to analysis and implementation

If you would like additional information, please contact Tom Vleisides at (213) 614-8066 ext. 244 or email tvleisides@castconsultants.com.

2: AMERICAN BANKER - B of A Rebrands Merrill Image with Product Push

Bank of America Corp. wants to remind everyone that Merrill Lynch & Co. is more than just a sideshow.

Trying to move beyond the lawsuits and congressional hearings, Bank of America will finally start using Merrill Lynch & Co. for what it intended when the Charlotte company bought the beleaguered investment bank in January — to develop wealth management products.

Bank of America said it plans to introduce today the first product that uses Merrill Lynch's investment management capabilities and the overall firm's banking capabilities. The "My Retirement Income" offering lets customers nearing, or in, retirement automatically transfer, monthly or quarterly, funds from a Merrill Lynch cash management account into a Bank of America deposit account.

The product is not unique, but it adds competition to the retirement planning market and is a tangible advance in the much-maligned integration of the two companies.

"This is a very important step as we tie two parts of this organization together," said Andy Sieg, the head of retirement and philanthropic services in the Merrill Lynch unit, who was hired recently from Citigroup Inc. "We are really bringing out what was the vision of the merger from the beginning."

Many companies, specifically insurance providers, have been introducing products for years that offer withdrawal benefits during retirement, analysts said. Investment companies, including Fidelity Investments, began to introduce retirement income products as many as five years ago to retain customers — and their assets — after retirement.

Sallie Krawcheck, hired in August as the $2.39 trillion-asset Charlotte company's head of wealth management and brokerage operations, has identified retirement products as an area of growth. During an Oct. 5 press conference, she called the business "a hidden gem" for B of A. "You don't hear much about it, but you will be hearing more about it," she promised.

Sieg agreed, saying that developing a stronger array of retirement income products has been a "central element" of Krawcheck's strategy.

"Customers are very interested in a product that offers them a paycheck into the retirement years," he said. "This is really banking and wealth management working in concert together. We are not just blending them into the same account, which we know from experience can just be confusing for customers."

The new product "harnesses the full capabilities of the entire company," Sieg said.

My Retirement Income works with existing Merrill Lynch retirement income products that the company has been developing for about two years, said Aimee DeCamillo, the head of personal retirement solutions for Merrill Lynch's global wealth management division.

Merrill Lynch also was set to introduce today a proprietary retirement income planning and investment platform, the Merrill Lynch Retirement Income Framework. It would let Merrill Lynch advisers work with clients on retirement income strategies, taking into account a client's individual risk tolerance, retirement consumption needs and appropriate asset allocation.

Burton Greenwald of Philadelphia's BJ Greenwald Associates said retirement income planning is a "no-brainer" for a company "looking for ways to cross-sell."

Sieg said he would not characterize B of A's new product as part of a cross-selling initiative. In most cases, he said, customers have an existing Merrill Lynch investment account and a B of A checking account. "We are trying to connect the components," he said. "We are looking for ways to deliver a new level of value to our customers."

Separately, B of A is starting a marketing campaign to tout products offered by its core retail banking operation, such as helping people spend wisely and gain control of their finances.

"We know trust in financial services is down significantly, and we've seen that in our own metrics," Jim Buchanan, a consumer marketing executive, said in an interview.

Another key objective is to "increase and maintain the company's share of media voice" compared to other banking companies, he said.

B of A expects to invest $40 million in the campaign, mostly in this quarter.

The company has been fighting difficult public relations battles over claims that it withheld pertinent information from shareholders on Merrill Lynch losses and bonuses.

3: AMERICAN BANKER - Big Banks' Reserves: Tomorrow's Big Profits?

Today's reserves could be tomorrow's profits for some banking companies, if the economy and regulators cooperate.

Heavy reserving has cut the industry's profits during the recession. But analysts say that financial giants like JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. could book sizable gains by winding down their massive reserves in 2011 and 2012. Regional banks are not as likely to see such a bounce, though, because they tend to have lower reserves than the largest lenders and deeper problems in home and business lending.

For JPMorgan, Wells and B of A, the economy and regulators are the main potential roadblocks to reclaiming all or part of the collective $43 billion they've set aside in the last four quarters. Industry overseers have not spelled out the level of reserves they will expect banks to hold should the economy and industry stabilize.

The comptroller of the currency, for one, has advocated changing accounting rules to force banks to hold higher reserves in times of low volatility. The income that banks would be able to claw back from reserves is also tied to loan-loss projections, notoriously foggy even in the best of times.

"If the economy bottomed out and housing prices have bottomed and unemployment starts going down and these are established as trends … , these reserves will start to drop, and you'll see outsized earnings for a period of time," said Keith B. Davis, an analyst at Farr, Miller & Washington.

Banks may now be operating a bit ahead of the curve; though reserves are not actually dropping, they seem to be plateauing.

Jason Goldberg, an analyst at Barclays Capital, said that reserves at the 26 big banks he covers rose $7.5 billion in the third quarter, about half as much as in the first half. In percentage terms, "the pace of reserve build is definitely slowing," he said. "I think that's consistent with stabilization in consumer delinquency trends. Eventually you stop padding, and you draw them down."

Reserves cut directly into profits when rising but boost them when falling. On the way up, profits are steered into reserves through loan-loss provisions. On the way down, excess reserves may be reclassified as net income. Regulators tend to frown on this practice, however. Instead, banks let reserves run off by setting aside less for loan losses than they charge off. So losses are booked against reserves, whittling them. The mismatch of loss provisions to chargeoffs nevertheless inflates earnings by reducing credit costs.

"What you're doing is taking a smaller expense," said David Gibbons, a managing director at Promontory Financial Group.

Though Goldberg said he does not expect to see reserve drawdowns soon, others are more bullish.

Anthony Polini, an analyst at Raymond James & Associates, said reserves at the largest banks could peak next year and start falling by 2011, which would improve earnings at the most heavily reserved companies for several quarters.

Winding down reserves at JPMorgan Chase through 2012 could add $5 to $6 to earnings per share, he said; By comparison, the company has earned $1.50 per share during the first nine months of 2009. At Bank of America, the gain could be as much as $2 per share, he said; the company has earned 39 cents per share in the first three quarters this year.

JPMorgan has $31.5 billion in reserves, or 4.74% of retained loans. Bank of America's $35.8 billion equals 3.95% of loans and leases. During normal economic times, most banks' reserves hover around 1.25% to 1.5% of loans. Bringing reserves down to a normal level could create a surplus of $15 billion at JPMorgan alone, Polini said. "At least half of their allowance to loans is probably excess."

The potential size of an earnings bounce depends, of course, on how much capital regulators decide banks must keep in reserves after an economic rebound. Bank reserving has been a hot-button issue; in the late 1990s, the Securities and Exchange Commission cracked down on SunTrust Banks Inc. for allegedly overreserving to manage its earnings. Since then, the SEC has made banks prove their reserves reflect actual losses. This has forced banks to keep low reserves during prosperity, a policy critics say worsened the credit crisis.

Comptroller of the Currency John Dugan said in a speech last March that banks should be allowed to overreserve in good times, though there has been no hard action on the regulatory front since then to change reserving standards.

Mark Fitzgibbon, director of research at Sandler O'Neill & Partners LP, said banks will probably have to keep reserves elevated until the economy fully recovers. If the rules are not changed, he said, banks will drive down their reserves to prerecession levels in order to expand profits.

"For a period of time, the accounting industry and the regulators will be willing to let banks run with much higher reserve levels because the pain from the problem loans is so fresh in their minds," he said. "Over time, people tend to forget."

4: AMERICAN BANKER - Branch Managers Return to Front Lines

As Morgan Stanley Smith Barney and UBS AG move to more complex management structures, some branch managers are scrambling to rebuild their client books.

These management structures are systems that have been long used by Bank of America Corp.'s Merrill Lynch & Co., where one manager oversees one or more "satellite" branches in a region. The manager of each satellite branch is then usually required to also service a book of clients. The manager is compensated for performing his management tasks, but the salary is less than that of a nonproducing manager, as the shortfall is made up by his own production.

Traditionally, at Morgan Stanley and UBS, each branch was run by its own manager who had few, if any, clients. Morgan Stanley began the move toward the complex structure before its joint venture with Smith Barney, but fully implemented the changes in September when Morgan Stanley Smith Barney created 137 complexes nationally, with each complex manager overseeing an average of seven or eight branches and between 50 to 200 advisers.

Approximately 100 previously nonproducing Morgan Stanley Smith Barney branch managers had to decide whether to go back into production, look for another role or leave the company.

Meanwhile, UBS established a system of 64 complexes and 19 stand-alone branches (not including the private wealth management offices, which cater specifically to ultra-high-net-worth clients). Each stand-alone branch kept its own nonproducing branch manager, but every branch manager, whose office was overseen by a complex manager, had to go back into production. Nearly 100 branch managers were affected.

Many of the managers affected have not had a book of business for years and said it is not an easy thing to conjure up overnight.

"Basically they're punishing branch managers who stayed with the firm and were loyal through the whole crisis," said one branch manager.

A branch manager at another firm who faces the same dilemma, said he feels they've actually been made the scapegoats for departing advisers. "Advisers left because their net worth took a hit with the falling stock price. But it looks like [the firms' executives] have said 'they can't keep advisers on board, what can they do for us?' " he said.

And, this manager said it is not only the branch managers that have been affected. Brokers are also concerned that they'll not only have to compete with their manager for clients, but vie with clients for their manager's attention.

"I have 20-something advisers who all need maybe 10 minutes a day from me," he said. "Now I'm going to have to close my door at a certain time of the day and say, 'I'm working with clients.' " The manager said some of his duties will be taken over by the complex manager, but he said his firm has not told him what will remain his responsibility.

Some brokers are concerned that their best managers will leave, said Danny Sarch, a recruiter in White Plains, N.Y.. "A lot of advisers stayed in their seats when they hated the firm because of loyalty to any given manager," he said. "The firms have destroyed corporate loyalty because of the way they crushed the stock [and the advisers' net worth]."

Most observers are pretty clear on the reason behind the change: cost cutting.

Bob Ellis, a principal in the wealth management practice at the consulting firm Novarica, a division of Novantas LLC, said branch managers were earning an average of $300,000 to $600,000 a year in salary and bonuses. "Production at these firms has gone to hell because of the market," he said. By making the managers become producers, they can cut base salaries to the $150,000-to-$200,000 range, he said.

Andy Saperstein, the head of wealth management at Morgan Stanley Smith Barney, said the move is not all about costs. He said that it is also designed to streamline management and allow for decision-making at the local level. "It means I can give more responsibility and control to my best managers," he said. "You can't monitor the decisions of 1,000 different organizations."

Bill Willis, an industry recruiter in California, said that, once managers are established, there is an upside in the new system. "The system works fine," he said. "It has been working at Merrill Lynch for a long time. But to ask people who haven't done business in years to build a book is very difficult. Once it's put together it's OK, but they're putting it together in a shotgun fashion."

To help the managers along, Morgan Stanley Smith Barney and UBS have provided some training. Morgan Stanley Smith Barney is continuing to pay managers their current salary until Oct. 1. Beyond that, industry sources said managers will likely get a lower base salary and bonus, and will have to make up the rest in production from their books.

Morgan Stanley Smith Barney managers have also been given specific asset targets that they must reach within the next year. One industry source said the managers had to sign a contract agreeing to reach $10 million in client assets over the next year or they'll be fired. However, they will not immediately go onto the regular payout grid and will initially receive a 50% payout on their production.

UBS is only paying its managers' existing salary until June 30. Then, their base salary will be cut by around 50%, said one source familiar with the plan. But, the managers will also receive a 50% payout on production until the end of next year. UBS managers have not been given specific asset targets.

Morgan Stanley Smith Barney faces another challenge. The complex manager chosen is likely to be from a different legacy company than the branches he or she oversees. So, lifelong Morgan Stanley brokers may find themselves with Smith Barney managers.

Saperstein said the firm recently trained all of the new complex managers on both firms' systems. They will also have technical support staff from both firms. The technology is on track to be fully integrated within two years. "I have no doubt that with the proper training and work experience, they will become familiar with both systems," he said

5: AMERICAN BANKER - Fed's Tough Transparency Talk Doesn't Apply on Pay

WASHINGTON — Listen to any speech from a Federal Reserve Board official and at some point, they are almost certain to preach the virtues of greater transparency — both in financial markets and at the central bank itself.

But the findings from the Fed's latest "horizontal review" of industry practices — this time, focusing on compensation — will not be made public. Citing the confidential nature of supervision, the Fed said it would not release the results of its review.

That is a departure from earlier this year when the Fed laid bare the capital positions of the 19 largest banks, and markets rallied amid the newfound clarity.

Cornelius Hurley, a former Fed lawyer who directs the Morin Center on Banking and Financial Law at the Boston University School of Law, said that by releasing those stress-test results the Fed made it possible to ask why any supervisory activity is not subject to sunlight.

"They opened up the old question of whether the whole supervisory process should be transparent," Hurley said. "You can take that argument all the way to whether examination reports themselves should be public."

Gil Schwartz, another former Fed lawyer now in private practice, agreed. "It makes it much more difficult for the Fed not to release more and more information," he said. "One of the things the agencies have learned is that the release of a lot of this information doesn't jeopardize national security."

The compensation review, part of a broader proposal the Fed released last month, targets executives, traders and other employees at the 28 largest financial institutions. (For smaller institutions, compensation oversight will be added to regular safety and soundness examinations.)

The question of how to handle information collected through horizontal reviews is likely to intensify. Testifying Thursday before the House Financial Services Committee, Fed Gov. Daniel Tarullo said the central bank plans to increase its emphasis on such reviews, which compare various banks' practices on particular issues.

Karen Shaw Petrou, the managing director of Federal Financial Analytics Inc., said, "It's a challenge the Fed has not fully reckoned with related to these horizontal reviews, not just for compensation but down the road for a full range of supervisory issues."

To be sure, releasing compensation data is a lot different from telling markets that an institution has enough capital to survive a severe downturn. Fed Chairman Ben Bernanke last month called the stress tests "a unique event."

But Fed officials have claimed excessive compensation is the sort of risk that poses a broad threat to the financial system.

The financial crisis "highlighted the potential for compensation practices at financial institutions to encourage excessive risk-taking and unsafe and unsound behavior — not just by senior executives, but also by other managers or employees who have the ability, individually or collectively, to materially alter the risk profile of the institution," Tarullo testified Thursday. "Bonuses and other compensation arrangements should not provide incentives for employees at any level to behave in ways that imprudently increase risks to the institution, and potentially to the financial system as a whole."

If that is the case, some say, then the public has a right to know how an institution's compensation practices might affect the broader economy.

"Of course that's a matter of public interest," Schwartz said.

Ultimately, releasing the compensation results could serve as a demonstration to the public that banks have learned lessons from the financial crisis and are making substantive reforms.

"No matter how high the compensation is, it will restore some of the public's confidence," said Robert Gnaizda, of counsel to the Black Economic Council, who argued that banks could use the data to their advantage. "The banks ought to be arguing that releasing executive compensation is sensible because it's all fairly determined."

Banks already cite the pay of their five highest-paid people in annual proxy statements filed with the Securities and Exchange Commission. Given the information that already exists, Robert Clarke, the former comptroller of the currency who is now a partner at Bracewell & Giuliani, dismissed the Fed's contention that the details it picks up are protected as supervisory information.

"Compensation information about institutions is much more commonly available and people are used to seeing it," he said. "Whatever this review produces is not going to cause a run on the bank."

Still, there are downsides to releasing compensation figures that worry the industry, including the possibility that unregulated firms could use the information to poach employees.

"There is a concern about people getting hired away," said Bert Ely, an independent consultant in Alexandria, Va. "Maybe it's an exaggerated concern … but people really do worry about it."

Moreover, the Fed might not have much choice but to withhold compensation details if they are contractually required to be kept confidential.

"They can't release some of this because there is information that is confidential to the company and the board and would be detrimental to the shareholders if it were released," said Tim Bartl, the senior vice president and general counsel at the Center on Executive Compensation.

In the wake of the Fed's aggressive response to the financial crisis, it has been derided as a secretive agency. Rep. Ron Paul, R-Texas, has spent much of the year pushing a bill that would open more of the central bank to an audit from the Government Accountability Office. That bill has attracted 308 sponsors in the House.

But the Fed has made tremendous strides in opening itself to the public and more clearly communicating the rationale behind its actions. The central bank now releases a monthly report detailing, among other things, how many borrowers use its liquidity facilities and the value of the collateral underlying the loans.

When it comes to its study of pay packages, the Fed has only committed to issuing a report after 2010 on "trends and developments in compensation programs and processes." But given the continued pressure on the Fed to become more transparent, observers said Bernanke is almost certain to be pressed to go further.

"The Fed chairman testifies twice a year to the Congress and they ask him whatever is on their mind," said Chris Low, the chief economist at First Horizon National Corp.'s FTN Financial. "I imagine Bernanke is going to have to defend this decision."

In contrast to the Fed, the Treasury Department's pay czar, Kenneth Feinberg, did publicly release compensation levels for executives at firms that have received "exceptional" government assistance, including Bank of America Corp. and Citigroup Inc. But observers said the two moves differ. For one, Feinberg is focused on absolute pay versus a company's practices, and he is overseeing pay at firms that continue to benefit from the taxpayer's dime.

"Feinberg is a special case," said Low of FTN Financial. "He's working with the seven firms that are least likely to pay back the Tarp money."

6: AMERICAN BANKER - Mortgage Pipeline – Back to the Future

A Roundup of Credit Market News and Views

Come Saturday, PNC Financial Services Group Inc. will be originating, securitizing and servicing mortgages under its own name — again.

The Pittsburgh banking company, which got out of the mortgage business in 2001 and has since offered home loans in its bank branches under a joint venture with Wells Fargo & Co., is winding down the venture this weekend and putting the PNC Mortgage handle on the business it acquired in last year's takeover of National City Corp.

And that will make National City Mortgage's chief executive, Sy Naqvi, the CEO of PNC Mortgage — again. Naqvi had run the old PNC Mortgage from 1993 until the unit was sold to Washington Mutual Inc.

After a detour that included posts at DeepGreen Financial Inc. and Harley Davidson Financial Services Inc., Naqvi returned to PNC in February to oversee the integration of National City Mortgage.

"Having a full-service mortgage company as part of the [National City] acquisition gave PNC the opportunity to look at the strategic fit of the business and how it could serve their customers best," Naqvi said. But until the decision was made to keep the business, National City Mortgage found itself going head to head with its own parent company.

"We operated in the same markets and actually competed for customers" with the PNC-Wells venture, Naqvi said. "Going forward, we are going to be on the same team."

Naqvi said all of the joint venture's employees opted to join PNC, which in addition to offering mortgages at PNC branches also will put its brand on the 300 National City stand-alone retail mortgage sales offices located around the country.

He said he expected PNC to maintain many of the Ohio facilities where National City Mortgage had handled servicing, document imaging and post-closing operations.

Jim Rohr, PNC's chief executive, is renowned for steering PNC well clear of the mortgage boom during the early part of this decade.

On a conference call last month, he said he aimed to make the new PNC Mortgage a top-10 retail lender, and that the unit would "deepen customer relationships consistent with our moderate risk profile. This line of business also provides high-quality assets for investment."

Naqvi said PNC will continue to refrain from offering exotic products or getting involved in the broker and correspondent channels. But with a full-service operation, PNC can now design products specific to the needs of its different customer segments, such as high-net-worth clients who might be interested in jumbo hybrid adjustable-rate mortgages, he said.

"We're thinking about loans that are still very much investment-grade, conservative loans but have" customized features, he said. (Securitization of mortgages has essentially stopped except for bonds backed by Fannie Mae, Freddie Mac and the Government National Mortgage Association, which do not deal with loans for more than $729,750.)

FHA Delay

The Federal Housing Administration postponed the release of its annual audit, which had been scheduled to take place Wednesday, saying auditors did not finish the report in time.

The Department of Housing and Urban Development, which oversees the FHA, said it would meet with the auditors Wednesday "to ensure that we can report to Congress in a timely and accurate manner."

HUD warned in September that the study would show FHA's congressionally mandated capital reserve ratio dropping below 2%. Since then the agency has taken a number of steps to control its risk, such as by tightening requirements for lenders that do business with FHA.

Still, concerns remain that the FHA, whose volume has grown astronomically in the last two years, will need a government bailout. Rep. Darrell Issa, R-Calif., and Rep. Spencer Bachus, R-Ala., sent HUD Secretary Shaun Donovan a letter Wednesday requesting, among other things, "data supporting claims that the FHA will not need to ask Congress for any funding."

Loan Doctor

Jim Russell has joined Collingwood Group LLC, a Washington consulting firm, to lead a new real estate asset management practice.

Russell said in an interview Tuesday that Collingwood plans to advise banks laboring with troubled loans, connecting them with other clients that can offer help. Such help could range from managing properties that serve as collateral to equity injections into the banks themselves, he said.

One possibility, Russell said, would be to place a loan with a special servicer that could guide decisions on tenants, for example, in an attempt to boost income from a property and "restore the loan to a performing status and then return it" to the bank.

Before joining Collingwood, Russell was a managing director at Prescient Inc., whose businesses include managing real estate and marketing nonperforming assets. Collingwood's other managing directors include Joe Murin, a former Ginnie Mae president, and Brian Montgomery, a former FHA commissioner.

7: AMERICAN BANKER - New Cop on Bank Beat? Not the Fed, Try Treasury

Maybe they should be focusing on the Treasury Department.

Under various proposals being weighed in Congress, the Treasury could end up overseeing systemic risk, deciding when the government exercises unprecedented resolution powers over giant companies and gaining veto power over what is now the Fed's free hand to aid failing firms.

Some observers say giving the administration such a direct role in overseeing the financial markets would inject a more political calculation into the regulatory process.

But others said a higher regulatory profile makes sense for the Treasury, noting the department is already at the center of making economic policy, might be less prone than other regulators to get too close to institutions and could end up being more accountable for the smooth functioning of financial markets.

"Treasury was always going to have authority when things blow up because ultimately you are going to need the backing of the taxpayer," said Douglas Elliott, a fellow at the Brookings Institution.

Early regulatory reform proposals put the Fed in charge of regulating systemically risky, or so-called Tier 1, institutions.

But as debate has evolved, policymakers have shifted toward creating a council of regulators overseeing systemic risk; some plans would give the Treasury a key seat on that council while others would have the Treasury lead it.

The Treasury could be a less-objective steward than the Fed, which is independent from the administration.

"If you have short-run issues being decided by the political side" of the government, rather "than by the more arguably dispassionate Board of Governors, then you could have some bad decisions being made," said William Longbrake, a member of the board of directors of First Financial and an executive in residence at the University of Maryland.

But the involvement of the politically minded Treasury might have its benefits.

"Politicizing is another word for accountability and you have to have accountability in this process," said Wayne Abernathy, a former assistant Treasury secretary and now the executive director for financial institutions policy and regulatory affairs for the American Bankers Association.

"When you get to systemic risk, it is so big and so important for the whole economy, you have to have accountability. And you want to make sure whoever is doing it has the full weight and support of the president and only the Treasury secretary can do that."

Also on the table: giving the Treasury the power to decide which systemically risky firms go into receivership.

Under the administration's proposal first introduced in the spring, the Treasury — upon the recommendation of a company's primary regulator — would have the authority to appoint an agency such as the Federal Deposit Insurance Corp. to be the conservator or receiver for a systemically important nonbank.

But critics say that approach would give the Treasury too much authority to decide which firms fail and which stay afloat, and some observers expect a legislative revision to emerge this week that would reduce that power. (House Financial Services Chairman Barney Frank is said to be in consultation with the administration on a revised draft that would include changes to both the systemic risk and resolution provisions.)

Under the Treasury's initial plan, the government could provide loans or guarantees to failing firms, which some observers say gives the Treasury a blank check to keep "too big to fail" firms in operation.

"The part I disapprove of is the ability of Treasury to spend money without approval of Congress," said Phillip Swagel, a visiting professor at Georgetown University and former Treasury assistant secretary for economic policy in the last administration.

"That is a permanent supercharged" Troubled Asset Relief Program.

But others argued it would be more difficult for firms to come to the Treasury for assistance than it would be to seek a helping hand from another regulator.

"It's much harder to lobby them," said Doug Landy, a partner at Allen & Overy LLP and formerly a lawyer at the Federal Reserve Bank of New York. "They won't listen as friendly" to arguments "by the institutions that what they are doing would hurt their business."

Another potential boost to the Treasury's power would be a say in whether the Fed could use its emergency lending power under the so-called 13(3) provisions of the Federal Reserve Act.

Currently, the Fed has free reign to tap the authority when it deems it suitable, and the authority was used during the crisis to help both American International Group Inc. and Bear Stearns & Co.

The final regulatory reform package could place that ultimate decision with the Treasury.

Longbrake said the administration could use that power to strong-arm the Fed into a decision it did not support.

"If they have to get approval from somebody else, what they will have to do, as things develop, is engage in an open discussion with Treasury," Longbrake said. "You may say, 'What's wrong with that?' But you don't know what happens behind the scenes."

Landy disagreed, saying the change would only codify existing practices.

"It's probably the least important because in practice the Fed does run those decisions with Treasury," he said. "The Fed realizes if they did it without Treasury's involvement or desires it would not be as effective."

But Lily Claffee, a partner at Jones Day and a former counsel at the Treasury, said even though the Treasury was heavily involved in last year's bailouts and even condoned them, the Fed having to ask for that permission would be a dramatic shift. "Asking if you agree with me is different than 'Mother may I?' " she said.

8: AMERICAN BANKER - Overdrafts Undermine Checking

Bankers and regulators are about to reinvent "free" checking.

Several banking companies' decision to adjust their overdraft fee policies, along with an expected Federal Reserve ruling affecting other vital fee structures, threaten to alter the ubiquitous product.

The changes will come with a cost. Free checking has helped banks gather cheap deposits while supplying a hearty dose of fee revenue for items ranging from nonsufficient funds to automated teller machine transactions. Though free checking is likely to remain an offering, observers believe regulation will significantly transform the product.

"I think there is going to be a steeplechase" among banks looking to retool free checking, said Hank Israel, the director of payments and checking at Novantas LLC. "Free isn't going to go away totally," he said, "but I think it will become a damaged item. Banks will have to tout it as free, but … ."

Banks are facing external pressure to change the fee structure built around free checking, which was a useful tool during the past decade to bring in the unbanked. Senate Banking Committee Chairman Chris Dodd introduced sweeping legislation this month to curb overdraft fees.

The Federal Reserve is expected to issue a final ruling on overdraft fees in the next two months that could also tighten oversight of ATM fees and charges associated with one-time debit card overdrafts, all of which play key roles in banks' noninterest income.

Kevin Jacques, the chairman of finance at Baldwin-Wallace College in Cleveland and a former Treasury Department economist, said a number of banking companies could be pinched. "We have had a number of banks that have gone further and further and become too dependent on noninterest income" as an offset to lower interest income and credit woes.

The impact of tighter oversight of Regulation E, which covers overdraft fees and other electronic funds transfers, could be substantial, bankers and observers said, though the precise severity remains unclear.

Bank of America Corp. Chief Financial Officer Joe Price said during an Oct. 16 call that internal actions to reduce overdraft fees would reduce fourth-quarter profit by $150 million to $200 million. The Fed's ruling "may further impact our fee revenue"; he promised "more explicit" commentary once the ruling is known.

Michael Cavanagh, the CFO at JPMorgan Chase & Co., said his company's retail business could lose about $500 million annually due to its decision to curb overdraft fees. "That's a pretty simple number," he said during an Oct. 14 conference call. "We don't have all of the other impacts that likely come along to say what to expect with a great degree of conviction."

Wells Fargo & Co., which also announced plans last month to reduce overdraft fees, did not detail the potential impact of its actions during its third-quarter call. The company refused to comment.

Service charges at banks rose 5.5% in the third quarter from the second, though they were down 1.1% from a year earlier, according to an analysis of call reports by Foresight Analytics LLC.

Executives at smaller banks are also watching Washington.

Robert E. Marling Jr., the CEO of Woodforest National Bank, said he is concerned the changes could negatively affect proactive banks. The Woodlands, Tex., company, for instance, has let customers opt out of overdraft protection for several years. The company has also refunded overdraft fees to roughly 36,000 customers after they took a 30-minute financial literacy class online.

Woodforest, which has a sizable in-store branch network with Wal-Mart Stores Inc., charges $2 when noncustomers use its ATMs. "We do have a dog in this fight," Marling said. He would prefer regulators who deal daily with banks to intervene, rather than legislators. "Debit card proliferation has gone wild in the last few years," he said. "I think there will be a move from punitive pricing to service pricing."

Such is the case at TCF Financial Corp., which will introduce a checking product next quarter that will replace overdraft fees on each item with a daily nonsufficient fund charge and another charge should an account fall below a certain level. One result is the return of the monthly account maintenance fee at the $17.7 billion-asset Wayzata, Minn., company. (More than one-quarter of TCF's third-quarter revenue came from banking fees and service charges.)

"This will totally restructure how our fee income works," William Cooper, TCF's chairman and CEO, said in an interview last week. Though having the potential to stabilize, or perhaps increase, revenue, he said that changing customer behavior is "the one unknown" to modeling profits.

Israel said other banks should have time to evaluate and adjust checking programs, based on his belief that any proposed change would not be enacted before December 2010 at the earliest.

Some bankers believe that would give the industry ample time to adapt in a way that would preserve some of the logic underpinning free checking. "Depending on what is brought forward, I am confident that free checking will be around for many years to come," Marling said.

9: AMERICAN BANKER - Return of an Interchange Firebrand

A polarizing figure from past battles between merchants and payments companies has returned to the interchange debate with harsh words — for both sides.

Lloyd Constantine, who maneuvered the card industry into paying the largest antitrust class-action settlement in history, has resurfaced six years later with a book about the case and some surprising criticism about other lawsuits that he sees as riding his coattails.

For example, don't look for his unequivocal support of a long-running merchants' suit alleging that interchange constitutes antitrust violations and price fixing.

"I'm not commenting on the ultimate merits of the cases, but they seem to be lawyer-driven cases. Our case was not a lawyer-driven case," Constantine, the lead attorney for Wal-Mart Stores Inc. and other merchants in the class action settled in 2003, said in an interview last week.

"They seem to be cases that had looked at our case and said, 'Look at those guys. Wow, they got rich.' I saw the process, I saw them running around the country, signing up clients — that's something that I've never done."

Constantine acknowledged the irony of such comments, having long been a target for similar accusations from payments industry members, especially after his suit was settled for $3 billion. (That included about $225 million in attorneys' fees.) The settlement, which also mandated the untying of debit card from credit card acceptance and a reduction in the interchange rates for signature-based debit, preceded a second round of lawsuits filed against Visa Inc., MasterCard Inc. and their bank customers.

His comments, and the book, "Priceless: The Case that Brought Down the Visa/MasterCard Bank Cartel," come as interchange has become an increasingly high-profile and mainstream issue, with advertising campaigns from merchants and networks alike, the public riled about the credit card industry in general and regulators and lawmakers looking into interchange.

And then there is the merchants' lawsuit in the U.S. District Court for the Eastern District of New York, which is seeking class-action status on behalf of plaintiffs including the National Association of Convenience Stores, the National Restaurant Association and merchants like Payless ShoeSource.

K. Craig Wildfang, a partner at Robins, Kaplan, Miller & Ciresi LLP and the plaintiffs' co-lead counsel, called Constantine's comments "unfortunate and misguided," but said they were "not going to have any impact on our case."

Merchants were "very unhappy with the results of the Wal-Mart case," which was "a very narrow attack" on one part of the interchange system, Wildfang said. "They wanted true reform, which is why our cases were much more broadly based."

Constantine left the payments realm three years ago to join his protege, then-New York Gov. Eliot Spitzer, as a senior adviser in Albany, but his name still elicits strong reactions from industry members. Even his critics — several of whom were reluctant to speak on the record — characterize him as an intelligent and "dangerous" force in the payments industry.

"He's a figure that everybody in the networks is very, very aware of," said Eric Grover, the principal in the payments consulting firm Intrepid Ventures and a veteran of Visa. "I don't think there's anybody in the industry who's particularly fond of the guy, but there's a certain respect. He's aggressive, he competes to win, he's a smart guy."

After Gov. Spitzer's resignation last year, Constantine returned to semi-retirement and finished polishing up a book about the Wal-Mart case. "Priceless" was published Oct. 6, during the same week that members of the House Financial Services Committee held hearings on a bill that would regulate interchange fees, and Visa unveiled an advertising campaign aimed at lawmakers in Washington.

But industry members raised doubts about whether his book would influence the current debate, especially the three bills in Congress that propose various methods for regulating interchange.

"Lloyd is a brand across the card industry — everybody knows what he stands for, everybody knows his arguments," said Duncan MacDonald, a former general counsel of Citigroup Inc.'s Europe and North America card businesses. "He can end up supporting people who would naturally take his view, but he is not going to be persuasive to anybody else who is sitting on the fence."

Constantine, who in 2005 called on the Federal Reserve Board to "step up to the plate" by enacting regulations that would disallow interchange fees of PIN debit networks, stood by that position last week, while acknowledging that interchange on credit "is a different thing. The economics on credit are entirely different than the economics on debit."

But such comments do not signal any kind of wholesale switch to the payments industry's viewpoint on interchange.

"The world would be better off if there were no interchange on the credit card side, and that the way that the product is paid for is by cardholders paying for what they get and merchants paying for what they get," he said. "And the efforts in Congress to look at that are, I think, well founded."

Visa would not discuss the book. Sharon Gamsin, a spokeswoman for MasterCard, called it "a rehash that in some cases distorts information that has been in the public domain since the DOJ trial, and doesn't add anything to the interchange debate. But, more importantly, Constantine recognizes the intense competition in today's payments industry, which undercuts the arguments being made by merchants in Washington and in the antitrust litigation."

(Referring to the initial public offerings at Visa and MasterCard, Constantine writes in the book, "The competition between Visa and MasterCard … and the innovation that will occur in a newly competitive environment are likely to produce benefits to the public that will far surpass even the record-setting benefits explicitly required by the Merchants' Settlement.")

According to Nielsen BookScan (which tracks many, but not all, retailer locations), "Priceless" has sold less than 500 copies to date. Constantine said he's been pleased by the response from readers who would not normally be interested in interchange or antitrust lawsuits.

Constantine, who has returned as counsel to the firm he founded, Constantine Cannon LLP, is also preparing to teach a course at Columbia Law School. But for the immediate future, he is putting the finishing touches on a second book that, he admits, will probably get a little more mainstream attention than "Priceless."

"Journal of the Plague Year: An Insider's Chronicle of Eliot Spitzer's Short and Tragic Reign," due out in April, chronicles the 18 months Constantine spent in Albany as a senior adviser to Spitzer, and the front-row seat he had during his friend's rise and fall. "It's not a happy book," he said.

10: AMERICAN BANKER - U.K. Breakups Could Point to Big-Bank Dismantling in the U.S.

The push to dismantle big U.S. banks gathered fresh momentum Tuesday as the British government forced the breakup of two institutions as a condition of their continued support by taxpayers.

Though it may be too early to declare Paul Volcker vindicated, the planned divestitures agreed to by Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC provide a blueprint for downsizing bailed-out firms. And they make the European Union's recently announced breakup of ING Group NV look less like an isolated case and more like the start of a trend.

But it remains unclear how the U.S. government will approach institutions currently considered "too big to fail," and whether regulators actually are interested in ridding the system of firms deemed as such.

Even within the bust-'em-up camp there is a debate over whether the lines ought to be drawn on size or on scope. Volcker, the former Federal Reserve Board chairman, wants commercial banks out of the investment banking business, with rules resembling the old Glass-Steagall Act. Others, like Simon Johnson, the former International Monetary Fund chief economist, say it is the concentration of credit risk in any form, not the mixing of lending and trading, that makes big banks a threat to the system.

Two weeks ago, neither view appeared to be getting much traction in Washington. Volcker, who heads President Obama's Economic Recovery Advisory Board, reportedly had been sidelined on policy matters as others in the administration asserted a more charitable view of full-service banks. And advice from the likes of Johnson, now a professor at the Massachusetts Institute of Technology's Sloan School of Management, seemed to run counter to the crisis-time decisions of regulators, who in arranging rescues of troubled banks effectively increased the size of companies already considered "too big to fail."

But the winds have shifted. In what is sure to be seen as a landmark speech on the topic, Mervyn King, head of the Bank of England, told a group of Scottish business leaders on Oct. 20 that there are only two logical ways of solving the problem posed by big banks: either accept that some institutions are "too big to fail," and apply regulatory discipline to make their failures less likely; or figure out how to resolve big-bank failures at minimal cost to society. He left little doubt as to his preference.

"There are those who claim" that proposals to restrict government guarantees for utility banking firms "are impractical," King said. "It is hard to see why. … What does seem impractical, however, are the current arrangements."

In a letter to The New York Times that same week, former Citicorp Chairman John S. Reed, responding to an article about the apparent marginalization of Volcker's voice within the Obama administration, said he agreed with Volcker that "some kind of separation" between commercial banking and capital markets activities "makes sense."

Revealingly, the crisis had convinced Reed that big lenders, including the one he led into a watershed merger with Sandy Weill's Travelers Group in 1998 to form Citigroup Inc., should get out of investment banking.

Together, the voices of industry statesmen like King, Volcker and Reed form a chorus urging a reconsideration of the issues around big banks.

"Two weeks ago I would have said it's very unlikely" that the government would seek the breakup of large institutions, said Robert Bruner, dean of the University of Virginia's Darden School of Business. "But in the wake of these speeches and utterances by very prominent people, I've grown aware that this is a topic of discussion among serious people, and that to me would be an indication that the probability is higher than perhaps ever before."

The news from Europe may further recast the debate, just by illustrating what is possible were regulators to decide that the system would be safer with smaller firms.

Dispensing with concerns over whether genies can be put back into bottles, European regulators simply imposed their will to deconstruct some of the Continent's biggest and most complex firms. ING now plans to sell its insurance business and the American piece of its ING Direct online banking unit. RBS will sell more than 300 U.K. bank branches, along with its insurance and global merchant services division and its stake in a commodities trading business, while Lloyds will shed 600 branches and slash mortgage assets. The British firms also agreed to new compensation limits as they accepted a new helping of aid.

The powerful U.S. financial lobby so far has been effective in protecting big banks, even amid a backlash over industry pay and bailout costs. But the rising tide promises to reshape the fight over policy, philosophy and the strategic imperatives that will define the future of banking.

11: AMERICAN BANKER – What's Lost, Gained If Giants Get Downsized

As the politicians and regulators fret about how to handle big banks, it is worth asking whether we really even need them — big banks, that is.

We do.

We don't.

We might.

The question, like so many raised in the wake of the financial crisis, is fraught with disagreements over policy and philosophy, over the measurable benefits to the economy and the ultimate costs to society.

So let's begin with the easy part, about which there is relatively little dissent.

From a retail perspective, big banks are often useful to consumers and frequently successful in achieving economies of scale when it comes to gathering deposits. But they are not necessary.

If the country's largest banks disappeared tomorrow, consumers might miss having branch and ATM networks with the ubiquity of Starbucks and the efficiency of McDonald's. But they would still have 8,000 other banks where they could open checking accounts and park their savings, in many cases lowering their fees and getting better interest by doing so.

The value of big firms is a more interesting question where commercial banking is concerned.

There are only so many balance sheets large enough to support the financing needs of giant corporations. But as a defense for big banks, that is an argument that leaves former International Monetary Fund chief economist Simon Johnson unmoved.

Johnson, a professor at the Massachusetts Institute of Technology's Sloan School of Management and an avid proponent of breaking apart big banks, notes that much of the lending and capital issuance arranged for big clients already is divvied up. If each firm had less balance-sheet capacity to offer, he said, the syndicate groups could simply expand without sacrificing deal size. Whatever the cost of the resulting inefficiencies — extra paperwork, additional desk clerks — "there's no way it outweighs the cost we're seeing" to support big banks in their current form, Johnson said.

Not everyone agrees. The benefits of consolidation lowered the underwriting costs of accessing the public equity market by more than 20% between 1980 and 1999, according to the research of Columbia University finance professor Charles Calomiris. Those savings, Calomiris argued in a recent opinion piece in The Wall Street Journal, "expanded use of the market particularly by young, growing firms."

Taking into account the multiplier effect of that access, admittedly a calculation that may involve more art than science, the burden of shouldering systemically risky banks may seem less stark.

It is a burden nonetheless. But it may be one that is unavoidable in certain areas of banking such as global transaction services and working capital loans, often requested in a variety of currencies to match the far-flung operations of multinational customers.

"For somebody like IBM or for somebody like Exxon, they need somebody that can help them around the world," said former Citigroup Inc. Chairman John S. Reed, who still considers Citi's global reach a cornerstone of the company. "At Citi in the old days, our international business had 1,500 major companies that we called our 'world corporate customers,' and we basically provided them local-currency working capital around the world. No consortium of small U.S. banks could have done that," he said.

Since Reed's retirement in 2000, the biggest banks have only gotten bigger. About 75% of the assets held by public banks and thrifts in the United States reside on the balance sheets of the 10 largest firms, according to data from SNL Financial. A decade ago, the asset concentration among the 10 largest firms at the time was just 54%.

The increase in concentration, driven largely by mergers among already sizable institutions, have helped big banks to leverage the expense of intricate payment systems and other vital components of the financial system that would be difficult to imagine existing in the absence of giant firms.

"Clearly you've got to have a lot of size and substance to play a role as a lead banker," said Fred Joseph, the former chief executive of Drexel Burnham Lambert, who since 2001 has been arranging investment banking deals for the middle-market customers of Morgan Joseph & Co.

But whereas Calomiris sees the industry's consolidation as a boon for young companies, Joseph argues that "the lending decision-making process is being concentrated to the serious long-term detriment" of firms outside the circle of elite corporate clients chased by the biggest banks. And to Joseph, who sees most of the potential for economic growth in this country resting in small to midsize companies, that has serious consequences for the broader economy.

In deciding on an approach to big banks, the U.S. simply will have to decide which consequences it is most willing to live with.

Coming tomorrow: A look at whether the risks posed by big banks have more to do with their size, or the way they are managed.

12: ANNOUNCEMENTS - Bank of America to Sell First Republic Bank to Investors

Bank of America Corporation today announced it has signed a definitive agreement to sell First Republic Bank to a number of investors, led by First Republic's existing management, and including investment funds managed by Colony Capital, LLC and General Atlantic LLC.

The transaction is expected to close in the second quarter of 2010, subject to receipt of all regulatory approvals. Terms were not disclosed.

First Republic was acquired on Jan. 1, 2009 as part of the Merrill Lynch & Co., Inc. acquisition. As of Sept. 30, 2009, First Republic had $19 billion in total assets, $16 billion in deposits, and $15 billion in wealth management assets under management.

Jim Herbert, chairman and founding chief executive officer, and Katherine August-deWilde, president and chief operating officer, will continue in their current positions along with the rest of the management team.

Bank of America Merrill Lynch acted as financial advisor for Bank of America. Wachtell, Lipton, Rosen & Katz acted as legal advisor to Bank of America.

13: ANNOUNCEMENTS - BNY Mellon Integrates Capital Markets and Securities

Client service a principal focus for integrated broker-dealer capabilities

NEW YORK, October 26, 2009 — BNY Mellon today announced the integration of broker-dealer services provided by BNY Mellon Capital Markets and BNY Mellon Shareowners, with BNY Mellon Capital Markets managing the integrated operation.

The integrated operation includes all existing BNY Mellon Securities and BNY Mellon Capital Markets locations, and will remain active in all market segments currently served by the two businesses.

"The strengths of BNY Mellon Securities and BNY Mellon Capital Markets in the equity and fixed income markets are a perfect complement," said Gary Strumeyer, President of BNY Mellon Capital Markets. "Enabling us to provide more coverage, the integration takes our full-service, 'one-stop' approach to client support to a new level and extends our growing position in the broker-dealer sector."

A full-service securities broker-dealer subsidiary of BNY Mellon specializing in underwriting and sales and trading services, BNY Mellon Capital Markets, LLC (member FINRA, SIPC) is the partner of choice for institutional and high-net-worth investors seeking efficient execution, industry expertise with timely and relevant marketing commentary, and a collaborative relationship. Providing services tailored to large public and private corporations and various governmental and not-for-profit entities, BNY Mellon Capital Markets has been in operation for 25 years and serves more than 5,000 clients from offices in New York, New Jersey and Pennsylvania.

14: ANNOUNCEMENTS - BNY Mellon's Pershing Unit Expands Suite of SWIFT ...

... Messaging Capabilities for Global Financial Services Organizations

JERSEY CITY, N.J.
(:BK)

Pershing LLC, a BNY Mellon company, announced today that it has expanded its Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging capabilities for its introducing broker-dealer customers. The enhanced SWIFT offering provides financial services organizations with access to a wide range of secure financial messages which enables them to communicate more efficiently and effectively with Pershing across critical business and operational areas.

LINK TO FULL ARTICLE: http://finance.bnet.com/bnet/?GUID=10389517&Page=MediaViewer&Ticker=BK

15: ANNOUNCEMENTS - ING to Separate Banking and Insurance Operations

ING announced today that it will move towards a complete separation of its banking and insurance operations as part of its ongoing review of the Group’s strategy and as a logical next step in its Back to Basics programme. This will be achieved over the next four years by a divestment of all Insurance operations (including Investment Management). ING will explore all options, including initial public offerings, sales or combinations thereof.

LINK TO FULL ARTICLE: http://www.ing.com/group/showdoc.jsp?docid=417610_EN

16: M&A - U.S Bank Expands in Nevada Through Acquisition of ...

... Banking Operations from BB&T Corporation

U.S. Bancorp and BB&T Corporation announced today the signing of a definitive agreement for U.S. Bank National Association, U.S. Bancorp’s lead bank, to purchase approximately $800 million in deposits and certain branch locations of BB&T’s Nevada banking operations. This acquisition includes the deposits of branches located in the Las Vegas-Paradise market, Reno-Sparks market and the Northern Nevada markets of Carson City, Fallon and Gardnerville Ranchos, that BB&T recently acquired from the Federal Deposit Insurance Corporation (FDIC) as receiver for Colonial Bank.

LINK TO FULL ARTICLE: http://news.moneycentral.msn.com/ticker/article.aspx?Feed=BW&Date=20091013&ID=10489800&Symbol=USB

17: BANKINSURANCE.COM - Bank Annuity Commissions Up In First Half, But Sagging In 2Q

BANKINSURANCE NEWS IN BRIEF - OCTOBER 19 - 25, 2009

Annuity fee income generated by U.S. bank holding companies (BHCs) in the first half rose 1.7% to $1.33 billion, up from $1.31 billion in first half 2008, despite a 9.1% drop in second quarter annuity earnings to $593.1 million, down from $652.6 million in second quarter 2008, according to the Michael White-ABIA Bank Annuity Fee Income Report.

Almost 41% of all large U.S. BHCs sold annuities in the first half, generating annuity earnings ($1.33 billion) that comprised 14% of the $9.48 billion in combined mutual fund and annuity fee income, or 18% of $7.38 billion in combined insurance and annuity fee income. Not quite 13% of U.S. banks, however, sold annuities in the first half, and those earnings fell 10% to $484.3 million, down from $539.6 million in first half 2008, indicating that non-bank subsidiaries generated over 63% of total annuity fee income.

Bank holding companies with over $10 billion in assets saw their annuity fee income rise 3.7% to $1.26 billion to comprise about 95% of total annuity earnings. While 72% (the highest participation rate) of BHCs of this size sold annuities, just short of 34% (the lowest participation rate) of BHCs with $500 million to $1 billion in assets offered annuities, and their annuity earnings fell 16.3% to $12 million, down from $14.3 million in first half 2008.

San Francisco-based, $1.28 trillion-asset Wells Fargo & Co. ranked first among U.S. BHCs in annuity fee income, as these earnings, bolstered by the Wachovia acquisition, soared 507% over first half 2008 to $340 million. New York City-based, $2.03 billion-asset JPMorgan Chase & Co. ranked second with $175 million, followed by Charlotte, NC-based, $2.25 trillion-asset Bank of America Corp. ($138 million), New York City-based, $674.5 billion-asset Morgan Stanley ($87 million) and fifth-place, Pittsburgh, PA-based, $279.8 billion-asset PNC Financial Services Group ($30.0 million), the Michael White-ABIA Bank Annuity Fee Income Report. shows. For more detailed information on the report's findings, click here.