Professional Documents
Culture Documents
Prepared for:
Syeda Mahrufa Bashar
Course Instructor: F403 Financial Markets and Institutions
Assistant Professor
Institute of Business Administration, University of Dhaka
Prepared by:
RH-01 Fariha Islam
ZR-03 Abdullah Atique
ZR-06 Munkasir Masud Bhuiyan
ZR-60 Sajeed Alam
RH-63 Sayeda Shifat Nazmee
Group 01 Section-A BBA 20th
SUMMARY OF ARTICLE 1:
GLOBAL BANKS
A WORLD OF PAIN
THE GIANTS OF GLOBAL FINANCE ARE IN TROUBLE
Since the 1990s, three kinds of international firms have emerged- investment banks, banks that have
gone native, and the global network banks. The global network banks are considered the most popular
approach and engage in a number of financial activities such as lending to and shifting money for
multinationals in scores of countries, and in some places acting like a universal bank doing everything
from bond-trading to car loans.
While this model of global banks include some of the biggest names in the world, it is now in deep
trouble. Giants such as JPMorgan Chase, HSBC, Citigroup, Deutsche Bank, and Standard Chartered
are likely to shrink down their global operations, and in some cases risk closure. Domestic lenders
such as Lloyds, Wells Fargo, and other midsized banks are doing much better. Among the global
giants, only JPMorgan Chase is doing passably well in terms of ROE, all others doing much worse
financially.
Around 20 years ago, the banks hoped that globalization would lead to an explosion in trade and
capital flows. As they expanded in the 1990s and 2000s, all of these global giants such as BNP
Paribas, Deutsche Bank, HSBC, Standard Chartered, and Chase concentrated on multinationals.
However, trade finance, currency trading and cash management typically account for only a quarter of
sales today. The model of global network banks is in trouble for three reasons difficulty in
management, fierce competition from second-rate firms, and the regulatory backlash after the
financial crisis of 2008-09.
Some of the measures of viability for global banks include best case return on equity and the
comparison between the benefits of being global with the costs. None of the global giants look good
in terms of these measures from the outside, whereas the internal situation are thought to be even
worse.
However, although the financial arguments for global banks no longer appear convincing,
unscrambling these firms would be hellish. There are two possible rays of light for global banks gradually rising interest rates in America and declining competition. Nevertheless. There will always
be new competition to push down margins possibly from the expanding banks from Japan and
China. The Western global network banks were right about globalization, but they have yet to work
out how to prosper from it.
SUMMARY OF ARTICLE 2:
issues due to the expansion of off-balance sheet activities while the similar larger banks are facing no
such harassment.
In conclusion the crisis in 2008 is evidence of low failure rates of large banks. Large banks enjoy
economies of scale allowing them to lend out cheaper source of loans. Still 2015 appears to be a
relatively favorable towards smaller banks over larger ones.