Global financial markets have endured a solemn collision from the financial crisis and economic downturn. Only a few banks have runaway unharmed as the retail banking manufacturing continues to fiddle with to shifts in the global financial and monetary environment. The shock of these changes will considerably alter the put on the market banking countryside, with modernized and corresponding international parameter, higher risk, investment shortages and a budding lawmaking severance of the put on the market and investment banking sectors (Sorkin, 2008).
The attitude for Retail Banking in Europe and the US’ is an innovative report that scrutinizes the bang of the financial crisis on the put on the market banking market in Europe and the US. It evaluates the current state of the sector, with and comprehensively estimates of the retail banking industry. Most important retail banks are evaluate and ranked based on an assortment of factors to put side by side performance, with key factors contributory to risk profiles and performance potential also provided. The dissertation examines the influence of government interference and discovers the probable collision of prospect legislation upon the industry. It recognizes the future insinuations for the trade banking market in Europe and the US in the next year and assesses budding business models and corporate strategies for the future (Sorkin, 2008).
HSBC governs the retail banking market in 2009, when review by total revenue. Citigroup’s total revenues have fallen by almost 40%, while Bank of America qualified a year-on-year enlarge of 10.8%.
The US is expected to lose its governance of the retail banking advertise, while European banks are on the increase in physique and are enhanced placed to acquire improvement of occasions in 2009. On the other hand, concerns are increasing in the UK over destructive government interference. A severance of retail and investment bustle is requisite to thwart a future crisis. Plummeting a proprietary activity that nearby predominantly high risks has become a key regulatory issue for the retail banking industry (Albellbum, 2009). The input confront opposite the banking industry over 2009-2010 will be shortages of assets liquidity/lack of financial support, high recognition costs, and global price unpredictability. A progression of de-leveraging in most major banks will also result in amplified demands on balance sheets.
Smaller banks and new contestant may have a calculated improvement in the current financial type of weather. Recent data in the US suggests sustained lending from less significant banks, as better competitors economize.
Motivational and Ethical Thoughts
Due to the brutality of the current financial crisis, the entire world has faced real jolts which not only adversely affected the bottom line of the banks, but also broke the motivational and confidential thoughts of the consumers as well. The companies as well as the banks have to work extremely hard to overcome on such crisis and to win the confidence of the people again, because it is the only thing which can add four moons in their long run. The government has to intervene on order to increase the confidence level of the consumers on the entire economy.
Criticism on Bank Role’s in the Current Credit Crunch:
To better understand and criticized on the working of the Banks, we have chosen Joseph Stiglitz' book "FREEFALL, by which we can easily gauge the stance of banks in the current economic crisis. According to him, the banks were doing a fantastic job before the arrival of the current financial crisis and enjoyed huge speculative and abnormal income. That was the stance which induced the banks to adulterate from the ethical standards. According to the ethical standards, the banks must evaluate the person with the help of different analyzing tool like the solvency ratio and all such things to assess the customer’s strength to pay back the amount he borrowed. The banks had not complied with the standards and gave extensive loans to everyone even to the students as well with authentic proofs and concrete evidences. The dilemma of the banks was totally unethical and leads to the recent bankruptcies. Small groups were in the line of the borrowing too but astonishingly the banks did not give adequate amount of cash to the companies which not only decrease the motivation level of the entrepreneur but also effect outrageously on the overall efficiency of the government. In order to get back the economy on the previous momentum, the banks have to play the part from their end and the regulating bank has to keep the discount rate up to a certain level which attracts the consumers easily. Below mentioned recommendations are also essential.
- The government must induce the people to borrow ample amount of money from the bank, to keep circulate the money.
- Must keep the interest rate and discount to a lower level to encourage the investors.
- Must intervene while giving the bonuses to the executives.
- Must do some thing to pledge the deposits of the banks.
- Government must take major actions to increase the dilemma of exports within the country.
- Must do something regarding enhancement of employment rate.
- Keep a hawk eye over the literacy rate.
- Must constrain the companies to follow the rules and regulation appropriately.
- Inflation rates must be kept stable due abnormal conditions.
- Must give ad hoc relief in the taxation issues pertain to corporations.