The Global Financial Crisis – impact on Banks and Regulation

Topics: Bank, Economy of Iceland, 2008–2009 Icelandic financial crisis Pages: 10 (3275 words) Published: November 19, 2013
Student Electronic Assignment Cover Sheet

Student (s) Number as per student card

Course Title: MBA in Finance
Lecturer Name: Mr. Enda Murphy
Module/Subject Code: AC692
Module/Subject Title: International Financial Intuitions and Markets Assignment Title: The Global Financial Crisis – impact on Banks and Regulation (Iceland) No of Words: 3035 words

Table of Contents

1. Global Financial Crisis-Impact On Bank and Regulations
a. Introduction
b. What Caused the crisis
c. Impact of Global Financial Crisis
2. Contribution of Banking Management and Regulatory team during the Crisis 3. Initiative being taken to restore order
a. Fish business
b. Growth of GDP
4. Conclusion
5. References

INTRODUCTION

The failure of the Icelandic banks in October 2008 had doubtless severe consequences for depositors. During this report, we tend to contemplate three sets of such depositors:  native authorities, charities and UK voters UN agency deposited within the Isle of Man and Guernsey subsidiaries of the Icelandic banks. We tend to contemplate the case for the availability of help by the United Kingdom Government to those depositors. We tend to don't settle for that there's a requirement to produce assistance to the native authorities. We tend to advocate that, on this occasion solely, all charities should be salaried for losses incurred as a consequence of the failures of the Icelandic banks. Finally, we tend to agree that the overarching principle ought to be that the United Kingdom Government cannot offer protect deposits control by British voters in jurisdictions outside the direct control of the UK. As such, whereas we tend to acknowledge the severe distress of these UK voters suffering owing to the Icelandic banking failure, we will solely advocate that the UK authorities work with the Isle of Man and Guernsey authorities to resolve these problems.

What Caused the Crisis?
Iceland has suffered a significant depression in recent times triggered by the failure of its over-extended banking industry. Before the collapse of Iceland’s 3 largest banks, Glitnir, Landsbanki and Kaupthing, contribution debt exceeded six times the nation’s GDP of €14 billion. The banks had branches and subsidiaries within the Britain, the Isle of Man and Guernsey, almost covering Europe. This report considers the circumstances that junction rectifier to the failure of those banks, the actions taken by the United Kingdom Government to safeguard British citizens’ savings, and people whose funds haven't been safeguarded.

In June 2007, an International Monetary Fund (IMF) report over that “The medium-term prospects for the Icelandic economy stay enviable”. However, the same report plumbed a cautionary note, light “Iceland’s giant accounting deficits, the rapid growth in obligation, and persistently high client worth inflation”. Other economic indicators additionally urged Iceland’s economy was doing well around now. Iceland’s 2007 gross domestic product per capita was US$ 37,700 that compared favourably with alternative European countries and was higher than the OECD average; as chart shows, unemployment was also low

In October month, Iceland nationalized its 3 largest banks - Kaupthing Bank, Landsbanki and Glitner Bank - that were defaulting on $62 billion of foreign debt. As results of the banks' collapse, foreign investors fled Iceland, prompting the worth of its currency, the krona, to drop five hundredth in one week. Iceland's banks used $100 billion in debt to finance foreign acquisitions, dwarfing Iceland's value of $14 billion.  Haarde and Gialadottir negotiated a $10 billion bailout from the UN agency to insure Iceland's bank deposits. Iceland asked its neighbors Luxembourg, Belgium, and therefore the UK to insure bank deposits of the branches in their countries.

Impact of Global Financial Crisis
On a depressing morning in early August, over a month before Wall Street and...

References: Bessis, J. (2012). Risk Management in Banking 3rd Edition. UK: John Wiley & Sons
Werner,H
Gregoriou,Greg N. (2010). The Banking Crisis and Handbook. USA: CRC Press
Rouse, N C
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