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Global Banking

Industry
Foreign banks in india Upcoming foreign banks
in india
 ABN-AMRO Bank Royal Bank of Scotland
 Abu Dhabi Commercial Bank Switzerland's UBS
 Bank of Ceylon US-based GE Capital
 BNP Paribas Bank Credit Suisse Group
 Citi Bank
Industrial and Commercial
 China Trust Commercial Bank Bank of China
 Deutsche Bank
 HSBC
 JPMorgan Chase Bank
 Standard Chartered Bank
 Scotia Bank
 Taib Bank
What is Bank Today?
The current banking scenario is greatly different from the
past.
Only 15 to 20 years ago, most Western banks generated
90% of revenue from interest income. Now this percentage
has fallen to 60%, sometimes as low as 40%.

the concept of banking is being modified and the traditional


barriers among financial service sub industries (retail
banking, private banking, investment banking, asset
management, insurance, etc.) are vanished.
GLOBAL BANKING
The common trends resulted in pace of
dramatic change for banking are:
The focus of banking is shifting from
transactions management toward sales of
financial products.
Barriers to entry for the retail banking
segment are being lowered.
The growing variety of delivery channels for
banking enables new entrants to thrive.
Challenges facing by global
banking
Credit Crisis

Hedge fund

Money-laundering
Factors affecting global
banking industry
• The technological breakthrough caused by
the eruption of e-banking and e-finance.
• Worldwide consolidation and consequent
restructuring.
• Increasing competition in terms of both
markets and products.
• “Contamination” among different industries.

Factors affecting global
banking industry
A slowing population growth and increasing
average life expectancy and per capita income.
The growing importance of a clear strategic
intent in the banking industry.
New competitors are entering the financial
service business.
Consolidation.
CONSOLIDATION
Consolidations take place for the following
reasons:
To take advantage of economies of scale.
eg:-the merger between the Swiss banks UBS
and SBC creating one of the largest banks in
the world.
To have access to distribution channels.
To widen the range of products that the bank
can offer both actual and potential clients.
eg.:-between Citibank and Travelers, has
originated Citigroup.
To enter a new geographic market.
Highlights of Global crisis
In October 2007 major failures start to appear
in the world’s financial industry, Swiss banking
giant UBS bank has announced losses $3.4bn
from investments linked to sub-prime.
Following, American banking giant Citigroup
posted a sub-prime loss of $40bn.
US investment bank Merrill Lynch revealed a
$7.9bn disclosure to bad debt.
After failing to search for a potential buyer,
Lehman Brothers becoming the first major US
investment bank to collapse since beginning of
the credit crisis.
Aftermath of global
crisis
IMF warns that world economy development
could decline to its lowest point ever since
World War II to just 0.5% this year.
In USA the interest rate has been cut hugely by
the Federal Reserve from the 5.25% to 0.25%.
In UK pound was at a 23-year low against the
dollar.
The Bank of England has cut interest rates to a
record low of 1% -the lowest level in its 315-
year history.
Stimulus Packages
across the Globe....
The US Congress passed a stimulus package
worth $ 838 billion, aimed at creating millions
of new jobs and steering the economy out of
the recession.
China announced a huge economic stimulus
package of an estimated $586 billion.
Japan announced $100bn to curb recession.
Germany announced $63bn.
Major bailouts of global
bank
In the biggest banking bail-out in American
history, mortgage companies ‘Fannie Mae’ and
‘Freddie Mac’ have been ‘nationalised’ by the
US federal government.

This has transferred a staggering $5 trillion of


mortgage debt from private to public hands.
Nationalisation of Northern Rock, in Britain,
involved taking over £100 billion of loans.
Major bailouts in banking
Bank of America buy Merrill Lynch in an all-
stock deal worth $50 billion.
Stricken Beligian-Dutch bank Fortis was bailed
out by the governments of Holland, Belgium
and Luxembourg to the tune of €11.2bn
(£8.9bn).
Iceland nationalises Glitnir bank. The
government bought 75% stake in the bank for
600m euros .