Mobile Banking: The Easiest and Most Convenient Banking Option

Mobile banking is a trend that is growing popular by the day with many people adopting this method as their method of choice for accessing their accounts, transferring their money as well as making payments as compared to online banking. This method of banking has been made popular and very successful by the vast mobile connectivity. The fact that one only needs to own a mobile phone and a bank account to be able to manipulate his money has facilitated the sky rocketing of the number of people subscribing to these services. There are many benefits that come with mobile banking services hence their popularity.

The benefits of mobile banking are not only felt by customers but by banks as well. The very first benefit that comes with this kind of service is the fact that accessing your bank account is made easy even when you are in the remotest of areas due to the fact that mobile connectivity is vast. This is an advantage that this type of service has over online banking as in order for you to transact using mobile banking you would need to be in area in which their is internet connection as well as have a computer or expensive phone for that mater. You are also able to transact as well as pay bills at any time without having to spend a lot of time queuing in banking halls.

The cost of transacting via your mobile phone is cheaper as compared to transacting within the banking hall. This is an advantage of mobile banking that no one would want to miss out on. This method of banking reduces the risk of fraud as opposed to other banking methods that include online banking. You will receive notifications on every transactions you perform via SMS hence monitoring your accounts is easy. the interface used for this type of banking is friendly and that anyone can use it with ease. All you may need to do is follow a few simple instruction. You will also be able to save records of all the transactions you perform via your mobile phone.

This type of banking also goes a long way in ensuring that you are always in touch with your bank. This way you will be among the very first to learn about promotions, offers as well as new products as offered by the bank. Apart from paying bills, transferring money and manipulating your account, there are many other services that you can access via mobile banking. Such include minimum balance alerts as well as various alerts depending on issues regarding your account that may need your attention.

In general, mobile banking provides convenience at its best. You do not have to rush to beat deadlines or spend a lot of time in long queues. It is predicted that sometime in the future this will be the banking method of choice for a majority of people worldwide as many more banks are adopting this system. So far, mobile banking has proven to be very helpful in many ways.

5 Methods For a Good Banking Relationship

Banking has become an essential part of our life. Money matters everywhere. It’s the lifeline for banks. Even the richest person needs to keep money with a bank only. The dealings with banks and conduct of accounts go a long way in determining the benefits a person derives from them. There are many opportunities to prove oneself as a good and loyal customer. However, the five aspects discussed here cover the avenues for developing pleasant relationships.

1) Opening of account: Get the list of documents necessary for opening an account and seek the clarifications and guidance. Never be in a hurry when opening a new account. Banks are required to verify the genuineness, and confirm the credentials of the person or firm opening the account for the first time. No bank will issue a debit card or check book on the same day of opening the account. So, have patience for the banker to comply with the systems and rules in vogue. However, keep in touch with the bank to know the status and give any information or clarification when sought.

2) Operating the account: Regularly and properly transact as per the rules and regulations of the account. You cannot use any account for illegal or unlawful activities like Smuggling, Terrorism, etc.. Maintaining the account with good balance earns not only interest, but goodwill from the bank. Do not forget to send greetings or compliments on special occasions like New Year eve, Festival, etc.. In case of emergency or inability to deposit funds in the account, talk to the banker about your situation and seek help. A prudent banker will never turn down a valid request.

3) Personal contacts: At times, you might be visiting your banker to avail a service or for some other purpose. This is the opportunity to impress the banker. Politeness, Clarity and Precision are sure to produce long-term benefits. Even when the response from the banker is not as expected by you, try to convince by projecting the issues and seek the right solutions. Even if the bank’s rules do not permit what you request, its officials will make honest efforts to get done. Nonetheless, do not hesitate to appreciate the sincere efforts of the bank and express thanks every time your purpose is satisfied.

4) Loan repayment: A common mistake committed by many borrowers is the failure to repay the loan on time. A borrower, if necessary, should seek the extension of time for repayment. No bank will decline a genuine request. However, the banker will neither excuse any default after such extension nor consider any repeated request for extension. Similarly, when there are changes in residence, job, phone number and other things, keep your bank informed of such changes by email or letter. These are courtesy and duty as well. So, the banker will be able to direct the future communications to the new address and phone. Banks take legal actions only when the borrower doesn’t respond to their notices or when the latter’ house is found locked at the time of visits by the banker or his agent.

5) Helping the Bank: Bringing business by way of new deposits and good customers makes a bank value your relationship. Likewise, your voluntary efforts to settle or recover the sticky loans by the defaulter earn reputation and rapport from the bank. Sometimes, buying an asset auctioned by the bank indirectly enhances the relationship.

One customer brought a brand new car to the bank office to show his new acquisition and thank the bank for guiding him to invest in a mutual fund that matured into a huge sum and enabled to buy the prized car. The staff at the bank felt proud of such good customers. Some people tend to deal with a particular bank for decades together. Even the fourth generation of a family prefers to continue with the same bank. The reason for such loyalty is the RELATIONSHIP with the bank.

Honest and transparent dealings are certain to yield lasting results and recognition. Anywhere and always.

Major Bank Foreclosures Opportunities Can Give You Extra Cash!

Major bank foreclosures from the country’s top banks present incredible opportunities. While you can buy bank foreclosures from many smaller lenders and banks, staying on the lookout for major bank foreclosures opportunities makes sense for plenty of reasons. First, bank foreclosures from major banks are very plentiful. Since larger banks give out many mortgages, they simply have many more loans defaulted and therefore get stuck with many bank foreclosure properties for sale. When you look for major bank foreclosures listings, then, you get lots of choice, which can often translate to big savings too. Since bank foreclosures are offered by large banks, or lenders who have lots of foreclosures and lots of money, in many cases, you can successfully buy major bank foreclosures for low-ball offers.

What Is the Secret of Major Bank Foreclosures?

The truth is, bank foreclosures from major banks are different from foreclosure options available from smaller lenders. That is because the large lenders have more money, more foreclosures, more mortgages offered, and more loans offered to high-risk bad-credit clients. Larger lenders have more bank foreclosures homes and so are more motivated to sell. Since they have more inventory, they may also be willing to offer their bank foreclosures for less. This means that whether you are an investor or home buyer, checking out major bank foreclosures opportunities is a great option if you are interested in distressed properties.

Plus, many larger lenders have separate departments or specialists that deal only with their bank foreclosures. That’s right: some major lenders have so many bank foreclosures that they hire special departments or experts to handle them. This can make finding major bank foreclosures easier for you, the buyer. It allows you to deal with a person or department who wants to sell bank foreclosures and is willing to listen to your offers – even if those offers are low. Some major banks even give all their bank foreclosures opportunities to one or two real estate brokers, so that simply by contacting that one broker, you can have access to the latest homes from a major lender.

How Can You Tell Good Major Bank Foreclosures Opportunities from Bad Ones?

Although major bank foreclosures are available in all styles, across the entire country and in every community, not all bank foreclosures are created equal. Some major bank foreclosures are homes that need more work than you may be willing to put in and some bank foreclosures simply have too many liabilities. It is your responsibility as a buyer to check out each of the bank foreclosures you are interested in to make sure that you are getting a quality buy. This does not have to be expensive or difficult – hire an inspector and assessor to look at the home for you and give you a sense of the home value and what work needs to be done.

There’s another way that you can easily tell the great major bank foreclosures opportunities from the duds: Foreclosure Data Foreclosure Data has all the tools, insider secrets, and even major bank foreclosures listings you need to make the most out of distressed properties across the country. Foreclosure Data lists hundreds of thousands of major bank foreclosure opportunities and other distressed homes and even allows you to get the help of foreclosure experts so that you can decipher the truth from the fiction when it comes to buying major bank foreclosures.

Secure and Safe – Tips For Online Banking

Just within the last several years, the Internet has emerged as a highly convenient way to conduct banking business, as well as shop for financial services. As the use of the Internet continues to expand, more banks are using the web to offer products and services or enhance its communication with existing customers.

However, according to the Federal Deposit Insurance Corporation (FDIC), safe online banking involves making wise choices – decisions that will help users avoid costly surprises or even scams.

Whether selecting a traditional bank or an online bank with no physical office, users should make sure a bank is legitimate and that deposits are federally insured. The following are tips for consumers considering banking over the Internet:

1. Read key information about the bank posted on its Web site. Peruse the “About Us” section on the bank’s Web site where a brief history of the bank, its official name, address, and its insurance coverage from the FDIC is featured.

2. Protect yourself from fraudulent Web site. Be careful to avoid copycat Web sites that use a name or Web address similar to, but not the same as, that of a real financial institution. Their intent is to lure potential customers in giving personal information, such as your account number and password. Making sure you have typed the correct Web site address of your bank before conducting a transaction.

3. Verify the bank’s insurance status. To verify a bank’s insurance status, look for the familiar FDIC logo or the words “Member FDIC” or “FDIC Insured” on the Web site. Internet users may also check the FDIC’s online database of FDIC-insured institutions.

4. Due to insurance purposes, a bank may use different names for its online and traditional services. Your deposits at the parent bank are added together with those at the Web site and insured for up to the maximum amount covered for one bank.

5. Only deposits offered by the FDIC-insured institutions are protected by the FDIC. Nondeposit investments and insurance products, such as mutual funds, stocks, annuities, and life insurance policies sold through Web sites or at a bank are not FDIC-insured, are not guaranteed by the bank, and can lose value.

6. Quite often banks that are chartered overseas are not FDIC insured. If you choose to use a bank chartered overseas, it is important to note that the FDIC may not insure your deposits.

Consumers often want to know how their personal information is used by their bank and whether it is shared with affiliates of the bank or other parties. Beginning in July 2001, banks are required to provide customers with a copy of their privacy policy, regardless of whether you are conducting business online or offline. Here, customers can learn what information the bank uses regarding its customers and whether it shares this with other companies.

It’s important to remember that the Internet is a public network. So, it’s important to learn how to safeguard banking information, credit card numbers, Social Security Number and other personal data. Look at the bank’s Web site for information about its security practices, or contact the bank. Also, be informed about the Website’s security features including:

1. Encryption: the process of scrambling private information to prevent unauthorized access.

2. Passwords or personal identification numbers (PINs): Used when accessing an account online. Choose a password unique to you and consider changing it regularly.

3. General Security: Security provided by your personal computer such as virus protection and physical access controls should be used and updated regularly.

Considered an added convenience to customers, some banks may offer links to merchants, retail stores, travel agents and other sites. Keep in mind that nonofficial Web sites linked to your banks’ site are not FDIC-insured. These company’s products and services may not be insured by the FDIC and your bank may not guarantee the products and services. Make sure you are comfortable with the reputation of a company before making a transaction and never provide a credit card or debit card number unless you initiate the transaction.

Russian Banking Sector – An Overview

Although Russia is not regarded as offshore banking center worldwide, before the crisis it managed to attract large volume of capital to its capital markets. Russia started reforms in the banking sector in the end of the 1980s with the establishment of a two-tier banking system, composed of the Central bank responsible for carrying out the monetary policy, and five large state-owned specialized banks dealing with deposit collecting and money lending. Most authors argue that by the end of the 1990s three major types of banks developed in Russia: joint-venture banks, domestic commercial banks, and the so-named ‘zero’ or ‘wildcat’ banks. The last were formed by their shareholders – in most cases groups of public institutions and/or industrial firms (the so called Financial Industrial Groups (FIGs) – with the major purpose to finance their own non-financial businesses. As a result of the low capital requirements and practically nonexistent bank regulation, the number of these new banks grew rapidly and as early as January 1, 1996, Russia had 2,598 banks, of which the great majority was constituted of the ‘zero’ banks.

The structure of the banking sector adopted the German-type model of universal banks with banks being allowed to hold substantial stakes in non-financial firms. At the same time, through cross-shareholdings the Russian firms literally owned the banks they borrowed from, thus ‘giving new meaning to the concept of ‘insider’ lending’. Such lending practices worked well because the government underwrote the implicit debt created by enterprise banks making risky loans to themselves. In addition to this, in the early reform stage, the government-directed credits dominated money lending; thus, the banks’ main function was to borrow money from the Central Bank of Russia (CBR) at subsidized rates and then channel the finances to designated enterprises; the last being in most cases the de facto owners of the banks. The overall effect of this situation was, on the one hand, regarding the enterprise sector, that many new enterprises were left out with extremely limited access to funds, and on the other hand, concerning the bank sector, it implied high risk exposures as banks were subject to risk both as creditors to the industries and as shareholders in them. Moreover, there was an added source of risk to banks since, at least theoretically, the banks bear the risk of government-directed credit to enterprises.

In addition, the macroeconomic situation in the early 1990s was characterized by extremely high inflation rates and thus, negative interest rates (e.g. in 1992-1993 the real interest rates were -93%; in 1994 through early 1995 -40% before finally turning positive for time deposits during the second half of 1995). As a result, the amount of total credit to enterprises dramatically dropped during this period; in 1991 the share of credits to enterprises comprised 31% of GDP, while in 1995 the banking system had a book value of loans to enterprises of $26 billion, representing 8.1% of GDP. All these factors taken together lead to a rapid growth of overdue credit and by the end of 1995 one third of the total bank loans were non-performing, a share amounting to almost 3% of GDP. Equally important, long-term credits amounted to around 5% of total bank loans, in other words, banks focused mainly on short-term money lending (which, taking into consideration the high level of uncertainty had a relative advantage as compared to long term money lending).

The above described characteristics of the Russian banking sector in the first half of the 1990s highlight the difficult macroeconomic situation in which a German-like model of universal banks was introduced. And even in this initial stage, one has enough grounds to question the feasibility of this decision for instead of a clear inflation history – an absolutely necessary pre-condition for the introduction of a German-type banking system – Russia had experienced extremely high, persistent inflation rates and a great macroeconomic instability. Moreover, some authors agrue that banks shareholding in non-financial firms was rare and could not reach a sufficient level of concentration to order to allow for the mecahnism propsed by Gerschenkron to work. Introducing a German-type of banking system in Russia, therefore, seems not to be an outcome of a well-thought strategy by the policy makers, but unfortunately, as seen by most observsers, a result of regulatory capture by some influential private interests.

Still, many authors claim that given Russia’s background, the chosen system of close bank-enterprise relationships was optimal and that banks played a major role in facilitating investment. In this respect, the next section of the paper will focus on providing empirical evidence on the bank-enterprise relationships in Russia and on assessing the relevance of the chosen bank model for Russia’s economy in the early transition stage. In particular, two major questions will be raised: 1) how did the close bank-enterprise relationship affect (if at all) the distribution of bank credit and the decisions of the enterprises; and most importantly, 2) did this model play the role of an instrument to boost firms’ investment as believed by Gerschenkron.

Offshore Bank Accounts – 6 Myths About Offshore Banking You Might Have Believed

Many of the people I talk to think they don’t need an offshore bank account. They think that offshore banking is just for criminals and tax evaders. Or, maybe, they think that an offshore bank account is just for the rich.

Much of this thinking is because of a lack of knowledge. And that is because there are a number of different myths surrounding offshore accounts. This article will dispel those myths, once and for all. And, it may help you understand, that if you are the type of person who wants to take responsibility for their own financial future, an off shore bank may be just what you are looking for.

Myth 1 – Offshore Banks are Located in Unstable Countries

As soon as you mention the term offshore account to someone, they immediately think of some politically risky country that they can’t trust. But an off shore bank account means any bank account that is not in your home jurisdiction. So technically, if off shore bank accounts were only in unstable countries, every country would be have to be considered unstable.

Myth 2 – Offshore Bank Accounts are Illegal

Offshore banking is legal, and it has to remain legal. In a global economy, money has to move between various countries to facilitate trade. So companies and individuals need bank accounts in different jurisdictions, and therefore are therefore offshore.

Myth 3 – Offshore Banking is only for the Rich

Companies and rich individuals have been using offshore accounts for many years. And up until recently, it was a secret they kept to themselves. But, that doesn’t mean that they are only for the rich.

Offshore accounts can often be setup for under a thousand dollars, including an offshore corporation to hold the account. In fact, personal accounts can often be setup for free, with just a small deposit of a couple hundred dollars.

Myth 4 – Offshore Banks are Unsafe

This depends on the offshore destination you choose. Since a lot of the benefits of offshore banking are derived from banking in low tax countries, there is a certain element of truth to this. But, that’s mainly because these banks are not FDIC insured like banks in the US or some other countries. That means, if the bank fails, you could lose your deposit.

But, doing proper research will help keep you safe. There are many large offshore banks that are worth billions of dollars. They are not likely to fail. You just have to diversify and evaluate your risk.

Myth 5 – Offshore Accounts are 100% Private

This is partially true. If the country itself dictates bank privacy. But, only if you follow all of the laws of the country where your bank account sits. Countries like Panama and Belize are tax havens that do protect your privacy. Other countries will happily share your personal information with almost anyone who asks.

However, if you break the laws of the country where the bank account is held, that privacy will dissolve. Banks will release your “private” records if you are involved in illegal activities such as drug crimes, murder and fraud, no matter where those crimes occur. Also in some “private” countries, that veil of privacy will be lifted in certain types of lawsuits.

Myth 6 – Privacy is the Only Reason for Offshore Banking

It’s true, that much of the benefits of banking offshore come from privacy. But there are many other reasons to consider it. Among those reasons are:

  • Better range of investment opportunities
  • Better banking features and benefits (interest rates or other benefits)
  • Access to your cash while traveling abroad
  • Diversified currencies

There are a number of different myths surrounding offshore banking and offshore bank accounts. But, as you can see, much of this is based on misinformation.

It is your job to learn the right information, in order to make a decision for yourself. These accounts have been used for years to help companies and individuals maintain privacy, protect their financial lives, reduce taxes and build their wealth.

Because there are so many myths, many people who could benefit from an offshore account, don’t end up utilizing them. But, if you believe that your financial future and your family’s financial future is your responsibility, offshore bank accounts and offshore banking in general are more accessible than you might have thought.

The Proposed Islamic Banking By Central Bank of Nigeria – The Way Forward

The Banking institution is a place where individuals or corporate organizations alike deposit their money for personal or business transactions for the purpose of savings, current or fixed transactions that would yield profit over a particular period of time. Nigeria as one of the growing economies of the world has taken the right step to restructure the banking system in the country. Dating back to the year 2005 where all the existing banks were mandated to re-capitalize to a minimum balance of Twenty five billion Naira or risk losing its operating licenses during the leadership of Prof. Charles Chukwuemeka Soludo, the then Governor of Nigeria’s apex bank, Central Bank of Nigeria.

Interestingly, this paved way for an organized and thriving banking sector where some of the banks met the expected benchmark while others merged and few dropped by the wayside. Nonetheless, this reform created free flow of capital funds for the banks to play around with – ushering of universal banking. One would not forget the role the banks played in the Capital market during the boom era where investors’ borrowed loans or applied for a margin loan facility from these banks ranging from 7% to 20% interest rates in order to reap bountiful profits on their appreciated stocks invested. Unfortunately, the proliferation of all manner of deals in our capital market over time accounted for the down turn of the economy. It must also be mentioned that Africa was not alone in this economic impasse as most countries of the world suffered the same fate including the United States of America.

In their bid to restore the good old days, economic experts and world scholars proffered solutions to revive the economy. Nigeria was not left out in the fight. With the emergence of Mallam Sanusi Lamido Sanusi as the next Governor of Central Bank of Nigeria succeeding Prof. Charles C. Soludo, he swung into action to continue on the good works of his predecessor. Between 2009 and 2010, about five bank chiefs were indicted and prosecuted for wrong use of depositors funds ranging from personal misappropriation of funds, unauthorized loans with no collateral and wasteful expenses. While others are presently on trial. Having seen the good works of the new Central Bank of Nigeria Governor, the Presidency recently established the Asset Management Corporation of Nigeria. The objectives of the Asset Management Corporation of Nigeria is to acquire ‘toxic’ assets of the troubled banks and would take majority shareholding of the insolvent banks after plugging their equity shortfalls. The public commentators commended the government for this initiative which gradually restored the confidence of the investors to invest in both the money and capital markets. No wonder in 26 April 2011 the prestigious Times Magazine honored Sanusi Lamido Sanusi as one of the 100 Most Influential People in the World in a grand Time Gala Award ceremony held in United States of America. Though, in as much as the reforms may seem to check the excesses of the bank operations, the adverse effects are quite frightening as the capital and money markets are presently witnessing low investors confidence following another purchase of three banks (Afribank, BankPHB and Spring Bank) by three relatively unknown companies (Main street, Keystone and Enterprise) respectively on August 5th, 2011 by the Sanusi led Central Bank of Nigeria.

However, at the beginning of 2011, Mallam Sanusi Lamido Sanusi re-opened the implementation of Non-interest banking, popularly known as Islamic Banking, which was initially introduced by his predecessor as one of the verifiable tools to revive the negatively skewed economy. According to Wikipedia, Worlds free encyclopedia, “interest-free banking seems to be very recent origin whereby a working partner gets a greater profit share compared to a sleeping (non-working) partner” What this simply means is that both the banks and investors (working partner) would get a greater profit share after a certain business transaction. One would ask, would this build the economic growth of the nation as being practiced in United Kingdom, Malaysia, etc? Definitely, it would build the fortunes of our economy but how we go about it is what is technically wrong. Please read Business day online of 29th June, 2011 for more explanation. The CBN Governor has the right to talk about the benefits of any product or scheme the apex bank is rolling out, but attaching more of the religious sentiments than professional cum economic gains, would sway the country to a very rough edge.

This proposed style of banking has generated heated arguments and debates across sections of the country. Remember that Nigeria is a secular state with almost equal number of Christian and Muslim faithful in population not to talk of other religious and traditional groups. For instance, the leadership of the Christian Association of Nigeria (CAN) has strongly opposed to the implementation of the Islamic Banking citing some wrong approaches by the Sanusi led Central Bank of Nigeria as using the state funds to promote the implementation of the scheme with no recourse to other religious groups in the country. The country is still facing serious security threats arising from kidnapping, militancy and most worrying, the terrorist attacks by the dreaded sect, Boko Haram especially in the Federal Capital (Abuja) and other northern parts of the country. It is surprising to know that the Presidency have been silent on the matter which needs an urgent intervention to put the facts right as the masses want better governance in terms of economic and social-political gains.

Whatever the outcome of the proposed Islamic Banking by the Central Bank of Nigeria would be, the apex body should please consider the following points as the way forward:

1. That the implementation processes of the non-interest (Islamic) banking should be done in strict adherence to the laid down procedures of the regulatory authority – Central Bank of Nigeria.
2. That It should also have greater benefits for the investors of the Islamic banking without directly or indirectly affecting other investors of interest banking in the same sector.
3. That the Central Bank of Nigeria should please continue to create more public awareness of the non-interest (Islamic) banking by having a round table discussion with all stake holders which includes: Religious sects, Economic experts, Law makers, Government officials and the Media to douse any misconception of the proposed scheme.

The fact that the non-interest (Islamic) banking with its’ numerous economic benefits as been practiced by some countries of the world, the Central Bank of Nigeria under her current leadership have to convince the over enlightened 55% Nigerians on its benefits without negatively affecting the other interest party for economic growth and tranquility.

Offshore Banking Services

Banking is one of the most important sectors of the world economy as it influences investment, consumption and other business activities. Furthermore, banking has a substantial impact on the circulation of money and thus influences economic growth. Offshore banking provides a unique opportunity to individuals, business people and companies to access the international market and implement their business and investment plans since offshore banking encompasses stronger privacy and security features. That is to say, the activities you launch through your offshore private banking are more confidential and secure. It should be underlined that you will be able to offer the same privacy to your customers together with other related benefits.

The procedures you need to follow in order to open an offshore bank account are not complex. In other words, every individual may open an offshore bank account within few hours. Note that each offshore banking jurisdiction has its own requirements. Among the most popular offshore banking centres are the Cayman Islands, Seychelles, Saint Vincent and Grenadines, Bahamas, Gibraltar and Netherlands Antilles.


As it has been mentioned before, opening an offshore bank account is rather simple. The procedures you need to follow in order to open an offshore bank account are similar to the procedures you follow in order to open a bank account in your home country. First of all, offshore banks will ask for your personal details: name, date of birth, address, citizenship, occupation and submit a copy of your passport, identity card or any other identification document issued by a governmental authority. Second of all, you will have to verify you residence address by presenting a utility bill or any other document. It should be mentioned that all the submitted documents must be certified.

Some considerable benefits of offshore banking are:

  • Minimised political risk. In many cases, the biggest threat is not the market risk but the governments, i.e. capital controls measures and bail-ins.
  • Asset protection.
  • Currency diversification. Holding foreign currencies leads to the minimisation of the risks you confront.
  • More options for your business and investment plans.


Cayman Islands:

One of the major advantages of the Cayman Islands is the political stability. The annual license fee is 9.000 US dollars. The international banking infrastructure is well-developed with many facilities. Another considerable advantage of the Cayman Islands is the zero taxation on international banking income. Nevertheless, the state’s approach toward international private banks owned by non-banker is poor. Despite the fact the Cayman Islands have well-developed banking structures, the poor attitude towards international banks owned by non-bankers discourages many investors and business people to launch offshore banking activities in the Cayman Islands.


The major advantage of Seychelles is confidentiality since state authorities have no direct access to bank information without a Court order. Note that Seychelles has double tax treaties with Barbados, Botswana, China, Cyprus, Indonesia, Malaysia, Mauritius, Oman, Qatar, South Africa, Thailand, United Arab Emirates and Vietnam. Furthermore, it should be pointed out that Seychelles has signed Tax Information Exchange Agreements only with the Netherlands.

Saint Vincent and Grenadines:

The country maintains a degree of flexibility and confidentiality that many bank owners prefer. In particular, confidentiality regarding the incorporation and the launch of business of an International Banking License has been ensured by the Confidential Relationships Preservation (International Finance) Act 1996 and by the International Banks Act 1996. Among the major advantages of Saint Vincent and Grenadines is the absence of exchange control restrictions to offshore transactions and stamp duties. Furthermore, there are no corporate taxes, no income tax, no withholding tax, no capital gain tax and no estate/inheritance/succession duties.

The country has political stability, well-developed international banking infrastructures and skillful labour force.

The International Banks Act 1996 issues the following licenses:

  • Class I Offshore Banking License: The Licensee is involved in offshore banking activities outside the country. The minimum class requirement for Class I license is 500.000 US dollars.
  • Class II Offshore Banking License: The Licensee is engaged in offshore banking with individuals or groups detailed described in a written undertaking. The minimum class requirement for Class I license is 100.000 US dollars.


Bahamas is considered one of the most attractive international banking centres in the world because of its excellent communications systems and the frequent air and sea connections with the USA. In addition, the country has a well-developed banking secrecy legislation. It should be taken into account that there are no taxes on international banking income.

There are two types of licenses, the unrestricted and restricted license. The unrestricted license can be obtained by private individual given that they can prove that they have a considerably high net worth. On the other point of view, restricted licenses are granted to financial institutions. Note that a restricted license enables the holder to offer banking and trust services exclusively to a particular class of associated individuals or businesses.


Gibraltar is a full member of the European Union. Therefore, banks incorporated in Gibraltar operate under the same legal framework as the banks in the UK. Nevertheless, Gibraltar has some additional advantages such as the efficient and effective bureaucratic procedures. Moreover, banks may operate completely free of tax.

Netherlands Antilles:

The Netherlands Antilles have a well-established international banking secrecy legal framework. Among the main advantages of this particular jurisdiction is the absence of license fees for an international bank establishment. Moreover, the international banking infrastructure is good, with many attorneys and accounting firms which handle international businesses. It should be considered that there is a small amount of tax imposed on international banking income. Nevertheless, the government’s attitude towards international banks owned by non-bankers is poor.

Eastern European Banking Model

A traditional banking model in a CEEC (Central and Eastern European Country) consisted of a central bank and several purpose banks, one dealing with individuals’ savings and other banking needs, and another focusing on foreign financial activities, etc. The central bank provided most of the commercial banking needs of enterprises in addition to other functions. During the late 1980s, the CEECs modified this earlier structure by taking all the commercial banking activities of the central bank and transferring them to new commercial banks. In most countries the new banks were set up along industry lines, although in Poland a regional approach has been adopted.

On the whole, these new stale-owned commercial banks controlled the bulk of financial transactions, 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 enterprise and industry assigned to them and they were not allowed to deal with other enterprises outside their remit.

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 did not wish to pay, the state-owned enterprise would, historically, receive further finance to cover its difficulties, it was a very rare occurrence for a bank to bring about the bankruptcy of a firm. In other words, state-owned enterprises were not allowed to go bankrupt, primarily because it would have affected the commercial banks, balance sheets, but more importantly, the rise in unemployment that would follow might have had high political costs.

What was needed was for commercial banks to have 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 during 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 promised 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 greater amount of higher-risk business in which they are involved. There have also 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 of the four banks will be sold to a single bidder in an attempt to create 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 size of any bid. All four banks have at least 20 percent of their loans as classified, where no interest has been paid for 30 days or more. Banks could make provisions to reduce these loans by collateral held against them, but in some cases the loans exceed the collateral. Moreover, getting an accurate picture of the value of the collateral is difficult since bankruptcy legislation is ineffective. The ability to write off these bad debts was not permitted until 1996, but even if this route is taken then this will eat into the banks’ assets, leaving them very close to the lower limit of 8 percent capital adequacy ratio. In addition, the ‘commercial’ banks have been influenced by the action of the national bank, which in early 1997 caused bond prices to fall, leading to a fall 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 almost complete. However, a state rescue package had to be agreed at the beginning of 1997 for the second-largest state bank, Postabank, owned indirectly by the main social security bodies and the post office, and this indicates the fragility of this sector. Outside of the difficulties experienced with Postabank, the Hungarian banking system has been transformed. The rapid move towards privatization resulted from the problems experienced by the state-owned banks, which the government bad to bail out, costing it around 7 percent of GDP. At that stage it was possible that the banking system could collapse and government funding, although saving the banks, did not solve the problems of corporate governance or moral hazard. Thus the privatization process was started 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 last 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, the Hungarian Development Bank and Eximbank.

The move towards, and success of privatization can be seen in the balance sheets of the banks, which showed an increase in post-tax profits of 45 percent in 1996. These banks are also seeing higher savings and deposits and a strong rise in demand for corporate and retail lending. In addition, the growth in competition in the banking sector has led 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, and this has led to Hungarian banks offering services similar 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 have 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.

As a whole, the CEECs have come a long way since the early 1990s in dealing with their banking problems. 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.

Bankruptcy And The Frozen Bank Account: Keep Your Money On Deposit Safe

When deposit account holders write a check or make a withdrawal, they may believe that they are accessing their own money, but that is not precisely true, for important reasons. What is actually happening is that the account holder is making demand upon the bank to pay over sums up to the amount on deposit. Viewed in this light, the bank balance really represents a debt owed by the bank to the account holder. Banks hold plenty of cash, but if every deposit holder were to withdraw all their funds at the same time the banks may not have enough to satisfy all these demands. Recognizing that banks can’t maintain such 100% liquidity, the law has developed this debtor/creditor approach to deposit accounts.

This approach becomes vitally important when viewed under the doctrine of setoff (also called offset). Setoff happens when two people or entities owe each other debts. Instead of requiring one side to pay the other and then collect the money back, either of the debtor/creditors can simply say “you don’t have to pay me all you owe; I’m setting off what I owe against your debt to me.” The other party usually can’t protest when the right of setoff is being exercised if the right is built into the transaction or under the law.

The classic setoff relationship is when a depositor owes money to their bank, under a mortgage, credit card or line of credit. When that happens, if the depositor is in default under the debt, under the right of setoff the bank can seize any money in the bank account and apply the funds taken to reduce the debt. This right of setoff will usually happen without any warning or notice to the account holder.

It doesn’t take much imagination to see that when the bank exercises its setoff rights the result is usually great inconvenience or hardship to the account holder. If there’s a default the depositor is usually insolvent or facing other financial distress. Losing access to cash on deposit may mean that other bills or necessary expenses can’t be paid. Even though these results may seem severe, the bank is completely within its rights to exercise this setoff. This is why clients seeking financial advice must be mindful to inform their advisors that they are holding money in banks who are their creditors. It is also why banks will exercise their setoff rights promptly if they believe their customers may be getting ready to prefer other creditors with the cash on deposit.

Debtors cannot seek protection from their banks by filing for bankruptcy. The Bankruptcy Code specifically preserves setoff rights and the US Supreme Court has ruled unanimously that applying an administrative freeze to prepare for setoff does not violate the automatic stay in bankruptcy. As a result, immediately upon learning of the bankruptcy filing by an account holder, a bank may administratively freeze a bank account. Under the debtor/creditor approach to bank accounts, this means that the bank will refuse to honor an account holder’s demand for payment of a check or withdrawal of funds. This refusal to pay on a debt is not by itself considered a setoff. That won’t happen until the bank files a motion for relief from the automatic stay and the bankruptcy court grants that motion. Once that happens, the bank will make a book entry by (1) reducing the amount considered on deposit and (2) applying that amount to reduce the debt owed to the bank. At that time, the funds are forever removed from the reach of the account holder.

Insolvent debtors need to understand the perils of leaving money on deposit with their creditor banks. They should expect that a bank can and will exercise their setoff rights and deprive them access to their cash, usually at a time they can least afford it.

On the other hand, banks and credit unions should anticipate that their debtor customers will seek legal advice that will result in depletion of their bank accounts to defeat their setoff rights. The best way to protect these rights is to closely monitor customers’ payment patterns to better understand whether a pattern of late payments is developing. If so, an early exercise of setoff rights may preserve a collection opportunity that may soon be lost forever.