The previous chapter detailed the structure of the research methodology applied for the data collection method. In this chapter a detailed and abundant research analysis of the whole study is presented. Importance of Financial decisions during recession period, which strategies applied by the different organisation and its useful during credit crunch research has been explained. Also, typical key financial risk areas which organisation need to avoid during credit crunch has been studied and analyzed statically.
The Financial strategies which adopted by bank during credit crunch was mainly based on elite interviews and interactions with different managerial persons at various organizations. The questionnaires structured were kept flexible to get respondents view more freely. The respondents were aware of the purpose of interview and mostly each interview lasted for about forty-five minutes or an hour. The questionnaires were mainly based on best capital structure and maintaining debt-equity. The main point had been noted during interviews to collect data from the respondent and after various surveys a detailed documental record was made with the help of certain current authorities literature review. Exploring all the studies conducted and a detailed analysis has been represented in relation with earlier research work findings.
Most affected reason of falling down of banking sector
The last few decades in the entire world have seen several remarkable financial and banking crises. Main causes of in the crisis in banking sector were the subprime mortgages and housing bubble which directly affected to the liquidity. According to Prof. Joseph Stieglitz, (2001), third quarters or two-thirds of countries growths associated with real estate. In this credit crisis mostly banking sector affected due to lack of liquidity, because of bank had landed money in market without seeing financial background and without any securities. Main reason behind this recession was fall down of housing price, people have mortgage their properties to get fund from financial institute, that's calls as CDO (Collateralized debt obligations).
Researcher think people talk too much about things, but they rarely cause, causes, and test solutions. For example, the rescue of banks does not because distress caused root nor out of the crisis, but lately all this talk about people. Thus, the time is spent on this topic so that it is considered by some at least a "solution", as comes to be. It's much more acceptable to talk about events, and then some lines usually signal a feeling generous decision, than to engage in a real solid analysis. In fact, a researcher in recent days, partly to talk about some issues is unacceptable argument, but maybe that's another article. Researchers in this article some of the causes of the financial crisis would like to check. Political (yet) without reason, by definition can prepare:
Borrow extra than responsibly repays
Financial crisis we are in. People do this both individually and as a nation, not reason. The government spends more each year than to get it set a bad example. The people's money, and interest on loans to foreign countries abroad flows. U.S. consumers borrowed more than they can pay, and banks do not have them.
It is very easy and it's hard to disagree. Now there are probably many reasons why people more responsibility and more people are able to repay the debt, but only good things to consider.
Excessive taxes and regulations applicable to state action
Simply put, the government usually makes it difficult or unwise to hire workers to do things. Better it is foreign. Paradoxically, the government usually working defense, "but the media never" safe "understands the consequences of that work no longer exists. Excessive taxes and regulations to implement the government to show why it is not profitable to hire people, build things. Financial Crisis: series, we arrive at the final result back to the stable.
Researchers believe that most people that they do not understand the current situation as a reason for not seeing things, and they do not know that such a decision. When it comes to the current crisis, they simply react to give money to bankers, they are upset, or maybe they are scared enough that they are willing to pay the bankers. In any case, most people are only reactive in nature and that solves nothing. People reward culture as the main dialogue is necessary. Instead, researchers believe that the original thinking that is part of the culture, unfortunately, come to be punished. Pure symbolism and social conversation a waste of time, but this level find most people on most of the time, this behavior deviates from the group break the rules we have decided on either reached or feel.
Development and analysis of some financial strategies for future growth
Lloyds TSB Banking Group:
Corporate strategy Lloyds TSB banking group being good customers, partners and shareholders, as recognized in the UK financial services in terms of support. Being a more conservative strategy is to focus on the relationship business "cycle path".
The focus of the group, and our strategic position in the UK financial services market in January 2009, lived significantly strengthened through the acquisition of HBOS. Lloyds TSB UK financial services group and a well-diversified financial services provider in the UK's largest retailer. Lloyds TSB markets in which participate in many key positions, a market-leading distribution of opportunities, well-known brands and large customer base. Level of organization and more goods and services, systems and training that will offer unparalleled service in our choice of clients and provides an opportunity to invest in the joint.
Building high performance Organisation:
High performance Organisation groups to improve their efficiency and make better use of their capital to risk while maintaining a cautious approach is focused on providing.
Lloyds group among UK financial institutions have a low cost to income ratio to continue to improve processing efficiency and effectiveness will remain a priority. Expected acquisition resulting from the collaboration will be important to further improve their effectiveness.
Using capital more efficiently is becoming increasingly important in modern conditions and strict capital to support business growth in the portfolio of the enterprise will be appointed.
Reasonable Lloyds TSB Group to increase the risk approach was used to "cycle through". Conservative and prudent approach to risk their business model and approach through the cycle "means that we will continue to support our customers during the economic cycle to be original. The risk of structures and mechanisms that have been implemented are the foundation for effective business management.
RBS Group:
(Source: RBS Group Annual Report and Accounts 2009)
http://annualreport2009.rbs.com/microsites/annual-report-2009/our_strategic_plans/roadmap_to_recovery.html
Barclays Group:
Barclays's main goal is to produce top quartile total returns to shareholders over time (TSR) produces. Barclays 2009 to achieve this goal, TSR 80% for the year 2009 the creation of our peer group at the upper end. But Barclays, AOS Executive Officer John Varley, who acknowledges that many shareholders have been obtained starting point from which the return was unacceptably low. Barclays to measure performance against the production target will continue.
Barclays will carefully manage the multiple objectives of the entrance. Total balance sheet size and use, risk-weighted assets (RWAs) and the profits they generate, these economic benefits are included in the core tier 1 capital levels, equity, total funding and liquidity to return to the situation, and in the framework of the ratio of credit deposit comparable revenues and it paid dividends.
Barclays, AOS medium term objective is the average return on equity exceeds the cost of the cycle for the creation of capital. In 2009 and 2010, relatively high cost of capital and capital combination of a very high level to provide a very stretching target. But Barclays is also the direction in which shareholders expect us to be aware of contexts, and we have built a medium-term plan accordingly.
Worst is behind the financial crisis, but the environment remains unpredictable, and for this reason, Barclays is a strategic framework in which we do business in 2010 and beyond, to have a clear idea.
Key components:
Barclays continue to act as responsible corporate citizens. Barclays will ensure that their wider responsibility to society is reflected in how we work. With their commitment to regulators and shareholders to the extent consistent with what is required to Barclays as a source for his role as a service to clients and customers, geographic, in which we operate economic growth and job creation will continue. We are creative practice to help your clients and customers as they deal with the economic downturn, and they have to deal with the consequences of financial crisis, governments and leaders must maintain.
Barclays will ensure that sound financial and organizational level, which implies and adapts to changes in the rules need to be maintained. Basel officials in December announced a package of proposed reforms on which they are consulting. Barclays is working hard to serve the regulatory sequence, the cumulative effect of reforms intended to ensure that the economy is well understood, and to provide adequate reforms are carried in extended transition period to enable the banking sector for economic development and support job creation. Finally the next few years, such as Barclays and Barclays that they have been taken to reduce the ability to make decisions in the period will be required to accommodate the changes. Mean while, Barclays is the changes that are taking capital gains, and they may be needed in such areas, many of them tend to hope. It is within your power generator to be pure consumers of capital, which reflects our activities in 2009, instead. Barclays, to maintain a high level of liquidity and very attentive to the size and structure of the balance will be. In particular, Barclays arm tighter control, and want to get up, over time, our deposit relationships. Stress test in recent years has been institutionalized throughout Barclay, Currently part of the cycle of supervision FSA. Barclays will ensure that we regularly economic, market and operational environment and changing their opinions to agree with the regulatory response continue to follow.
Barclays will pay dividends in accordance with prior commitments renewed. Barclays in 2010, three quarterly fixed payments and final settlement of the variable refers to the March 2011 calendar year 2010. Regulatory reform in view of uncertainty about the full results, prudence suggests that dividend policy should be conservative. Nevertheless, the warning is subject to, Barclays intends to dividend policy for the year 2009 a dividend of 4.5 pence per share for the progressive relative.
Barclays, the group allocation of capital through the AOS be done on the economic and strategic, medium-term development in the achievement of the international diversification of income sources will increase, which reflects our commitment. So Barclays Wealth, Barclays Corporate, ABSA and the GRB, to Barclays Capital investment banking sector uses structural changes at a time to cherish. 2010 could be another year, but in which Barclays to increase returns and discretion will determine which approach to the balance sheet size.
Regulatory uncertainty, Barclays, CEO John Varley, targets described so far, despite the color, Barclays will deliver another year of significant advantages. The income balance is also important, and Barclays continue over time for two GRB, ABSA, Barclays Wealth and Barclays Capital and Barclays corporate profits come from the third goal in the third.
Key financial risky area and possible solution to avoid them
Lloyds TSB Banking Group:
Maintaining a solid foundation of management is a priority for the new banking group Lloyds and is the basis for the provision of effective risk management. Divisions and units of approved capital and liquidity risk parameters within the group to operate within a political framework that allows the group to optimize performance. Team approach to risk management ensures that the business strategy unit of risk for the realization of personal goals, while the responsibility for business performance will be. Departmental and group risk management takes a combination of effective independent monitoring.
Group strategic objectives associated with both qualitative and quantitative data to facilitate more effective decisions and risk analysis to test their abilities by providing advice, including stress, continues to grow. Potential risk group, who understand our strategy and plans to take consistent and that well-paid is the key to shareholder return.
As part of its integration initiative, the group found that inheritance practices and financial control mechanism was used by Lloyds TSB Group is rolling, the U.S. Sarbanes Oxley Act, including compliance, because of the project in February 2011 to present in time.
Risk analysis and reporting, as well as opportunities to support the identification of risks and provides a holistic view of the overall portfolio risk. Strategies to mitigate risks are in line with clear responsibilities and timescales are controlled by the group and divisional level.
Reflecting the importance the group places on risk management, risk group within the five main criteria of a balanced scorecard on which individual performance is considered as a staff. Business leaders have indicated risk management and accounting tasks to achieve these incentive programs. Although the risk management section location in the past year has remained largely unchanged, as well as quantitative and qualitative information on debt and cash.
Group identification, evaluation, measurement and risk management to meet the needs of its customers to design enterprise-wide risk management framework used. This time management of risk with the corporate strategy alignment, right, new technology or the impact of emerging-market risk assessment and risk mitigation strategies through the development of tolerance and seeks to maximize value for shareholders. Total group wide risk and determine the corporate appetite for risk, and gain a competitive advantage to exploit the vulnerability, seeking to increase shareholder value, reduce or transfer risk where appropriate basis for the development of solutions to identify risk groups and is aimed at strengthening the capacity for evaluation.
Risk management frameworks of internal controls over 10 activities that include interdependent Treadway Commission (COSO), issued by the Committee of Sponsoring Organizations of the framework components include a map.
Politics and governance structure is dynamic and where the business strategy and appetite for risk in response to changes in market conditions can be amended to adjust the relationship.
Lloyds TSB Group's business strategy, the main driving force of at-risk high-level principles and risk measures and indicators used to determine the risk appetite. One of the main objectives of the current risk appetite measures earnings volatility has been developed to supplement the capital measures.
