J. Sifri Consulting Services: May 2007 Archives

The Arab Academy for Banking and Financial Sciences Discredited

This week past, the Ministry of Higher Education in Jordan has discredited all degrees granted by the Arab Academy for Banking and Financial Sciences. Last week the Ministry announced in Jordanian Newspapers that the Academy has failed to provide its students with quality higher education. The Ministry claimed that the substandard education and professional training which bankers have been receiving at the Academy since quite a long time had contributed to the deterioration of the performance of the banking industry in Jordan. The Ministry reiterated that they will no longer sanction the Academy’s academic qualifications neither do they acknowledge the previously awarded ones.

Since inception, the number of the Academy’s PHD and MBA graduates exceeded one hundred thousand in addition to a vast number of undergraduates in Jordan, Syria, Lebanon, Egypt, Oman, Yemen and Libya where the branches of the Academy are situated. The question remains whether these qualifications are considered valid or would they be discredited as well.

Although the Academy must be held responsible for the poor quality of its programs, the Ministry of Higher Education bears part of the responsibility for keeping its eyes closed for so long. The MoHE have been taking serious measures to improve the quality of banking training and education in Jordan which is an important accountability. The Minister of Higher Education Ibrahim Toqan stressed that all banking and finance universities and institutes will be discredited by the government if they were found unfit to do what they were sanctioned to do; teach students banking at international standards.

Posted by popular at 03:02 PM | Permalink

Global Custody - Big Players

JSCS Securities Services www.graincon.com

The global fund managers relentlessly screen the globe’s continents in search for investments opportunities. The emerging markets have been a source of handsome returns for savvy fund managers who were sharp enough to spot the potentials of these untapped markets. A key element of their success lies in the heart of their investment decision making process; their buy and sell orders are mostly based on a long term investment strategy rather than some hasty short term speculations.

Last edition we highlighted the industry volumes. This week we will look at the main service providers, their geographic distribution and their stature in different regions around the world, most particularly Middle East, Asia, Australia, Central and Eastern Europe, Caribbean, Latin America and the Caribbean.

In Asia, three major banks literally dominate the securities terrain, namely the HSBC, CitiBank and Standard Chartered. They share the leadership and they fiercely compete against one another in every major market in the region.

In China, the largest sub- custodian is the HSBC where it has had a continuous presence since 1865. The HSBC only serves corporate investors who meet specific criteria set by the bank and do not serve individuals or MSEs. The HSBC is also the leading sub-custodian in Hong Kong, Indonesia, Malaysia, The Philippines, Taiwan and South Koria.

The Bank’s prevalence is due to numerous elements, including the following:-

In-depth knowledge of the local markets.
Extensive Asian network.
State of the Art automation.
High standard of service.

The HSBC operates its custody and clearing business under the umbrella of its fully owned subsidiary “The Asia Pacific Securities”.

In the Middle East, the HSBC operates within a network of 10 custody and clearing sectors each located in a different country, namely UAE, Kuwait, Oman, Jordan, Bahrain, Qatar, Palestine, Saudi Arabia, Lebanon and Egypt. Thus, it is the most widely spread international bank offering securities services in the region. Further more, the HSBC was granted a license to offer its securities services on the recently built Dubai International Financial Exchange.

In Australia, Westpac Banking remains the predominant sub-custodian. They have over 950 branches spread across the continent. The group also provides its services in New Zealand and throughout the region. The bank have more than $150 billion of assets under custody and management.

In the Caribbean, once again the HSBC plays the leading role as it offers institutional investors in addition to private clients a variety of services such as fund administration, trust custody, asset management and banking services to individuals and institutions. 40% of the bank’s business is derived from global funds services. Its global network covers key financial and offshore centers including Cayman Islands, Cook Islands, Dublin, Guernsey, Hong Kong, Isle of Man, Jersey, London, Luxembourg, New York, New Zealand, Singapore, South Africa, Tokyo and Bahrain.

In Central and Eastern Europe, Bank Austria Creditasntalt, part of Italy’s UniCredit, competes with CitiBank, Deutsche and ING in almost all the securities markets in there. Bank Austria is especially strong in Poland, the Czech Republic, Slovakia and Slovania. It also have connections through Germany’s HVB units in Bulgaria, Croatia, Hungary, Romania and Ukraine. The bank supports global investors entering the CEE markets with quality service and comprehensive range of services than can be tailored to individual needs.

In Latin America, Citigroup prevails in this region. The bank’s Florida – based operations center is equipped to handle peak volumes with consistently good service. In Mexico, the group provides more than 88% of the market’s foreign investors. The bank’s official sit on the board of local clearinghouses and serve on technical committees in many countries around the region where they actually influence major changes in securities regulations.

In Southern Africa, Nedbank Investor Services are the market leader. They serve more than 90 institutional investors. Their integrated custody services together with the advanced technology that allows online real – time reporting and trade confirmations place them ahead of all others.

In Argentina and China, the HSBC leads the markets. Although the bank has comparatively recently entered the market of Argentina, it is deeply rooted in the Chinese market as it was established in as early as 1865 under the trade mark of the Hong Kong and Shanghai Banking Operations at that time. As highly respected and reputable financial institution, the HSBC operates through a large network of branches. It is said that the bank owns more than 20% share in the Bank of Communications, i.e. China’s fifth largest bank.

In Western Europe, The PNB Paribas of France is the leader. Through the Paribas Securities Services, the bank offers its standardized services all over the main markets of Western Europe. The bank offers specialist services and investment operations support to financial institutions. It also provides support and advisory services to issuing companies, including share registry and shareholder management services and local paying agent services. The serves broker – dealers and global custodians through its multi -direct clearing and custody, or MDCC, line of business. It continues to increase its pan-European coverage.

In Austria, Bank Austria Creditanstalt is the leader. The BA-CA was recently bought by the Italian bank UniCredit. With assets totaling approximately Euro 139 Mio and a 25% market share, the bank is by far the largest in Austria.

In France, BNP Paribas Securities Services is the leading provider of sub-custody services in France, with 2.4 Billion Euro in assets under custody (at year end 2004). The French bank has also boasts an extensive network outside of France. In addition to the provision of core clearing and settlement services, it also provides an extensive range of value added services including collateral management, outsourcing, fund administration and accounting, performance analysis and transfer agency service. Its securities services business comprises four main areas: clearing, settlement, global fund services, global corporate trust and global liquidity services.

In Brazil and Chile, the CitiBank Brazil unit is the largest sub-custodian in the country and offers the full range of securities services i.e. safekeeping, settlement and corporate actions. The Bank maintains links to the depository and clearing entities for stocks and corporate bonds and offers efficient handling of transactions. In Chile too, the bank leads the market with an overwhelming share of 80%. The Bank acts as an agent for the Chilean global depository receipt programs. Its brokerage subsidiary is a member of the country’s two major stock exchanges.

In Canada, Royal Bank of Canada Global Services is the leading provider in the Canadian Market with a strong focus on securities lending and trading services. It also expanded its European presence recently, entering into a joint venture on the institutional investor services side with Dexia BIL to create RBC Dexia Investor Services. The new combined RBC Dexia Services boasts 2 Trillion Canadian Dollars in assets under custody.

In the Czech Republic, Ceskoslovenska Obchodni Banka (CSOB) prevails there. Part of the Belgian banking group KBC, CSOB is the largest Czech – domiciled bank and the largest CEE bank by assets. It is a universal banking group providing a range of financial services and is well placed to serve the needs of foreign investors entering the Czech marker as the exclusive partner of CzechInvest, a government investment agency.

Source; Internet – Used with permission.

www.graincon.com , Banking Consultants, Securities

Posted by popular at 08:30 PM | Permalink

Fair Trade

www.graincon.com

By Yacoub E. Sifri

Every now and then we hear about demonstrations against the World Trade Organization (WTO), the International Monetary Fund (IMF) and the World Bank. Because protesters believe that poverty in the world must be reduced or even eliminated, they strongly resent globalization.

Not every one necessarily agrees with the protestors. Of course, closing down international trade would make the world a much poorer place for most of us. Many believe that globalization entails more trade of goods and services and thus greater creation of wealth; this means higher standards of living and less poverty. But again, this can only be achieved if and when the contribution of other countries in the world trade increases rather than having the international trade dominated by few of the world’s countries. Many Asian countries have brilliantly adopted long term strategies to increase their share in the world’s trade and they succeeded to do so. Conversely, many Arab countries continue to lag behind with shocking accelerating rates of poverty whilst they own staggering volumes of expensive natural resources. This is mainly due to the fact that these countries had drawn their trading strategies with the sole aim of strengthening the security of the ruling regimes rather than working to increase their countries’ trading activities and developing their GDPs.

The debate on globalization seems an endless one. The issue has even developed to question the viability of Capitalism and whether or not it is the best system when taking into consideration the different socio economic environments around the globe. The collapse of communism almost a decade ago has strengthened the conventions in capitalism, but nowadays the emergence of new social ideologies and the widened political disputes between the Middle East and the west is causing to revive long extinguished systems such as communisms, religious systems …etc.

“…In his book “Free Trade Today”, Professor J. Bhagwati identifies four different new critiques that question the benefits of an open trading system:-

‘Demands’ for ‘fair trade’ that either mask protectionism or degenerate into it, in both cases charging that free trade lacks fairness and that fair trade restores it.
Concerns that free trade harms the environment.
Charges that free trade (and its chief institution, the WTO) is incompatible with the advancement of social and moral agendas.
Fears that free trade hurts the real wages of workers and that rich countries trading with poor countries create poor in rich countries, and in poor countries that free trade accentuates poverty. Let us discuss each one of these points in turn …”.
But what is fair trade and what is unfair trade? This is related to the cost of factors of production where in certain countries the cost of producing goods would be much cheaper than the cost of producing the same goods in other countries. The most obvious example would be China and India who both have lower environmental standards and in extreme cases they may have child labor. To allow trade with a country that uses children in the production of its goods or services, is not only allowing unfair trade, but actually sanctioning unethical formal conduct; this is a crime and must be addressed as such. The acceptable social conduct today is that children must be protected by governments from being exploited or abused by any party in any where. Of course some say that restricting such trade would only hurt the poor countries, whose best chance of reducing poverty and increasing labor standards is to export to rich countries. So this is just an excuse for protectionism and for restricting the benefits that flow from comparative advantage, this is the version of fair trade that Bhagwati criticizes above.

Some of the fair trade views that are worth while reviewing are; a. the industrial countries had pressurized developing countries to open their markets to the products of the richer counties whilst they imposed restrictions on developing country exports into rich countries markets. The uneven bargaining powers in such case make the poorer countries in the weaker position. The case of free trade has to apply to all, and not in one direction only, b. the second argument is quoted from the Economics text Lypsy and Christal:-

“… The second argument for fair trade applies to products like bananas and coffee, where some charitable groups argue that industrial countries’ monopsony power has depressed the prices of such commodities. They aim to counter these poverty – inducing low prices by offering a “fair trade” product at a higher price, the revenue from which go to the poor country producers. Rich country consumers are free to buy these ‘fair trade’ products as they are sold alongside comparable but cheaper products in supermarkets. This form of fair trade allows people who so wish to direct charitable giving to specific producers, and there is nothing in economics to say that they should not do so. The only doubt is whether this will catch on in a big enough way to solve the underlying problem. Counteracting monopsony power in commodity markers is likely to require a stronger intervention from governments if this is the true nature of the problem.“

Today with the world’s attention is focused on solving the global warming concern, nations are aware of the importance of the environment for our lives and that for our
children and grandchildren. Economists realize that free markets prioritize their production ahead of other vital concerns such as environment. It is often necessary that governments intervene to ensure the deliver the social optimum resource use especially common property resources like fisheries and rain forests. It also applies to pollution issues like greenhouse gases and acid rain.

Obviously, we can not address environmental concerns by eliminating international trade. Suitable policies to solve the problems in hand are what needed in addressing these problems. Many believe that international trade is not the cause of environmental problems. Indeed, the higher standards of living that world trade provides can be helpful in providing the extra output that takes living standards sufficiently above subsistence so that quality of life is also in high demand.

The World Trade Organization has incorporated in its rules clauses that allow the WTO to use sanctions against countries whose labor rules or social conventions they didn’t like. They claim that this represents a moral crusade to help the poor people, but many say that these clauses are only means to protectionism hiding behind moral mask.

Posted by popular at 07:16 PM | Permalink

Sin in Christianity

www.graincon.com

God is not against us because of our sin. He is with us against our sin. – Author Unknown

Sin Defined: Sin translated from the original Greek literally means “to miss the mark,” commonly referring to transgressing against, disobeying or wandering from God.

For all have sinned and fall short of the glory of God." (Romans 3:23) (NIV)

Sin can take many forms, from lustful thoughts to angry words to selfish actions, and not one of us is immune to sin. Maybe “missing the mark” doesn’t seem like such a bad thing, but biblically speaking, sin separates us from God.

But your iniquities have made a separation between you and your God, and your sins have hidden (His) face from you so that He does not hear. (Isaiah 59:2) (NAS)

The Bible tells us that there is a dire penalty for sin – death. Death means eternal separation from God – not just on this earth, but in the life after our physical bodies die.

For the wages of sin is death, but the free gift of God is eternal life in Christ Jesus our Lord."(Romans 6:23) (NAS)

As humans, always imperfect, we will forever “miss the mark.” Thankfully, through Christ, we have been provided a way to have our sins wiped away completely. God loves us so much that He sent His son to die so that we do not have to face separation from Him for eternity.

But we must acknowledge our sinful natures.

If my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then will I hear from heaven and will forgive their sin and will heal their land. (II Chronicles 7:14) (NIV)

All God asks, in exchange for salvation and eternal life with Him, is that we ask Him for forgiveness, turn away from sin, and turn toward Him.

Sin is a serious problem with a serious penalty. Not believing that sin against God and man must ultimately be paid for is gambling with your soul. But God has provided a way out!

Posted by popular at 01:13 PM | Permalink

J. Sifri Consulting Services

The Banking Consultants and Educators

May 15, 2007

The Arab Academy for Banking and Financial Sciences Discredited

May 12, 2007

Global Custody - Big Players

May 11, 2007

Fair Trade

Sin in Christianity