Personal Finance guide

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Apart from the stock market crash and the severing of international credit lines to Nigerian banks, analysts still maintain that the nation is yet to feel a stint of the global financial meltdown. But one part of Nigeria that is definitely been affected by this financial meltdown is the federal government income as its revenue generation capacity has been greatly diminished due to falling oil prices – a fall out of reduced demand for crude. For a country that sold a barrel of crude for $140 a few months ago and now desperately seeking buyers at $45 thereabout, the global financial crisis couldn’t be closer.

The issues that this raises however, is far of greater importance than how much we sell or make from a barrel of oil. It has exposed the inability of successive governments in Nigeria to diversify the Nigerian economy, a once vibrant agricultural economy, from the mono-product, oil dependent economy that it currently is.

Currently, Nigeria generates 80% of its revenue from oil exports and about 90% of its foreign exchange putting the country always at the mercy of crude oil price fluctuations. As the Nigerian economy again cycles down with falling oil prices, the need for the creation of more options for the economy comes to the fore with the government in need of more revenue, more employment for its people and better infrastructure.

Reviving the real sector of the economy, especially the manufacturing sector which serves as the industrial base of the economy and encouraging private enterprise remains a ready alternative for any attempt at diversifying the economy beyond oil exporting. Without any statistical backing it is obvious that real sector growth in Nigeria has been on the negative in the last two decades. Large, small and medium sized industries wind up almost daily. New entrants always find it difficult to survive and close doors as quickly as they opened them.

Continue reading ‘The Race for favourable rates’ »

After the latest phase of banking consolidation was concluded at the end of 2005, Governor of the Central bank of Nigeria, Chukwuma Soludo assured Nigerians that they could now afford to keep their money in any of the 25 banks which emerged after consolidation and go to sleep with both eyes shut. Renewed confidence in the banks increased interest in banks and citizens developed faith in the banking system unlike the era of distress that once characterized the industry.

But in June 11 2007, jitters where sent down the spines of investors and depositors as news that the Central Bank had dissolved the board of directors of Spring bank plc came in. The Central Bank in the letter dated June 5 admitted that the bank was in a grave situation.

In a statement, the CBN gave the reasons for dissolving the board as ‘negative shareholders’ fund contrary to prudential requirements stipulated by the CBN pursuant to the provisions of the Banks and Other Financial Institutions Act 1991, and the CBN Act 1991 as amended’.

A few days later, erstwhile chairman of the bank Rev Segun Agbetuyi in an open letter dated June 11 published in major Nigerian newspapers convicted the CBN banking supervision unit of complicity in aiding fraud in the bank. Accusations and counter accusations dampened confidence and ensured that the bank’s profile nosedived and set it in need of salvation. If not, perhaps Nigerians could look forward to the first liquidation less than 2 years after consolidation.

Hope was however raised in 2008 when Bank PHB offered to purchase majority stake in the bank whose shares had become a burden on investors’ portfolio haven not made profit or declared any dividend. Shareholders ratified the takeover and the deal was sealed. The reconstituted board was approved by the CBN late December 2008 and Charles Ojo an Executive Director in Bank PHB in charge of Abuja operations was appointed the new Managing Director of Spring bank. For a bank that had been rocked by various controversies (including the consolidation of the bank which was revealed to be inconclusive and a large bad debt portfolio) the task ahead for the new managing director is a daunting one.

Continue reading ‘Task befor Charles Ojo’ »

Gone are the days when banks – and bank accounts – generally extended the same set of features. Instead, any given bank today usually offers a wide range of bank accounts for customers to choose from, with selections varying significantly from one bank to the next. Thus, consumers are able to select a bank account that caters to all their financial needs.

However, the sheer number of banks and types of bank accounts out there can also make the process of choosing an account seem overwhelming. So it’s best to break the process down into easier steps. To begin, you’ll need to choose a bank. Many people have either done business with banks before or currently have some type of account open with a local bank. If you already know which bank you want to open your account with, a large part of the work is already done. However, if you need to choose a bank, it’s best to do a bit of research first.

Start off by choosing a handful of banks in your area that you might want to bank with – then proceed to researching each of them further. You’ll initially want to consider aspects like locality and the number of branches in your area, extent of banking services, and customer service ratings – information that can all be gathered via online research or word-of-mouth. If you ultimately find you’re interested in multiple banks after your initial research, you can then start looking into each bank’s services and account types in more detail to choose the bank that’s right for you.

Continue reading ‘Finding a Bank Account that Caters to your Financial Needs’ »

Executive Summary - It has come to our attention that the USA is starting to treat “Bank Reference Letters” as “Suspicious Transaction” events that require reporting to the USA government. We highly suspect many other governments are doing the same thing with their banks when a reference letter is requested. Many clients have noticed in recent months that many banks are reluctant to issue a bank reference letter and many banks outright refuse to write a reference letter. The banks are refusing to issue reference letters because they would then have to write a suspicious transaction report and they try to minimize the amount of these that they generate to avoid government audits and investigations. Panama banks all require a bank reference letter even if you are opening the account in person. This is the case with almost all the banks around the world. Do not do this. We can assist with opening a bank account where a bank reference letter is not required.

Apostille – The next alarm bell concerns getting documents apostilled. An apostille is a government worker who certifies notarized documents. Basically they are there to certify the fact that the notary is in fact a notary. In many countries the apostille works for the national government. In the USA the apostilles work for the various state agencies, generally found in the Department of State that each of the states has. Many offshore banks ask their new account applicants to notarize and then apostille documents like passports. Panama banks all require this unless you open the account in person.

Recently the apostilles in the USA are starting to ask the people to fill out a form explaining what the apostille is to be used for. This is similar to the bank reference letter in that it is probably being reported whenever anyone wants a copy of a passport to be apostilled. Do not get any ID documents or anything else you want to keep private apostilled. Notarized only. So far we have not been seeing any notaries report any suspicious events or even ask what the notarized document is to be used for. Do not use a notary at a bank, credit union, savings and loan, or a stockbroker’s office. These are tightly regulated businesses that are required by law to report any and all suspicious transactions. No apostilles is the safest course of action.

Continue reading ‘Bank Reference Letters Being Treated as Suspicious Transactions’ »

Savings Accounts are offered by commercial banks, savings and loan associations, credit unions, building societies and mutual savings banks. Earlier when you opened a savings account you were provided with a pass book and cheque book as accessories that enabled you to access your account. With the gradual make over of Retail Banking, ATM cum debit card, credit cards and other accessories creped in allowing you to do the same without paying the bank or branch a visit. All savings accounts offer itemized lists of all financial transactions, traditionally through a passbook, but also through a bank statement. The other account that one can access is a current account. Current accounts allow you a no-transaction limit, which isn’t the case with a savings account. With a savings account, the account holders are allowed to make three transactions with a withdrawal limit of Rs 50,000/ maximum (approx figures). Current accounts are mostly used by businessmen, mostly due to the high amount of transactions that they need to make.

Withdrawals from a savings account are occasionally costly and are sometimes much higher and more time-consuming than the same financial transaction being performed on a current account. Ideally interest is paid on a savings account on nature of minimum balance held on a quarterly basis. Hence if frequency of withdrawals is more the amount keeps decreasing and so does the interest. The term deposit is used by the banking industry in financial statements to describe the liability owed by the bank to its depositor, and not the funds (whether cash or checks) themselves, which are shown an asset of the bank. Nature of deposits varies depending on the tenure. The most commonly opted for deposit scheme is the fixed deposit scheme where an individual is required to keep an amount locked in for a period of a year or more. Term deposits are where the deposit is kept on a monthly/ daywise basis (100-180) days. NRI Term deposit accounts are the mostly sought after scheme as it helps improve financial regulations due to differences (mostly high) in currency rates.

Continue reading ‘Accounts & Deposits’ »

Indian Banking sector Report ( http://www.bharatbook.com/Market-Research-Reports/Report-on-Indian-Banking-Sector.html ) elucidates that Indian Banking sector is dominated by Public sector banks (PSBs) which accounted for 72.6% of total advances for all SCBs as on 31st March 2008. PSBs have rapidly expanded their foot prints after nationalisation of banks in India in 1969 and further in 1980. Although there is a restrictive entry/expansion for private and foreign banks in India, these banks have increased their presence and business over last 5 years. Peculiar characteristic of Indian banks unlike their western counterparts such as high share of household savings in deposits (57.4% of total deposits), adequate capitalisation, stricter regulations and lower leverage makes them less prone to financial crisis, as was seen in the western world in mid FY09.

The Scheduled Commercial Banks (SCBs) in India have shown an impressive growth from FY04 to the mid of FY09. Total deposits, advances and net profit grew at CAGR of 19.6%, 27.4% and 20.2% respectively from FY03 to FY08. Banking sector recorded credit growth of 33.3% in FY05 which was highest in last 2 and half decades and credit growth in excess of 30% for three consecutive years from FY04 to FY07, which is best in the banking industry so far. Increase in economic activity and robust primary and secondary markets during this period have helped the banks to garner larger increase in their fee based incomes.

A significant improvement in recovering the NPAs, lowest ever increase in new NPAs combined with a sharp increase in gross advances for SCBs translated into the best asset quality ratio for banking sector in last two decades. Gross NPAs to gross advances ratio for SCBs decreased from the high of 14% in FY2000 to 2.3% in FY08. With in the group of banks, foreign and private sector banks grew at higher rate than the industry from FY03 to FY08 primarily because of lower base effect and rapid expansion undertaken by these banks. In FY09, overall growth in credit and deposits was led by PSBs. However, growth of private and foreign banks was significantly lower in FY09 due to their high exposure to stressed sectors and problem at parent level for foreign banks.

Continue reading ‘Bharatbook.com : India's Strong and Impressive growth in Banking sector’ »

Since the economic downturn, banks and financial institutions in the UK and abroad have come under fire from all directions. This is as least partly to do with the fact that they play such a crucial role in the stability of the global economy.

The reasons that we went into a recession and the roles that these financial organisations had to play in that is complex and not something I plan to discuss here. However, what does seem worth talking about is how the banks et al can become more efficient in what is now an increasingly competitive and scrutinised market.

Continue reading ‘The Importance of the Right IT Software in the Current Economic Climate’ »

A corporate credit card can be an invaluable business tool that helps you to run your operation more smoothly.

And the great news is, getting a business credit card can be as simple as making sure your financial records in order, and applying with a bank or credit card provider online!

Gone are the days where you needed to dress up in your finest suit and lug a briefcase full of financial documents to a meeting with your bank manager: now, you can simply log on to the website of the bank you wish to apply with, and fill out an online application that usually takes just a few minutes.

Continue reading ‘How To Get A Business Credit Card’ »

Have you ever wondered what money really was? What is behind its mystique? Well, it is not gold coins. It is not a basket of fish, or a truck load of bread. Money is an idea. It is an idea backed by confidence. Nothing more. Once we had to have gold as the standard of that confidence, but now there is enough confidence in the production of products that money was backed by the production of the country and land instead.

So what else is money? Money can be considered a negotiable receipt for deposited goods. How it once worked was that a goldsmith would accept somebody’s gold and give that person a receipt in exchange, which in turn became money. But then, one day, realising the goldsmith’s repute was good with these receipts and that they had become negotiable, he loaned a receipt based on the gold someone else, as had deposited. Then the goldsmith loaned out several receipts on the same gold. And that is how banking started.

Today a bank will loan out against almost anything that can be produced. The only real trouble comes when too many people want to cash in their receipts to get the gold or goods that have been deposited. If there is too much money loaned out and confidence downturns, then a run can start with the bank unable to honour the receipts, causing bankruptcy. Banks vary as to how many times they will loan out against what is deposited with them. Some are ten times and some are as much as 70 or more. Even a thousand is not heard of. The higher the amount loaned out compared to what is deposited the greater the risk of economic collapse. And that is what the current threatened financial collapse is about.

Continue reading ‘What Is Money Really?’ »