'free on board

The FOB (Free On Board) abbreviation is an import/export term relating to the point at which responsibility for goods passes from seller (exporter) to buyer (importer). It's in this listing because it's commonly misunderstood and also has potentially significant financial implications. FOB meant originally (and depending on the context stills generally means) that the seller is liable for the goods and is responsible for all costs of transport, insurance, etc., until and including the goods being loaded at the (nominated FOB) port. An importing buyer would typically ask for the FOB price, (which is now now often linked to a port name, eg., FOB Hamburg or FOB Vancouver), knowing that this price is 'free' or inclusiveof all costs and liabilities of getting the goods from the seller to the port and on board the craft or vessel. Logically FOB also meant and still means that the seller is liable for any loss or damage up to the point that the goods are loaded onto the vessel at the FOB port, and that thereafter the buyerassumes responsibility for thegoods and the costs of transport and the liability. From the seller's point of view an FOB price must therefore include/recover his costs of transport from factory or warehouse, insurance and loading, because the seller is unable to charge these costs as extras once the FOB price has been stated. The FOB expression originates particularly from the meaning that the buyer is free of liability and costs of transport up to the point thatthe goods are loaded on board the ship. In modern times FOB also applies to freight for export by aircraft from airports. In recent yearsthe term has come to be used in slightly different ways, even to the extent thatother interpretations are placed on the acronym, mostcommonly 'Freight On Board', which is technically incorrect. While technically incorrect also, terms such as 'FOB Destination' have entered into common use, meaning that the insurance liability and costs of transportation and responsibility for the goods are the seller's until the goods are delivered to the buyer's stipulated delivery destination. If in doubt ask exactly what the other person means by FOB because the applications have broadened. While liability and responsibility forgoods passes from seller to buyer at the point that goodsare agreed to be FOB, the FOB principle does not correlate to payment terms, which is a matter for separatenegotiation. FOB is a mechanism for agreeing price and transport responsibility, not for agreeing payment terms. In summary: FOB (Free On Board), used alone, originally meant that the transportation cost and liability for exported goods was with the seller until the goods were loaded onto the ship (at the port of exportation); nowadays FOB (Free On Board or the distorted interpretation 'Freight On Board') has a wider usage - the principle is the same, ie., seller has liability for goods, insurance and costs of transport until the goods are loaded (or delivered), but the point at which goods are 'FOB' is no longer likely to be just the port of export - it can be anyplace that it suits the buyer to stipulate. So, if you are an exporter, beware of buyers stipulating 'FOB destination' - it means the exporter is liable for the goods and paystransport costs up until delivery to the customer.

Bank Insurance Fund

A unit of the FDIC that provides insurance protections for banks that arenot classified as a savings and loan association. As with all FDIC protection, the BIF provides coverage of up to$250,000 per customer account for insolvent banks. The BIF was created as a result of the savings and loan meltdown in the late eighties.

'Bad Debt Reserve'

An account set aside by a company to account for and offset losses that arise as a result of defaults from futures loans. This figure maybe calculated based on historical norms or other known information about therelative safety of the debt.
Also known as a "loss reserve".

New survey: Popularity of Mobile Banking Jumps

A new survey by the American Bankers Association shows a sharp increase in the popularity of mobile banking, driven mainly by customers in the 18 to 34-year-old age group. The survey of 1,000 U.S. adults, conducted Aug. 2-6, 2012, by Ipsos Public Affairs, an independent market research firm, revealed that while the Internet remains the most popular banking method, mobile banking is now preferred by 6 percent of customers, a 100 percent increase from 2010, and by 15 percent of 18-34 year olds, also known as “millennials.” This is the fourth year in a row that customers have named the Internet as their favorite way of conducting their banking business, with 39 percent of respondents saying it is the method they use most often to manage their bank accounts. The second most popular way to bank — visiting a branch — continued its downward trend to 18 percent. “The survey results show consumers have a clear preference for the speed and convenience that come with Internet and mobile banking,” said Nessa Feddis, ABA senior counsel and retail banking expert. “However, banks are committed to serving the needs of all customers regardless of which method they prefer,” she added. The survey’s margin of error is +/- 3.1 percent. When asked “Which method do you use most often to manage your bank account(s),” customers responded as follows: *. Internet Banking (laptop orPC) – 39 percent (36 percent in 2010) *. Branches – 18 percent (25percent in 2010) *. ATMs – 12 percent (15 percent in 2010) *. Mail – 8 percent (8 percent in 2010) *. Telephone - 9 percent (6 percent in 2010) *. Mobile (cell phone, Blackberry, PDA, I-Pad, etc.) – 6 percent (3 percentin 2010) “These results show customers are embracing new technologies that make managing a bank account simpler, easier and more convenient but that doesn’t mean that the traditional bank branch is going anywhere,” said Feddis. “Branch design may evolve as a result of declining foot traffic. However, we know that nothing replaces humaninteraction and that’s why branches will never disappear,” she added. Online banking first became the most preferred banking method in 2009 with 25 percent of customers namingit as their favorite. Previously,visiting a branch was the most popular method, followed by ATMs. About the Survey These are some of the findings of an Ipsos poll conducted Aug. 2-6, 2012. For the survey, a national sample of 1,000 adults aged 18 and older were interviewed by telephone. Weighting was employed to balance demographics and ensure that the sample's composition reflects that of the universe. A survey with an un-weighted probability sample of this size and a 100 percent response rate wouldhave an estimated margin of error of +/- 3.1 percentage points 19 times out of 20 of what the results would have been if the entire populationof adults aged 18 and older in the United States had been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

Vikram Pandit quits Citigroup; Michael Corbat named successor

Citigroup CEO Vikram Pandit today stepped downfrom his post and member of the US banking giant’s Board.
The Board of Directors has unanimously elected Michael Corbat, CEO and a director of the Board, the company said.
The development comes a day after the India born CEO-led the US banking giant reported 88 per cent plunge in net profit at $ 468 million in the July-September quarter.
Nagpur-born Columbia University graduate Pandit, 55, had been the CEO of Citigroup since December, 2007.
Pandit said Citigroup has emerged from the financial crisis as a strong institution and “now is the right time for someone else to take thehelm at Citigroup.”
"Thanks to the dedication and sacrifice of people across Citigroup, we have emerged from the financial crisis as a strong institution. Citigroup is well-positioned for continued profitability and growth, having refocused the franchise on the basics of banking.
“Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take thehelm at Citigroup,” Pandit said in a statement.
He added that he is leavingthe company in better hands.
Corbat is the “right person” to tackle the difficult challenges ahead, with a 29-year record of achievement and leadership at this Company, he said.
“I will truly miss the wonderful people throughout this organisation. But I know that together with Mike, they will continue to build on the progress we have made,” he added.

MasterCard sells its data to marketers

The credit card company’s MasterCard Advisors Media Solutions Group is able to provide companies with information telling them when customers are likely tospend and who is most likely to buy their products.
“What if you could know thebiggest week for spend and then reach those shoppers who are twice as likely to spend leading up to that week and then create campaigns?” asked Susan Grossman, senior vice president at MasterCard Advisors Media Solutions Group in an online presentation entitled “Leveraging MasterCard DataInsights to Reach Holiday Shoppers”
MasterCard, which processes 34 billion transactions a year in 210 countries and territories, said it started the initiative in February.
To build a targeted audience which can then be sold to a company, MasterCard starts with billions of anonymous transaction, which it then aggregates into small segments which comprise of similar transactions. When they create an audience the analytics is performed on these segments and not individuals.
Ms Grossman said protecting privacy was “core” to MasterCard’s values.

Banker 'recruited twogirlfriends to make £1m from insider dealing

An investment banker fed confidential information to two girlfriends to make more than £1m through insider share dealing, a court head.
Thomas Ammann, 39, used Christina Weckwerth, 44, and Jessica Mang, 30, as “cash and cover” to make illegal trades, it was alleged.All three profited from the activity, although each woman was unaware of the other’s existence, SouthwarkCrown Court heard.
Miss Weckwerth, a wealthy divorcee from Koenigstein in Taunus, Germany, whom Mr Ammann met through a dating website, invested more than half her divorce settlement to make about £1.2m, a jury was told.
Miss Mang, a health worker from central London who met the banker at a nightclub, used credit cardsand borrowed money from her family to make £30,000, it was alleged.
The two women deny charges of insider dealing which Ammann has admitted.
The jury was told that, despite earning a substantialsalary, Ammann lived beyond his means and was frequently in financial trouble. He relied on property deals in his native Germany to boost his income from the London branch of Mizuho International investment bank. In 2009, Ammann started working on a multi-billion pound takeover of Océ, a Dutch printing an copying group, by the Japanese electronics company Canon.
Armed with insider information, he approached his girlfriends about investing on his and their behalf, the court heard. He was one of just seven bankers at the London offices who knew about the deal before it was announced.
In diary entries dating from October 2009, Miss Mang wrote that Ammann had offered to tell her what he was doing at work so she or her father could profit.
She wrote that she was “embarrassed” that she only had £30,000 to invest.
“Transaction feels a little demeaning,” she noted about an alleged agreementto pay Ammann 50 per cent of the profits. “I’d feel a little like I pay him for his companionship. I do worry he doesn’t trust me.” She also described how her flatmate, a Goldman Sachs banker, told her that she was engaging in insider dealing, but she dismissed the warnings as “prissy”.
Miss Weckwerth, a mother ofone, invested more than half of her £1.4m divorce settlement in Océ shares between February and September 2009.
When the takeover deal wasbriefly called off, somethingthat Ammann would have been aware of, she cashed in her stake. She reinvested when talks resumed, the court heard.
Amanda Pinto QC, prosecuting on behalf of theFinancial Services Authority, said: “It is clear that each woman had insider information from Thomas Ammann. Jessica Mang wrote as much in her personal diary. Ms Weckwerth’s [position] is an irresistible inference from her pattern of trading.”
She added: “These two women managed to almost double their money by trading in one stock. Each ofthese women considered that Ammann was their boyfriend. They had no idea of the existence of the other. Weckwerth got back nearly £2m and Mang, who was trading at a very, very much lower level, made £60,000.” The case continues

Intel quarterly profitfalls 14%

Intel, the world's largest chipmaker, says its net income fell 14 per cent from last year,and it's looking at tough conditions in thenew quarter. Third-quarter net income was $2.97 billion US, or 58 cents per share, down from$3.47 billion, or 65 cents per share, a year ago. Intel Corp. blames tough economic conditions, but analystsbelieve a shift in spending from PCs to tablets and smartphones may be contributing. Still, Intel beat expectations for the quarter. Analysts polledby FactSet were expecting earnings of 50 cents per share. Revenue fell 5.5 per cent to $13.5 billion. Analysts were expecting $13.22 billion. The Santa Clara, Calif., company says it expects about $13.6 billion in fourth-quarter revenue, belowthe analyst forecast of$13.7 billion.

Google is facing fresh criticism in Europe for its collection of users’ personal data.

Just weeks after getting hit with a record $22.5 million U.S. fine for Internet privacy violations, Google is facing fresh criticism in Europe for its collection of users’ personal data. In an Oct. 16 ruling , France’s privacy-rights regulator said Google’snew privacy policy violated European data-protection rules. Google failed to set “any limit concerning the scope of the collection and the potential uses of the personal data,” and gave users inadequate means to opt out, the agency said. France could impose fines on Google within “three to four months” if the policy is not modified, said Isabelle Falque-Pierrotin, chairwoman of the regulator, known as the CNIL. Last March, Google established a uniform privacy policy covering more than 60 services, including Google searches, YouTube, and Gmail. In a statement e-mailed after the decision, Google’s global privacy counselPeter Fleischer said thecompany was “confident that our privacy notices respectEuropean law.” Although other countries are not bound by France’s action, they’re likely tofollow its lead in demanding that Google revamp the policy. EU authorities had asked the CNIL toconduct the review, and the French findings were reviewedin advance by European national regulators and by data-protection authorities in anada, Australia, and several Asian countries. If Google refuses to modify its policy, it would be “almost certain to increase anyfine that the regulatorsmay wish to impose,” says Chris Watson, head of the telecommunications practice at the law firm of CMS Cameron McKenna in London. The ruling comes 10 weeks after the U.S. Federal Trade Commission fined Google $22.5 million—the biggest fine in the agency’s history—to settle charges thatit breached privacy protections on Apple’s Safari Internet browser. The FTC said Google illegally planted cookies in Safari, bypassing Appleprivacy settings so thatGoogle could track users’ browsing behavior. The French decision also could create headaches for Google as it faces scrutiny by U.S. and European antitrust regulators. EU anti-monopoly authorities in 2010 opened an investigation of the company that is still ongoing.

Royal Bank of Scotland has suspended its head of rates trading in Europe and Asia Pacific, the most senior employee to be put on leave so far as the bank investigates its alleged role in the interbank lending rate scandals. Jezri Mohideen was suspended last week as part of the bank's continuing investigation into the interbank rate-setting affair, according to two people close to the bank. RBS dismissed four traders last year but Mr Mohideen is the most senior employee and thefirst senior manager to be put on leave. He was head of rates trading in Europe, the Middle East,Africa and Asia Pacific. RBS declined to comment on Mr Mohideen's case but said in a statement: "Ourinvestigations into submissions, communications and procedures relating to the setting of Libor and other interest rates are ongoing. RBS and its employees continue to co-operate fully with regulators." Mr Mohideen could not be reached for comment. The bank has not requested a suspension of his authorisation by the Financial Services Authority, people close to the situation said. The news comes at a difficult time for RBS after the collapse of a deal to sell more than 300 bank branches to Spain's Santander. The bank is braced for a large penalty from regulators over its alleged involvement in the attempted manipulation of Libor, the interbank borrowingbenchmark, following the £290m fine handed down to Barclays this year. Recent court filings by a former Singapore-based trader at RBS have placed the bank under fresh scrutiny over alleged attempts to manipulate Libor. In papers filed at the high court in Singapore in recent months Tan ChiMin -- also known as Jimmy Tan -- said it hadbeen part of his duties toprovide the bank's Liborrate-setters with "input" and that RBS had condoned the practice. Mr Tan was dismissed bythe bank late last year for alleged gross misconduct relating to the setting of Libor. He issuing the bank for wrongful dismissal.