Summary of the Case Study
Profits at the global banking group HSBC have fallen after it made provisions of more than $1.1 billion to cover losses from the economic crisis in Argentina. The Argentine crisis accounted for $1.12 billion of the write-down - which was slightly higher than analysts had forecast. The figures were in line with analysts' expectations and this helped push shares in HSBC 59p higher to close at 837p. Last year Argentina descended into chaos as people protested against draconian policies introduced to try and avoid default on overseas debt and devaluation of the peso. Eventually the pressures became too strong, and Argentina defaulted on its debts and floated the peso against the dollar. HSBC took a $520m charge to cover losses stemming from the change in value of the peso, and a general provision of $600m for losses in Argentina. Concerns about HSBC's exposure to the crisis in Argentina came to the fore yesterday as it emerged that its investment banking arm was preparing to lower its profits forecast for the company. HSBC Group's 2001 results, notably the economic crisis in Argentina and the related devaluation of the peso by the government which forced HSBC to book a US$1.12 billion charge. Argentina has been a major disappointment foe HSBC and they have a very talented team and all the necessary elements for success in a stabilised economy to have a profitable business. Nevertheless, the situation in Argentina remains both fluid and disturbing. The Argentine monetary collapse in 2001 was devastating to the economy and to a large number of Argentine citizens. Their currency was pegged to the U.S. dollar, 1-to-1, but sank to 3-to-1 after the collapse. The resulting loan default, naturally, created a firestorm in the global financial community. The fine print to all this, however, is that, in Argentina, like everywhere it seems, the rich got richer and the poor got one hell of a lot poorer. Of course, the sanctimonious world press, smelling blood, rushed in. At least there was some, albeit grudging, admission of IMF culpability but, as one could predict, not for the right. Argentina's government won a respite from its mounting economic crisis last night as fears that the peso would go into freefall in its first day of trading against the dollar for a decade proved unfounded. After opening at about $2.20, the peso staged a rally in afternoon trading, breaking through $1.
Prior to Fuller’s transfer, management at the Carson’s location was poorly run using the classical approach. While this approach can be successful, management has to find a good middle ground between caring for the company and caring about their employees. A traditional classical approach recognizes that there are five important factors to running a successful business (Miller, 19). According to text, these factors are planning, organizing, command, coordination and control (Miller, 19-20). These factors can be seen when you look at Third Bank as a whole. In the study, the CEO saw the issues in his company and put a plan together to improve. He had meetings with management, like fuller, to organize a solution. He then commanded all locations
Santander is retail banking financial which was founded in 1857. It is centered in Santander Spain as the name suggests. It has its operations carried in Euro zone widely by its market share and it is known as one of the largest banks in the world for market capitalization. The company has expanded through various acquisitions in 2000. There is a drastic change in the formation of the rules and regulations by the company from acquisitions and merger. Banco Santander had a merger with Banco Central and Banco Hispanoamericano in 1999 thus, considering both the entities equally it is known as Banco Santander Central Hispanoamericano or BSCH. This merger was designed equally so as both the pre-existing firms CEO had took over the control equally
This paper argues that the Mexican peso crisis of December 20 should have been expected and foreseeable. In the year preceding the crisis, there were several indicators suggesting that the Mexican economy and peso were already under extreme pressure. The economy bubble was ballooning to burst so much so that it was simply a crisis waiting to happen.
Economically speaking, Argentina was at the verge of collapse despite its initial strong stability seen at the beginning of Videla’s regime. Argentina adapted a neo-liberal economic system; in addition their initial policies of liberating trade and eliminating price controls were just some policies that would create huge economic problems for Argentina at the time. In order to make up for liberating domestic trade and eliminating price controls control had to be implemented to ensure that the regime had full control of the economic situation which was at stake as a result of the adoption of these polices. Wages in Argentina were lowered which resulted in “real wage well below historical levels” (Nogues). Although this was successful in reducing inflation at first this in time also cause inflation to rise relatively high. As a result of this high inflation that occurred as a result of this police, he Argentinian regime entered a panic and implemented other policies to try to amend this problem, policies that resulted contradictory since these polices hindered the success of one another. The reintroduction of price and exchange controls along with the already implemented wage controls all lead up to “inconsistent policy behavior” (Nogues).The inconsistencies in economic policies lead the Central Bank to classify “perceived capital inflows as being inflationary, and financial controls to be ineffective” (Nogues).
Macquarie Bank (now Macquarie Group) has risen from a small, Australian subsidiary of a UK investment bank to become one of the world’s most prominent banks. It is particularly prominent in the field of infrastructure where an innovative, specialist approach to investing and structuring has given it a platform to grow assets and revenues and secure early market share in an infrastructure privatisation renaissance.
American Express has become one of the leaders in credit and debit card transactions of the financial world. As the most innovative company in the business, they were the first to develop a large-scale traveller’s check. Over the years the company became more of a financial company and with the advent of consumer credit and debit cards they became a major player in supplying this service to it's members. American Express produced a niche market of "card members" to fit the needs of various financial desires. American Express has had to diversify it's products and services over the years to stay competitive with Visa and Master Card, who still control over 75% of the market share. The "elite" consumer still carries an American Express card, and the services and extra benefits associated with "being a member" are still an attractive bonus to many users. With it's financial services, travel business, and it's new Internet business sites American Express continues to grow and even through the recent meltdown in the financial markets they have seemed to emerge as strong as ever and will remain competitive through the 21st century. Once appeared as a travel service company associated with entertainment expenses, and even had several celebrities appeared in their advertisement campaigns. However today it seems as though the company attempts to convey that their service provides an easy and rewarding spending experience.
Although Wells Fargo has maneuvered the recent crisis very responsibly and prudent, it is lumped together with other Wall Street firms and their failure during the crisis. Its’ reputation, as the reputation of any firm on Wall Street, has suffered. The trust in Wall Street firms is destroyed It is believed that the economic crisis was triggered by failures in leadership; we are in a so-called leadership crisis, meaning that the majority of the American public doesn’t have trust in their leaders anymore, and neither do employees trust their managers. This leadership crisis influences the productivity of banks, as can be seen at the falling stock value of Wells Fargo. Therefore, to guarantee enduring productivity, Wells Fargo has to adjust some managerial aspects because only a strong leadership provides a stable future and avoid another crisis.
Europeans arrived in Argentina in 1502. Spain established a permanent colony on Buenos Aires in 1580. Later on Argentina will become independent, but it will not come until July 9, 1816. From 1880 to 1930s Argentina was one of the top 10 wealthiest nations based on their agriculture. It wasn’t until 1986 that Argentina became a democracy, before that it was under military regime. During 1998 and 2002 Argentina had a major economic downfall. This is known as the Argentinean great depression. There were a couple of reasons: During the military regime the country went into debt for not finishing projects. Also, after democracy came back the new president try to stabilize the economy by creating a new currency, thus the country needed loans for this to happen. The debt eventually rose and the country had lost the confidence of the lenders.
Cabral, R. (2013). A perspective on the symptoms and causes of the financial crisis. Journal of Banking & Finance, 37, 103-117
Jalal Hafidi MIS5206.001– HDFC case analysis 1 1. What, if anything, should HDFC do to make existing customers more secure? First of all, all systems can be compromised no matter what, which means it hasn’t been done yet in the IT field. HDFC is still fairly new in the market, with the technology trend, online banking will be the most challenging and vulnerable part of the game. HDFC seems to have pretty strong security system and procedures, however, its models still haven’t matured yet, leading to maybe inconvenience to the customers and/or an opportunity for hackers to test and dust off their hacking skills.
Truman, Edwin M. . "The Mexican Peso Crisis: Implications for International Finance." Federal Reserve Bulletin 0 (1996): 199-209.
During the past year Wells Fargo, a well-recognized bank of the United States, has been trying to clean its name and the mess it got itself into, when it was brought to the public that the bank was involved in generating fraudulent checking and savings accounts for its clients without their knowledge or their authorization. “The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent”
This paper provides an overview of the crisis, outlines the major causes of the crisis, examine alternative solutions to the problem
The bank failure in Jamaica illustrates how negative mindsets and behaviors can devastate the financial system and disrupt economic growth. The primary role of any bank is to safeguard its customer’s money, offer interest rate on deposits, lend money to creditworthy individuals, and make sound investment decisions to maximize shareholder value. Because of rapid economic growth between the late 1980s and early 1990s in Jamaica, the Central National Bank (CNB) and Worker’s Savings and Loans Bank (WSLB) loosened their monetary policies, provided preferential interest rates and extended credit beyond what was reasonable to members of its own board of directors, managing directors, and officers of the bank. These actions posed significant risks to the bank and its future.
Many researchers have pointed out that the global imbalances are the root of the recent financial crisis. Portes claims that “the underlying problem in international finance over the past decade has been global imbalances, not greed, poor incentive structures, or weak financial regulation, however egregious and important these may be.” (2). According to him, the global imbalances lead to “the increasing in dispersion of current account”, which “puts a burden on financial systems to intermediate.”