Regulatory aspects of banking business

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Регулирование банков

Have you ever considered what is the difference between a local bank and a department of an international bank?
Which of these organizations is regulated more comprehensively?
Where is it better and more secure to open an aсcount?
Maybe you are thinking about establishing your own bank and getting a proper licence…
If you are interested in these aspects, THIS ARTICLE IS RIGHT FOR YOU!

Banking regulations and operation of transnational banks are highly important for the state policy of any country. International banks functioning in different countries are obliged to follow strict rules set on the basis of local banking regulations. These rules concern bank operations and facilities, the quality and value of loans, capital adequacy and methods to expand it, which are used to improve relations with clients. Also the structure of the banking system depends on certain social and economic conditions.

Transnational banks are characterised by extensive network of departments on a global basis and international operational aspects. But when transnational banks establish a new branch in a definite country, they must follow the local rules of banking regulation and supervision. These features are precisely examined by banks as far as this survey is conducted in order to estimate external factors of the target economy which will prominently influence the actions and functionality of banks in the future. Bank operations are regulated by local and international standards and acts for risk leverage.

Oversight and compliance monitoring of perfomance of international bank departments allows controlling outflow of funds to some extent and prevents banks from evading the prescribed procedure of conducting foreign exchange procedures. Supervision bodies authorise a bank to open branches in case they recognise that it possesses sufficient assets and qualified management team that is able to coordinate the work of created departments successfully.

Establishment of a new bank branch in Italy initially requires grand financial capabilities and outstanding management, otherwise supervision organisations do not allow to open branch network of a bank. The Bank of Italy permits banking consolidation considering financial condition of each bank applying for its permission. It estimates capital adequacy level after the consolidation, profit contemplation, efficient management opportunities, and possible bank competition impact. Moreover, the bank must comply with antimonopoly laws.

Singapore is one of the leading global financial centers and it is the main distributive financial node of Southeast Asia. Such a high position explains why this country has created and successfully maintains one of the most efficient banking systems in the world, which comprises approximately 700 local and international banking organisations and financial entities.

Singapore banking system includes well-developed network of financial organisations which are operating according to international standards and regulations. Singapore is a leader in Southeast Asia as far as it guruantees stable functionality of banking sector at local and international levels and it created all the circumstances required for conducting internal and external financial operations.

As a result, the operation and service of financial organisations of the Singapore Republic is perfomed at top level of leading economies. That is why Singapore banks attract so many international clients.

Hong Kong has united all the banks in a unified three-level system. That is why all the banks are devided into three groups there. The first group includes licensed banks which have no limitations. The second group represents banks with restrictive licence which can have deposits not bigger than 500 000 HKD. And the third group is deposit banks which accept deposits from 100 000 HKD for longer than three months. Hong Kong banks with restrictive licence and deposit banks are different financial institutions which perform the same function.

Banking system in Czech Republic started to develop after collapse of Czechoslovakia which caused many problems, but now the Republic has a highly-developed banking industry. Nowadays you witness continuous real GDP growth in Czech Republic and the whole banking system is highly efficient.

France has a productive two-level banking system. The first level is the Central bank which has become relatively independent since France joined the European Monetary Unit. The second level represents trade banks which are divided into cross-functional and designated entities.

Gibraltar is a full-fledged member of the offshore group of banking auditors and it follows all the international banking regulatory standards. The International Monetary Fund has concluded that Gibraltar fully complies with 18 principles and mostly it coincides with other 7 principles.

Банковская система

Bank performance monitoring

In most cases performance of banks is controlled by documentary compliance monitoring. The main task of this procedure is to find issues in bank performance at very early stages which can cause non-solvency and bankruptcy and effectively eliminate them. Each country has specific features of getting the source information about condition of banks.

For instance, monitoring institutions in England receive annual reports from banks which are verified by external public accountants and reports on some types of operations right after they are completed.

Germany has ongoing banking monitoring based on monthly statements showing financial responsibility, liquidity and other positions; there is an annual report together with profit and loss statement. Besides, German Federal Office can require any sort of information from banks including accounting records and any documents.

Trade banks in Italy provide monthly condensed statement of condition, quarterly report on deposits and loans and annual profit and loss statement.

The quarterly bank reports in France are provided on floppy disks for safety. The main report is prepared every six months and it includes cash flow, profit and loss statement. Condensed statements of condition are sent every month, research information concerning, for example, total sum of shady internal and external credits or created safety funds is provided on regular basis.

The U.S.A. has a very strict system of bank supervision. All the banks are obliged to provide quarterly full financial reports and income statements.

Many countries have recently questioned if central banks are legally acceptable to perform compliance regulation and monitoring. Historically, central banks in developed economies and developing countries completely or partially supervise and regulate banks. The following countries invested central banks with monitoring authority: Australia, Iceland, Spain, Ireland, the Netherlands, New Zeland and Portugal. Some countries intentionally excluded these functions from central banks and transferred them to special state offices.

Shareholders are also monitored to get legal income and follow the interest of loan suppliers and investors.

Each country has a specific banking industry which must be considered by international businessmen. Our team is always ready to consult you professionally how to open bank accounts or get a bank license in various countries.