A traditional banking model in a CEEC (Central and Eastern European Country) consisted of one dealing with individuals’ savings and other banking needs, a central bank and several purpose banks, and another focusing on foreign financial activities, etc. The central bank provided the majority of the commercial banking needs of enterprises in addition to other functions. The CEECs modified this earlier structure by taking all the commercial banking operations of the central bank and transferring them to new commercial banks in the late 1980s. In most countries the new banks were set up along industry lines, although in Poland a regional approach has been adopted. short term loans Miami Fla, for more information…..
On the whole, these new stale-owned commercial banks controlled the bulk of financial operations, although a few ‘de novo banks’ were allowed in Hungary and Poland. Simply transferring existing loans from the central bank to the new state-owned commercial banks had its problems, since it involved transferring both ‘good’ and ‘bad’ assets. Moreover, each bank’s portfolio was restricted to the company and industry assigned to them and they weren’t allowed to cope with other enterprises outside their remit.
On The Subject of banking problems
As the central banks would always ‘bale out’ troubled state enterprises, these commercial banks cannot play the same role as commercial banks in the West. CEEC commercial banks cannot foreclose on a debt. If a firm didn’t want to pay, the state-owned enterprise would, historically, receive further finance to meet its difficulties, it was a really rare occurrence for a bank to bring about the bankruptcy of a house. In other words, state-owned enterprises weren’t allowed to go bankrupt, primarily as it would have affected the commercial banks, balance sheets, but more importantly, the increase in unemployment that would follow might have had high political costs.
What was needed was for commercial banks to see their balance sheets ‘cleaned up ‘, perhaps by the government purchasing their bad loans with long-term bonds. Adopting Western accounting procedures might also benefit the new commercial banks.
This picture of state-controlled commercial banks has begun to change in the mid to late 1990s as the CEECs began to appreciate that the move towards market-based economies required a vibrant commercial banking sector. There are still a number of issues lo be addressed in this sector, however. For example, in the Czech Republic the government has pledged to privatize the banking sector beginning in 1998. Currently the banking sector suffers from a number of weaknesses. A number of the smaller hanks appear to be facing difficulties as money market competition picks up, highlighting their tinder-capitalization and the greatest amount of higher-risk business in which they’re involved. There have likewise been issues concerning banking sector regulation and the control mechanisms that are available. This has resulted in the government’s proposal for an independent securities commission to regulate capital markets.
The privatization package for the Czech Republic’s four largest banks, which currently control about 60 percent of the sector’s assets, will also allow foreign banks into a highly developed market where their influence has been marginal until now. It is anticipated that each lamp of the four banks will be sold to a single bidder in an attempt to establish a regional hub of a foreign bank’s network. One problem with all four banks is that inspection of their balance sheets may throw up problems which could reduce the magnitude of any bid. All four banks have at least 20 percent of their loans as classified, where no interest has been given for 30 days or more. Banks could make provisions to reduce these loans by collateral held against them. However, in some cases the loans exceed the collateral. Moreover, getting a clear picture of the usefulness of the collateral is difficult since bankruptcy legislation is ineffective. The ability to write off these bad debts was not allowed until 1996, but although this route is taken then this will eat into the banks’ assets, leaving them very close to the lower end of 8 percent capital adequacy ratio. In addition, the ‘commercial’ banks have been influenced by the work of the national bank. These in early 1997 caused bond prices to fall, leading to a decrease in the commercial banks’ bond portfolios. Thus the banking sector in the Czech Republic still has a long way to go.
In Hungary the privatization of the banking sector is most complete. However, a state rescue package had to be agreed to the principle of 1997 for the second-largest state bank, Postabank, owned indirectly by the major social security agencies and the post office, and this indicates the fragility of this sector. The Hungarian banking system has been transformed out of the difficulties experienced with Postabank. The rapid move towards privatization resulted from the problems encountered by the state-owned banks. These the government bad to bail out, costing it around 7 percent of GDP. At that stage it was be that the banking system could collapse and government funding, although saving the banks, didn’t solve the problems of corporate governance or moral hazard. Thus the privatization process was initiated in earnest. Magyar Kulkereskedelmi Bank (MKB) was sold to Bayerische Landesbank and the EBDR in 1994, Budapest Bank was bought by GE Capital and Magyar Hitel Bank was bought by ABN-AMRO. In November 1997 the state completed the final stage of the sale of the state savings bank (OTP), Hungary’s largest bank. The state, which dominated the banking system three years ago, now only retains a majority stake in two specialist banks, Eximbank, and the Hungarian Development Bank.
The move towards, and success of privatization can be viewed in the balance sheets of the banks. This showed an increase in post-tax profits of 45 percent in 1996. These banks are also seeing higher savings and deposits and a high rise in demand for corporate and retail lending. In addition, the growth in competition in the banking sector has given rise to a narrowing of the spreads between lending and deposit rates, and the further knock-on effect of mergers and small-hank closures. Over 50 percent of Hungarian bank assets are controlled by foreign-owned banks. This has led to Hungarian banks offering services comparable to those expected in many Western European countries. Most of the foreign-owned but mainly Hungarian-managed banks were recapitalized after their acquisition and they’ve spent heavily on staff training and new information technology systems. From 1998, foreign banks will be free to open branches in Hungary, thus opening up the domestic banking market to full competition.
Panama has 150 banks. Perhaps 12 will open up an account for a foreigner not living here. Four will urge you to sign documents waiving bank secrecy and, in some instances, allowing the bank to report back to your home country tax authorities, of that 12. We don’t use either of these banks at all. There are banks operating in Panama only. Most of our clients have accounts in the biggest bank in Panama.
If there’s a problem (has nt been one since the Americans left in 2000) the other banks in the other countries with the same name will step in and shore up the Panama Bank which is a separate Panama Banking Corporation using the same name. They have to store the name worldwide. Since offshore banks don’t have insurance this is the protection we provide for our clients. The International banks we use typically have $25-$75 Billion in assets. The Panama bank is using a name used in other countries but is a separate Panama Banking Corporation under Panama Bank Secrecy Laws. You could sue the bank and the executives if they violated the bank secrecy laws of Panama and the banks have deep pockets and the punitive damages would make you and your family smile for many generations to come. The executives could also go to gaol. Rest assured the Toronto or London banks according to the same name aren’t going to be in a position to access your banking records in Panama and turn them over under some court order. There is a legal separation preventing this from happening. We have a massive amount of clients with the largest Panama bank and never had one client have their bank secrecy violated ever.
The national currency in Panama is the US dollar but Euro accounts and Pound Sterling Accounts are available as well. We only open Panama bank accounts for Panama corporations or foundations that we formed. If we didn’t form the entity we need to shift it over to us as the resident agent and use our nominees. If you have a corporate or foundation bank account you can add in a personal bank account if the signatories are the same at the same bank.
For more details read our sections on Panama Banking, Guatemala Banking, Saint Vincent Grenadines banking, and Belize Banking. If you require more privacy & security read our section on Guatemala Banking using international trust agreement signatory service banking.
The CEECs have come a long way since the beginning of the 1990s in dealing with their banking problems, as a whole. For some countries the process of privatization still has a long way to go but others such as Hungary have moved quickly along the process of transforming their banking systems in readiness for their entry into the EU.