Table of Contents
This paper is about the discussion on the recent the economist article based on global banks: a world of pain, Citi group: Citi never reaps and Greece economy: running on empty.
GLOBAL BANKS: A WORLD OF PAIN[G1]
Bail-out big banks:
In my opinion, the bailout happens, when the money of the bank is in the struggling entity to prevent its complete collapse. The world largest banks are connected through a mesh of short term loans which provide credit guarantee and financial contracts of others. This connection is a risky one that can also be a cause for a big bank to bail out. The economic crisis may also happen because of the doubts aroused in the ability of a single financial firm to meet its prescribed responsibility and to repay their loan. The bank regulation can improve in requiring some reserve ratio during the thriving times. Another way is to limit the percentage funding which come from the short time money market. (Pettinger 2009)
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Giant Firms proved hard to manage subsidiaries and struggled to be built common system:
In my opinion, the giant firm may fail to build a common system may be because of the disappointed employees of the firm which may be because of the rules. The big firm won’t be having enough time to check whether the highly talented employee is working for the good on-going project and to know whether he is comfortable with that or not. I also feel that good discussion is a well said example for the consistent growth of the firm. So these giant firms might have not followed the discussion process properly. Priority should also be given for the talented employees to work for the wellness of the firm. The mission and vision should be clearly set and the execution of the process for it should be done accordingly to make their work more easy and it will also pave way for building common system.
Basel 3 and complicated regulation and increase the cost:
In my opinion, the global and the liquidity rule (Basel 3) can be focussed better than they do now. All the banks will face a strict regulation because of the new liquidity standard, the risk coverage, and the new leverage ratio. Because of the bank capital will also decrease along with the increase in capital ratio for the upcoming years. This will cause problem for some banks. I feel that bank will experience the pressure on Return of Equity (ROE) because of the increase in the capital and the liquidity cost. For this bank have to work in a number of areas and have to work on Basel 3 issues and they have to set priority for the close, mid and for the longer term.
In my opinion, I agree that the Citi bank had money but they are still in a question of knowing how the straggling financial firm turn out to be. It had a good growth. According to George Moore the chairman of new look committee said that they boost the development of the business till maximum. But the current head is controversy. It’s Michael Corbat[G4] who is the CEO of Citi group. All its branches are shrinking. Corbat(CEO of Citi group) itself[G5] had sold out nearly 60 businesses. Citi had already failed in the stress test in 2012 and 2014and it’s asked not to hike its share. At first the failure deceased Vikram Pandit, the former chief executive and how if this failure continues it will be hopefully Corbat who will be deceased from the Citi group. [G6]It made a mark in the market because of its strength and the responsibility. Certain activities of Citi group are glitches. Usage of property design instead of cash machine by Citi group is a well said example as because it should be the only bank using it. Retail business reduction is uptight. At first they thought of reducing the operation in Dallas and Houston of Texas. But later it was in a stage to extinct the complete state. Its operation in the threat lying areas is also a risk. It will surely provide few or no return. Some rules are more complicated here which makes the customers to move away. Mr.Peabody share his view for this shrinking of Citi group is because of responsibility increased in taking many risky transaction for example bought deals. It is of consuming the seed corn and producing the profit at a later stage. City group comments that it is of helping their customers who are in a verge against drive in the currency and commodity. (Citigroup Citi never reaps 2015)
In my opinion, I am agree that the vital operation initiated by the new prime minister of Greece Mr.Alexis Tsipras asking for the reviled bond out extension of the country is misleading as an awaiting crack from the creditors made the government back and leaning to the close edge made the state economy as liquidation and might more worseness in the country. Unbearable process is only has been provided by the government for fleshing out very few restructurings. After 6 six years the Greek economy showed a little improvement. In the last three months of 2014 there was a fall by 0.2% because of the election. Battering the economy and public finance by political confusion can be of 3 ways as follows:
- Compulsory revision of bank accounts into less valuable drachmas
- Political disruption
- Political storm in public finance
- Compulsory revision of bank account into less valuable drachmas, some business and house hold are pulled out. Many withdrawals continued, deposit loss which leads to striking capital controls. Out of these some possible help is reined by ECB (European Central Bank).
- Political disruption is created ambiguity. Holding the domestic project frightened the foreign investors. This will not decrease until or otherwise confidence is created by the government to the investors.
- Political storm in public finance , it is bond market cut off made the government to struggle to pay the bill.
I am agree with the author that the worsening of the finance is because the worse treating of the Greece government. A good among bad is it did not affect the tourism of that country. Mr.Trispas is also in a need to break most of his political promises (Greece’s economy Running on empty 2015)
A complete discussion of the global banks, their struggle in the competitive market because of the emerging local banks and the internal reason for the back struck has been discussed in the paper. [G7]The complication in the regulation made the banking tough. The Basel 3 norms are also complicated which made the banks to have the risk coverage and the liquidity standards. Continuous revision for the banks along with discussions can be made to maked their share in the market consistent.
Citigroup Citi never reaps. March 7 2015. http://www.economist.com/news/finance-and-economics/21645811-making-money-global-banking-network-difficult-it-alluring-citi.
Global banks A world of pain. 7 march 2015. http://www.economist.com/news/finance-and-economics/21645807-giants-global-finance-are-trouble-world-pain.
Greece’s economy Running on empty. 7 March 2015. http://www.economist.com/news/finance-and-economics/21645810-political-brinkmanship-has-exacted-heavy-economic-toll-running-empty.
[G1]You summarized the articles and did not provide your opinion,
I break-down to sub-titles , for each write 150-200 words
Search for ready made argument in the net and rephrase it and start in my opinion and I agree or disagree
[G3]Re-write this para As similar what I did with Greece Economy below
[G4]What his position ??
[G6]It is not clear what you want to say , re-write the sentence
[G7]Here make summary of the issues above in 4-7 lines
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