bank profits

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

Further deterioration of loans will eventually force banks to recognize losses that their bookkeeping lets them ignore for now, says David Sherman, an accounting professor at Northeastern University in Boston. Janet Tavakoli, president of Tavakoli Structured Finance Inc. in Chicago, says the government stress scenarios underestimate how bad the economy may get.

The accounting rule changes that matter most for the banks came on April 2, when the Financial Accounting Standards Board gave companies greater latitude in how they establish the fair value of assets. Lawmakers, including Representative Paul Kanjorski, a member of the House Financial Services Committee, had complained that existing mark-to-market standards worsened the financial crisis.

Debt Valuation

Along with that change, FASB also let companies recognize losses on the value of some debt securities on their balance sheets without counting the writedowns against earnings. If banks plan to hold the debt until maturity, they can avoid hurting the bottom line.

At Citigroup, the recipient of $346 billion in fresh capital and asset guarantees from the government, about 25 percent of the quarterly net income came thanks to the debt securities rule change, the bank said.

Another $2.7 billion before taxes came from an accounting rule that lets a company record income when the value of its own debt falls. That reflects the possibility a company could buy back bonds at a discount, generating a profit. In reality, when a bank can’t fund such a transaction, the gain is an accounting quirk, Weiss says.

Citigroup also increased its loan loss reserves more slowly in the first quarter, adding $10 billion compared with $12 billion in the fourth quarter, even as more loans were going bad. Provisions for loan losses cut profits, so adding more to this reserve could have wiped out the quarterly earnings.

Wells Fargo

Without those accounting benefits, Citigroup would probably have posted a net loss of $2.5 billion in the quarter, Weiss estimates. In the five previous quarters, Citigroup lost more than $37 billion.

Wells Fargo also took advantage of the change in the mark- to-market rules. The new standards let Wells Fargo boost its capital $2.8 billion by reassessing the value of some $40 billion of bonds, the bank said in May. And the bank augmented net income by $334 million because of the effect of the rule on the value of debts held to maturity.

Wells Fargo spokeswoman Julia Tunis Bernard declined to comment, as did Citigroup’s Jon Diat.

Banking & capital markets issues

Disruptions in the financial markets, increased regulatory complexity and operational risk are major challenges for domestic and international banking institutions and capital markets-securities firms. These challenges, along with event-driven opportunities and new technologies have transformed the sector. In the current risk-adverse climate, institutions seek innovative solutions and ways to reduce their exposure.PricewaterhouseCoopers professionals can assist with your most critical business needs including:
Risk management
Regulatory & compliance
Anti-money laundering
Securitizations & valuations
Cost containment
Tax
Sarbanes-Oxley
Mergers & acquisitions
How PwC can helpOur banking and capital markets practice is organized to fully leverage our global team of over 33,000 professionals in every segment of the financial industry – consumer/retail banking, commercial banking, wholesale banking, mortgage banking, securitization, capital markets, insurance, investment management, broker/dealer and real estate. Our professionals include not only auditors and tax specialists with deep industry experience, but dedicated teams that provide internal control assessments, financial systems design and implementation services and solutions across a broad range of industry-related matters, including regulatory compliance and risk management.

Mobile banking

Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile Internet but can also use special pMobile Banking Services
Mobile banking can offer services such as the following:

[edit] Account Information
Mini-statements and checking of account history
Alerts on account activity or passing of set thresholds
Monitoring of term deposits
Access to loan statements
Access to card statements
Mutual funds / equity statements
Insurance policy management
Pension plan management
Status on cheque, stop payment on cheque
Ordering check books
Balance checking in the account
Recent transactions
Due date of payment (functionality for stop, change and deleting of payments)
PIN provision, Change of PIN and reminder over the Internet
Blocking of (lost, stolen) cards

[edit] Payments, Deposits, Withdrawals, and Transfers
Domestic and international fund transfers
Micro-payment handling
Mobile recharging
Commercial payment processing
Bill payment processing
Peer to Peer payments
Withdrawal at banking agent
Deposit at banking agent
Especially for clients in remote locations, it will be important to help them deposit and withdraw funds at banking agents, i.e., retail and postal outlets that turn cash into electronic funds and vice versa. The feasibility of such banking agents depends on local regulation which enables retail outlets to take deposits or not.
A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When depositing money, the merchant receives cash and the system credits the client's bank account or mobile wallet. In the same way the client can also withdraw money at the merchant: through exchanging sms to provide authorization, the merchant hands the client cash and debits the merchant's account.

[edit] Investments
Portfolio management services
Real-time stock quotes
Personalized alerts and notifications on security prices

[edit] Support
Status of requests for credit, including mortgage approval, and insurance coverage
Check (cheque) book and card requests
Exchange of data messages and email, including complaint submission and tracking
ATM Location

[edit] Content Services
General information such as weather updates, news
Loyalty-related offers
Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment.rograms called clients downloaded to the mobile device.

threats to online banking

Network Security,
Online Banking,
Security Management amples presented in this paper shows that the biggest threat to online banking is still malicious code executed carelessly on the end-user's computer. The attackers tend to target the weakest link. Once the attacker has control over a user's computer, he or she can modify the information flow to his or her advantage. This may have happened in the case of the businessman from Miami. The situation most likely will not change until new transaction methods are introduced. So, whenever using an online financial system, ensure that the system is still under control and not a spoofed puppet, or one could end up featuring as the businessman in the next fraud case article.

banking regulations

Objectives of bank regulation
The objectives of bank regulation, and the emphasis, varies between jurisdiction. The most common objectives are:
Prudential -- to reduce the level of risk bank creditors are exposed to (i.e. to protect depositors)
Systemic risk reduction -- to reduce the risk of disruption resulting from adverse trading conditions for banks causing multiple or major bank failures
Avoid misuse of banks -- to reduce the risk of banks being used for criminal purposes, e.g. laundering the proceeds of crime
To protect banking confidentiality
Credit allocation -- to direct credit to favored sectors

[edit] General principles of bank regulation
Banking regulations can vary widely across nations and jurisdictions. This section of the article describes general principles of bank regulation throughout the world.

[edit] Minimum requirements
Requirements are imposed on banks in order to promote the objectives of the regulator. The most important minimum requirement in banking regulation is maintaining minimum capital ratios.

[edit] Supervisory review
Banks are required to be issued with a bank license by the regulator in order to carry on business as a bank, and the regulator supervises licenced banks for compliance with the requirements and responds to breaches of the requirements through obtaining undertakings, giving directions, imposing penalties or revoking the bank's licence.

[edit] Market discipline
The regulator requires banks to publicly disclose financial and other information, and depositors and other creditors are able to use this information to assess the level of risk and to make investment decisions. As a result of this, the bank is subject to market discipline and the regulator can also use market pricing information as an indicator of the bank's financial health.

[edit] Instruments and requirements of bank regulation

[edit] Capital requirement
Main article: Capital requirement
The capital requirement sets a framework on how banks must handle their capital in relation to their assets. Internationally, the Bank for International Settlements' Basel Committee on Banking Supervision influences each country's capital requirements. In 1988, the Committee decided to introduce a capital measurement system commonly referred to as the Basel Capital Accords. The latest capital adequacy framework is commonly known as Basel II. This updated framework is intended to be more risk sensitive than the original one, but is also a lot more complex.

[edit] Reserve requirement
Main article: Reserve requirement
The reserve requirement sets the minimum reserves each bank must hold to demand deposits and banknotes. This type of regulation has lost the role it once had, as the emphasis has moved toward capital adequacy, and in many countries there is no minimum reserve ratio. The purpose of minimum reserve ratios is liquidity rather than safety. An example of a country with a contemporary minimum reserve ratio is Hong Kong, where banks are required to maintain 25% of their liabilities that are due on demand or within 1 month as qualifying liquefiable assets.
Reserve requirements have also been used in the past to control the stock of banknotes and/or bank deposits. Required reserves have at times been gold coin, central bank banknotes or deposits, and foreign currency.

[edit] Corporate governance
Corporate governance requirements are intended to encourage the bank to be well managed, and is an indirect way of achieving other objectives. Requirements may include:
To be a body corporate (i.e. not an individual, a partnership, trust or other unincorporated entity)
To be incorporated locally, and/or to be incorporated under as a particular type of body corporate, rather than being incorporated in a foreign jurisdiction.
To have a minimum number of directors
To have an organisational structure that includes various offices and officers, e.g. corporate secretary, treasurer/CFO, auditor, Asset Liability Management Committee, Privacy Officer etc. Also the officers for those offices may need to be approved persons, or from an approved class of persons.
To have a constitution or articles of association that is approved, or contains or does not contain particular clauses, e.g. clauses that enable directors to act other than in the best interests of the company (e.g. in the interests of a parent company) may not be allowed.

[edit] Financial reporting and disclosure requirements
Banks may be required to:
Prepare annual financial statements according to a financial reporting standard, have them audited, and to register or publish them
Prepare more frequent financial disclosures, e.g. Quarterly Disclosure Statements
Have directors of the bank attest to the accuracy of such financial disclosures
Prepare and have registered prospectuses detailing the terms of securities it issues (e.g. deposits), and the relevant facts that will enable investors to better assess the level and type of financial risks in investing in those securities.

[edit] Credit rating requirement
Banks may be required to obtain and maintain a current credit rating from an approved credit rating agency, and to disclose it to investors and prospective investors. Also, banks may be required to maintain a minimum credit rating.

division of banking

Main Phone: 609-292-7272
The Division of Banking consists of two major units - the Office of Consumer Finance and the Office of Depositories.
The Office of Consumer Finance provides consumer protections through the regulation of 16 types of businesses that provide a variety of consumer financial services. Included in the Office's supervisory responsibilities are the investigation of complaints, on-site examinations, the monitoring of net worth and surety bonding requirements through annual report filings, and the initiation of enforcement actions as may be required. In addition, the Office supervises state-chartered credit unions through on-site examinations and report filings to ensure safety and soundness, as well as compliance with applicable state and federal laws.
The Office of Depositories processes and reviews applications by depository institutions for new charters, branches, relocations, plans of acquisition, mergers, bulk sales, stock conversions and auxiliary offices. In addition, the Office is responsible for the examination of state-chartered commercial banks, savings banks and savings and loan institutions and for enforcement actions involving these depositories.

banking and securities

Total Assets of Banks andCredit Unions in Alaska
Total assets for all banks with home offices in Alaska were $4,581,657,000 as of December 31, 2008, an increase of $179,323,000 or 4.07% from a year ago. This total excludes Key Bank, National Association and Wells Fargo Bank, National Association, which are interstate branches and do not furnish balance sheet information for Alaska.
Total assets of all state-chartered banks in Alaska were $1,953,698,000 as of December 31, 2008, an increase of $48,465,000, or 2.54% from a year ago. Approximately 43% of the total assets of all banks headquartered in Alaska were held in state-chartered institutions.
Total assets for all credit unions in Alaska were $5,544,045,216 as of December 31, 2008, an increase of $473,375,573 or 9.34% from December 31, 2007. Total assets for all state-chartered credit unions in Alaska were $624,672,189 as of December 31, 2008, an increase of $83,679,791 or 15.47 % from the end of 2007. Approximately 11.27% of the total assets of all credit unions were held in state-chartered institutions.