TBTF: Thirty companies deemed to be Too Big to Fail

Today’s Financial Times has the news article on a list drawn by the Financial Stability Board declaring 30 companies including 6 large insurance companies deemed to be Too Big To Fail.

It will be interesting to see how these companies will shape up over the coming 12 months.

Some interesting omissions are Lloyds Bank, no additional bank from Canada besides RBC. CALYON is not on the list as well. Even Rabo Bank of Netherlands, the only AAA bank in the world does not make the cut. The reason: It is only present in Netherlands, for the most part, and hence not interwined with the rest of the world.

Not a single bank from Asia which is because they are not as interconnected in the global financial system as their counterparts from US and Europe and more importantly are very well regulated and strongly capitalized.

Banks
US
Bank of America Merrill Lynch
Citigroup
Goldman Sachs
JPMorgan Chase
Morgan Stanley
Canada
Royal Bank of Canada
UK groups
Barclays
HSBC
Royal Bank of Scotland
Standard Chartered
Switzerland
Credit Suisse
UBS
France
BNP Paribas
Société Générale
Spain
BBVA
Santander
Japan
Mitsubishi UFJ
Mizuho
Nomura
Sumitomo Mitsui
Italy
Banca Intesa
UniCredit
Germany
Deutsche Bank
Netherlands
ING

Insurance groups
Aegon
Allianz
Aviva
Axa
Swiss Re
Zurich

Thirty financial groups on systemic risk list
By Patrick Jenkins and Paul J Davies in London

Published: November 29 2009 23:30 | Last updated: November 30 2009 08:17

Coming to Delhi

With holiday season upon us and Dubai having Eid as well as UAE National day celebrations with many holidays, I shall be visiting Delhi from 26th Nov to 2nd Dec. If you are in Delhi and would wish to meet up, please do drop me a line.

A Guide to Banking Services in Dubai

Almost anyone from any part of the world can open an account in Dubai.

However, banks can be classified into 3 broad types in Dubai, as follows.

1. Retail banks offering local banking services including chequing (though, not for non-residents), loans, deposits & investments. These are regulated by the Central Bank of UAE. Such banks are from various countries but it is better to deal with locally based banks for business as well as regular chequing accounts since they offer the convenience of many branches and many more ATM’s. As per current practice, with the exception of UK, only 1 bank is allowed to operate in the UAE from each country with the added restriction of one branch in each emirate, so you shall find one bank with relatively few branches by a foreign bank, however, local banks have tens of branches and some have many more.

2. Private & Corporate Banks in DIFC. These banks do not offer chequing accounts nor loans in AED (local currency - dirhams). They are allowed to offer only corporate banking & private banking services for high value clients, above USD 500,000 in net worth and market services from various countries and can also book business in DIFC (which follows separate and strong rules & regulations) and are regulated by the DFSA.

3. Representative banks from various countries. These are present in DIFC as well as outside under the supervision of the Central Bank of UAE. Such banks 'represent' the countries they are from and offer services predominantly to nationals of their own countries, i.e. opening accounts, doing investments, providing loans from their country of origin. One exception is Switzerland from where they pretty much provide all kinds of investment service to all type of nationalities. You can find banks from most countries of the world operating under representative offices in Dubai.

If someone wishes to open a basic bank account, all they have to do is to visit a local branch, provide their UAE residence visa, sometimes a letter from employer (depending on the bank), copy of passport and voila, you shall receive a cheque book and ATM card with access to online banking. This process is different for non-residents. Non-residents also need to provide a bank reference letter from any country along with passport and they can receive a savings bank account and fixed deposit services, without a cheque book and invest in deposits as well as wide variety of investments.

There is no restriction on the currencies that you may invest in and capital/money can flow freely without any Govt restrictions to any other part of the world.

Investment products are provided by locally based banks as well as from DIFC based banks from various countries catering to both residents as well as non-residents for which almost all banks have specialised divisions usually called "Priority Banking" or "Wealth Management" and for high value clients are called “Private Banking”.

Some banks also offer weekly/monthly draws whereby a client who has placed money in a fixed deposit with/without interest, could potentially receive AED 1m or thereabouts if he/she wins that week/month. Such promotions are quite popular with a few banks, however, one local bank has been extremely successful in this marketing strategy to attract many clients. Due to extremely high competition in Dubai, banks come out with innovative strategies and marketing ploys to attract new customers.

Dubai has the highest concentration of banks in the world, when compared to any other city, despite a relatively small population size, which makes the banks extremely competitive.

Loans are usually not provided to non-residents and are available based on UAE residence visa (businesspersons or salaried employee) for cars, homes, personal purposes etc. Credit cards are usually not available for non residents but exceptions are possible in some cases.

Most banks provide investment services through their private banking divisions to place money or investments abroad from a very wide variety of locations. A few locations where business may be booked are: Singapore, HK, India, Jersey, Guernsey, Zurich, Geneva, London, Delaware (US) etc.

All in all, Dubai is a very attractive, well located, favorable for banking and a safe place to maintain a bank account or use the location to seek services from various parts of the world, by dealing with bankers who are physically based in Dubai.

Dubai is the most sought after financial service providing location across Middle East and Africa. Bahrain is another one but is not as large as Dubai is today although it used to be until the early 90's.

US Govt. can now 'officially' view European bank account activity

We all know that since Sep 2001, US Govt has had access to passenger data of all passengers on all airlines touching down in the US.

Now, it is also confirmed that US Govt shall gain access to all bank account activity (in addition to the airlines) regardless of nationality or origin (if the a/c is based in EU). The agreement has also confirmed that access shall be granted to the SWIFT international payment transfer system. SWIFT is used by pretty much all banks worldwide for transfer of money from one party to another or within same remitter/beneficiary accounts. However, what is alarming, that in the name of terrorism, all transactions are now being watched by the Big Brother, thus making invasion of privacy 'offically legal", despite being in different parts of the world. this only means that you can run away but you cannot hide and that the world is actually a very small place.

The following news was just released by German newspaper - Deutsche Welle. I am confident that this will not be captured/relayed by any of the major media organisations worldwide.

EU to share consumers' financial data with US

Excerpts:

US and European negotiators have completed a draft agreement that would give American law enforcement access to Europeans' financial data to combat terrorism. The deal has consumer and privacy advocates up in arms.

Author: Brett Neely
Editor: Susan Houlton