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Banking

The essence of banking through ages

Banking is an ancient practice, dating back to 8000 BCE, while the banking was believed to have originated, as they lent money for framing and trading services. The concept of extending credit came into action when the banks lent seeds or the seed money as we call it, to the farmers. However, the modern banking system as we see it today seem to have originated in Italy, in 1492, founded by banks like Banca Monte dei Paschi di Siena and Hoare Bank (which stands on London’s Strand today) founded in 1672. There are roughly over 300 traditional banks existing in the United Kingdom and more than 5000 commercial and savings banks actively operating in United States. Banking sector has remained as a fundamental segment of commerce over the centuries. It is also the basement for the businesses both large and small. The relationship between the banks and the business is very crucial for the business to run smoothly, while these relationships are being constantly challenged by many of the new competitive banks and fintechs now a days, the banks remain shielded still.

The successful stories of the banking sectors as we hear today are the one who took anecdotes of taking a chance, extending a small business loan to an entrepreneur etc. Home, auto and business loans are almost synonymous to being a citizen of this earth. Banks however are changing, especially during these last 18 months. With every citizen experiencing a year of dramatic disruption around the globe, pausing to get this in order which are very essential was one of the tasks. Managing the most needed transactions of trust and opting for the leadership which had the skill set of delivering a sense of faith to our economic stability is, what was worthy of our time. Banking still matters because bank-related transactions are a pillar of our trust in currency and confidence in future economic capability and not only because of what we think about the transactions.

Productivity and innovation can co exist and this, one may find in those well-run organized banks. This small bank and business relationship has helped fuel business growth for many centuries now. Paul Saltzman, chief legal officer of Eagle Bank and former president of The Clearing House, said that, Integrity in the banking sector overall fills assurance in the economy and supports the critical part of the  banks play in helping societies to meet their credit needs. He believes that integrity in the banking sector starts and ends with the tone at the top of each institution.

The bank’s CEO and its board members play a crucial part in the lives of the citizens. Large banks manage massive transactions daily of the people who go about their daily lives in the mega cities where as the small banks manly focus on lending to farmers, the local populations and vital rural businesses to maintain a healthy village culture. Each local bank, large or small, carries forward the actions of legislative bodies and central banks. Over these 10 years, we are seeing the game Pac man go live as there is a competitive grab for the traditional banking market share, where the players goal is to eat as many dots as he can before getting eaten himself. Traditional banks have learned that in order to succeed, they not only need to be dexterous and innovative but they also need to maintain the trust they strived so hard gaining all these years and rebuild in these crucial times.

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Banking

Goldman banker hired by the Citi bank

Citigroup has hired Luisa Leyenaar-Huntingford from Goldman Sachs. This new hire is to co-head its global infrastructure franchise. Because, it seeks to win more business from cash-rich investment firms focusing on infrastructure deals. Leyenaar-Huntingford will be based in London. Responsibility will be shared with Todd Guenther in New York.

The pair will work closely with industry teams covering healthcare, industrials, natural resources and clean energy transition (NRCET), technology and communications. Leyenaar-Huntingford helped in the establishment of the Goldman’s infrastructure franchise in her time at the Wall Street bank. They will team up with Citi’s Iberia co-head of banking, capital markets and advisory (BCMA) Jorge Ramos will continue to be a senior member of the global infrastructure franchise.

The infrastructure sector is poised for further growth, according to the memo. The memo was released by Citi’s global co-heads of the alternative assets group Anthony Diamandakis and John Eydenberg, and its EMEA head of BCMA Nacho Gutierrez-Orrantia. There was significant private investment demand across the globe to deal with environmental, energy, transportation, waste, communication, digital and other social needs.

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Banking

Banks make slow progress on UK gender pay

Major banks in Britain made a slight dent in their gender pay gaps. Several insurers went backwards. Companies in Britain with more than 250 employees have been required to publish the difference between the pay and bonuses of their male and female employees. They got a reprieve due to the pandemic, last year. The financial services sector has shown one of the largest genders pay gaps in Britain. The lack of women in senior jobs is the main reason.

Pay gap data from 21 major financial institutions showed a narrowing in their average mean gender pay gap. This is just 0.4 percentage points. Banks alone had a pay gap which narrowed by one percentage point. Ann Francke, chief executive of the Chartered Management Institute said that the UK’s financial services industry has often been singled out. It really does have to get its house in order. Goldman Sachs had the widest gender pay gap in the year to April 2020. Goldman posted a gender pay gap of 51.8%. The bank told the staffs that narrowing the gap further was a critical priority. A spokesperson for banking lobby group UK Finance said, that there is clearly more still to be done.

FTSE 100 insurers Prudential, Legal & General and M&G reported a widening in their pay gaps. Prudential’s UK gender pay gap widened to 45.2%. M&G also reported a widening in its pay gap in the most recent year to 30.5%. The M&G spokesperson said that they are determined to narrow their gender pay gap and will do this by achieving better representation of women in all roles at all levels of our organization. Legal & General’s mean gender pay gap widened to 30.8%.

The insurer said that the legal & general is tackling the underlying causes of its pay gap. This is by creating a more diverse workforce and a more inclusive culture through sustained, long-term action. Admiral had a gender pay gap last year of 12.8%. The 21 firms surveyed were Barclays, HSBC, Lloyds, NatWest, Standard Chartered, Bank of America Merrill Lynch, Goldman Sachs International, JPMorgan, Morgan Stanley, UBS, Credit Suisse, Deutsche Bank, PGMS (a Phoenix unit), abrdn, Schroder Investment Management, St James’s Place, Legal & General, Prudential, Admiral Group, Aviva and M&G.

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Banking

BOJ to lower inflation target-Japan’s finance minister

Japan’s outgoing finance minister, Taro Aso, said that he had proposed lowering the central bank’s 2% inflation target. This is when the prices took a hit from plunging oil prices. He was the finance minister for nearly nine years. The slump in oil price was among the main reasons the government could not officially declare an end to deflation. In his final news conference as finance minister, Aso said that he proposed to Governor Kuroda that, with oil prices falling this much, it would be hard to achieve 2% inflation. Hence, the target must be lowered at some point. He stated this by referring to Bank of Japan (BOJ) chief Haruhiko Kuroda.

Aso also said that the governor said he would do his best to achieve the target. This is stated by adding that policymakers must scrutinise at some point, why the BOJ’s inflation target of 2% has not been met. The remarks highlight how the government and lawmakers distanced themselves from the BOJ’s target years ago, despite central bank reassurances that achieving the target was possible by maintaining or increasing stimulus.

Aso was deeply involved in negotiations with the BOJ. After Kuroda took over as governor, he deployed a massive asset-buying program. This is for pulling Japan out of deflation. Aso supported the BOJ’s stimulus efforts. He is a member of the cabinet. And also, had raised many doubts that monetary policy alone can reflate the economy out of the doldrums. New Prime Minister Fumio Kishida is set to form a cabinet.

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