The current state of affairs shows that even the biggest banks with good reputation can fail in realization of their objectives. Thus, the Germany’s biggest bank, Deutsche Bank, has been fined by the court for more than seven hundred thousand US dollars. The reason for this is the failure to give proper advice to middle-size client on the real risk of a complex swap transaction.

The conflict started from the side on Ille company, the client of Deutsche Bank. Ille’s business deal embraced a bet on the difference between two-year and ten-year interest rates. Deutsche Bank’s fixed-rate pays to the company were netted against Ille’s pays to the bank, which were grounded on the interest rate difference, spiced by a coefficient.

The court claimed that Deutsche Bank’s warnings to Ille company were insufficient and could provoke the risk of loss. The court also stated that there was a conflict of interests, as long as Deutsche Bank was both giving advice to the client but actually, betting against it.

The bank should have informed the client how much the deal was worth to Deutsche from the first day. In Ille’s case it was around 4 percent of the contract’s interest rate swap. A solicitor for Deutsche Bank warned earlier this year that disclosing such revenue could provoke a second fiscal crisis. The judges obviously were not persuaded.

Personal finance is a point of interest for nearly each individual, basically when it comes about saving cash. One may suppose that keeping cash at home is safe, however events reveal many risks attached to the very method of saving finances. A number of persons just are not able to live in one location with their ‘treasure’: they’ll always be allured to spend it in everyday life. (continue reading…)

Offshore banking is a quite popular business nowadays and ever more people are involved in it. Offshore banking provides a method to overcome the limitations on currency movement both for individuals and organizations. Usually offshore banks are situated in places that propose fiscal and legal advantages. There’s less confinement in legal injunctions and low or at all no taxation in such locations.

In spite of the privileges ascribed to such banks, there exists implicit disbenefit as well. As a matter of fact, some offshore banks stipulate greater interest rates than the home banks due to their lower expenditure base. The regulation isn’t developed to protect the holders’ accounts from frauds or money laundering. Thus, a holder cannot be assured that his savings are in total safety.

To continue, the returns on certain offshore banking accounts might be substantially lower than common bank accounts. That is why the advantages of offshore banking appear at a high cost. The other offshore banks prescribe fees and minimum deposits necessary to open and manage accounts. Hereby, it makes them difficult of access to the community. (continue reading…)

Worldwide economic crisis left an unpleasant imprint of banking system. Banks and individual financial institutions tried to outlive the recession providing new policies in servicing and customer area. Today many EU countries provide austerity plans for the mass fields of human activity. UK government is not an exception: it introduces changes to the banking system which are opposed by banks.

The changes touch upon bonuses which will be limited from 1 January, 2011. Top UK bank bosses are going to meet with the Business Secretary to discuss this controversial issue. According to new governmental introductions, the banks commitments as for the lending to SME must be increased. In its turn, the government will set a limit to bonuses and won’t bow to the wishes of banks. Top banks threaten to leave UK in case the following limitations are set into force. However, the UK government assures that stricter regulations are necessary to provide in order to avoid default in banking system.

Public opinion has divided on those who back the changes and those who support banks. For many people bonuses are the main reasons for financial crises. Supporters in the form of British Bankers’ Association believe that the above mentioned changes will put British banks to higher disadvantage comparing to rivals outside Europe.

Irrespective of the opposition, the British government is certain that limitation of bonuses and increase of lending to SEM will be a success and help the banks to outlive all instable situations.

The Bank of Japan’s Policy Board has decided to retain the country’s interest rate at 0.1%.

The monetary policy decision was made without dissent, and was made as Japan continues its moderate recovery, which has been boosted by improving economic conditions overseas.

Export and production have risen, as has private consumption, although employment remains in some difficulty.

The decision to leave the rate unchanged was widely anticipated, and follows similar moves by the Bank of England and the European Central Bank (ECB) to leave the respective interest rates of the UK and the eurozone at 0.5% and 1%, both of which are historic lows.

The UK has had the same interest rate, its lowest ever, for more than a year, and the interest rate was not expected to change this month.

Later in June, the Coalition Government will lay out its emergency Budget, which is commonly thought to include spending cuts and tax hikes, possibly including VAT.

If you want a basic savings account, there are two ways to go: a traditional bank, where your money will earn a pittance; or an Internet bank, which will pay you more. That’s a no-brainer. Go online!

You open the account online and transact your business there. You can also access the account by mail or phone and speak to a service rep if you have a problem. The rules are simple: no fees, no minimum deposits, no complicated accounts, no bank lines, no time wasted driving back and forth to see a teller. And your savings will earn a lot more money.

You can link your Internet savings account to the checking account you already have at a traditional bank. That lets you move money back and forth with the click of a mouse. Consider having your paycheck deposited into your Internet savings account automatically. To pay bills, move some of that money into your checking account as needed. There might be a two- or three-day delay before the traditional bank credits your checking account with the cash, but so what? You’re earning interest on cash that would otherwise lie fallow. If you’d rather send your paycheck to your traditional checking account, set up an automatic savings arrangement. Have a fixed sum of money transferred to your Internet account every time your paycheck comes in. (continue reading…)

The online bank is a wonderful thing. It has all the features of a traditional bank and also has some new features too. Hence people can use these features and simplify the way they handle their banking needs. Online banking services have thus given the power to human beings to operate at any time of the day as the websites operate 24 hours and 365 days every year.

The main features of online banking are many. The ability to check your accounts from anywhere makes the online banking feature amazing. The requirements are simple as these websites do not need any special type of software and are also quite simple to operate. They come with useful features like paying bills online and also acquiring bank statements without going to banks as these statements can be downloaded online.

There are not many differences in terms of functionality when it comes to online banking. The services that they offer are the same which are available in banks but the major difference is that these transactions do not require people to stand in counters and wait in a queue. All they have to do or normally do is to access the website of the bank and with just a few clicks of the mouse and few pushes on the buttons, you get to know many things. These things can be the amount of money that they have in their account, or making payments or even buying items with the help of the online shopping feature present in some of these websites. Then there are also services like management of loans and keeping specific financial history for individuals. Online banking services have thus been a boon rather than a bane and have entirely changed the way people now perceive banking services. (continue reading…)

1. The financial system

The financial system is a network of financial organizations, which carry out and regulate financial activities, the ministry of finance, the treasury, the central bank, the tax service, stock and currency exchanges.

There are budgeting, financing, investment, banking, taxation and insurance are the main forms of financial activities. Financial assets flow in the system from savers to borrowers, who use them. Savers and borrowers are linked by financial intermediaries. They are banks, finance, investment and insurance companies.

The heart of Britain financial services industry locates in the famous “Square Mile” in the City of London. It is one of the largest financial centers in the world. The world’s largest banks and financial markets located there. For example, London Stock Exchange, the Foreign Exchange Market, the Financial Futures and Options Market, Eurobond and Eurocurrency markets. (continue reading…)