TARGET2 is the real-time gross settlement system for the Eurozone, and is available to non-Eurozone countries. It was developed by and is owned by the Eurosystem, TARGET2 is based on an integrated central technical infrastructure, called the Single Shared Platform. SSP is operated by three providing central banks, France and Italy, TARGET2 started to replace TARGET in November 2007. TARGET2 is an interbank RTGS payment system for the clearing of cross-border transfers in the eurozone, participants in the system are either direct or indirect. Direct participants hold an RTGS account and have access to real-time information and they are responsible for all payments sent from or received on their accounts by themselves or any indirect participants operating through them. Finally, bank branches and subsidiaries can choose to participate in TARGET2 as multi-addressee access or addressable BICs, the use of TARGET2 is mandatory for the settlement of any euro operations involving the Eurosystem. The Eurosystem consists of the European Central Bank and the central banks of the 19 European Union member states that are part of the Eurozone.
Participation in TARGET2 is mandatory for new member joining the Eurozone. TARGET2 services in euro are available to non-Eurozone states, National central banks of states which have not yet adopted the euro can participate in TARGET2 to facilitate the settlement of transactions in euro. Central banks from four non-Eurozone states Bulgaria, Poland, in 2012, TARGET2 had 999 direct participants,3,386 indirect participants and 13,313 correspondents. TARGET2 is the real-time gross settlement system with payment transactions being settled one by one on a basis in central bank money with immediate finality. There is no upper or lower limit on the value of payments, TARGET2 mainly settles operations of monetary policy and money market operations. TARGET2 is operated on a technical platform. The business relationships are established between the TARGET2 users and their National Central Bank, in terms of the value processed, TARGET2 is one of the largest payment systems in the world. TARGET2 is a harmonised RTGS system covering the Eurozone and it operates on the Single Shared Platform, which replaced the decentralised first-generation TARGET system.
It was designed to provide a service with benefits for economies of scale which allows it to charge lower fees. All participants of the Eurosystem, and outside it, can access the same functionalities and interfaces, SWIFT standards and services are used in the harmonised communication between the system and its participants. Before the introduction of TARGET2, some central banks held home accounts outside their RTGS systems and these were used primarily to manage minimum reserves, standing facilities and cash withdrawals, but to settle ancillary systems’ transactions
The eurozone, officially called the euro area, is a monetary union of 19 of the 28 European Union member states which have adopted the euro as their common currency and sole legal tender. The monetary authority of the eurozone is the Eurosystem, the other nine members of the European Union continue to use their own national currencies, although most of them are obliged to adopt the euro in future. Other EU states are obliged to join once they meet the criteria to do so, no state has left, and there are no provisions to do so or to be expelled. Andorra, San Marino, and Vatican City have formal agreements with the EU to use the euro as their official currency and issue their own coins. The ECB, which is governed by a president and a board of the heads of central banks. The principal task of the ECB is to keep inflation under control, the Eurogroup is composed of the finance ministers of eurozone states, but in emergencies, national leaders form the Eurogroup. Since the financial crisis of 2007–08, the eurozone has established and used provisions for granting loans to member states in return for the enactment of economic reforms.
The eurozone has enacted some limited fiscal integration, for example in peer review of each others national budgets, the issue is political and in a state of flux in terms of what further provisions will be agreed for eurozone change. In 1998 eleven member states of the European Union had met the euro convergence criteria, Greece qualified in 2000 and was admitted on 1 January 2001 before physical notes and coins were introduced on 1 January 2002 replacing all national currencies. Between 2007 and 2015, seven new states acceded, the 2012 data above of eurozone states were published by World Bank in May 2014. Latvia and Lithuania were not in the eurozone in 2012, the euro replaced the ECU1,1 at the exchange rate markets, on 1 January 1999. During 1979-1999, the D-Mark functioned as a de facto anchor for the ECU, the first enlargement of the eurozone, to Greece, took place on 1 January 2001, one year before the euro had physically entered into circulation. The next enlargements were to states which joined the EU in 2004, and joined the eurozone on 1 January in the noted, Cyprus, Slovakia, Latvia.
All new EU members joining the bloc after the signing of the Maastricht treaty in 1992 are obliged to adopt the euro under the terms of their accession treaties, nine countries are EU members but do not use the euro. Before joining the eurozone, a state must spend two years in the European Exchange Rate Mechanism, as of January 2017, only the National Central Bank of Denmark participates in ERM II. Denmark and the United Kingdom obtained special opt-outs in the original Maastricht Treaty, both countries are legally exempt from joining the eurozone unless their governments decide otherwise, either by parliamentary vote or referendum. The other seven countries are obliged to adopt the euro in future and they should join as soon as they fulfil the convergence criteria, which include being part of ERM II for two years. Sweden, which joined the EU in 1995 after the Maastricht Treaty was signed, is required to join the eurozone, Interest in joining the eurozone increased in Denmark, and initially in Poland, as a result of the 2008 financial crisis
Interest rate swap
Interest rate swaps can be used for both hedging and speculating. In an interest rate swap, each counterparty agrees to pay either a fixed or floating rate denominated in a currency to the other counterparty. The fixed or floating rate is multiplied by a principal amount. When both legs are in the currency, this notional amount is typically not exchanged between counterparties, but is used only for calculating the size of cashflows to be exchanged. When the legs are in different currencies, the notional amounts are typically exchanged at the start and the end of the swap. The most common interest rate swap involves counterparty A paying a rate to counterparty B while receiving a floating rate indexed to a reference rate like LIBOR, EURIBOR. By market convention, the counterparty paying the fixed rate is the payer, a pays fixed rate to B B pays floating rate to A Currently, A borrows from Market @ LIBOR +1. 5%. B borrows from Market @8. 5%, note that there is no exchange of the principal amounts and that the interest rates are on a notional principal amount.
Also note that interest payments are settled in net, that is, the fixed rate is referred to as the swap rate. At the point of initiation of the swap, the swap is priced so that it has a net present value of zero. If one party wants to pay 50 bps above the par swap rate, as OTC instruments, interest rate swaps can come in a number of varieties and can be structured to meet the specific needs of the counterparties. For example, the legs of the swap could be in same or different currencies, the interbank market, only has a few standardized types which are listed below. Each currency has its own standard market conventions regarding the frequency of payments, the day count conventions, Party P pays/receives floating interest in currency A indexed to X to receive/pay floating rate in currency A indexed to Y on a notional N for a tenure of T years. For example, you pay JPY 1M LIBOR monthly to receive JPY 1M TIBOR monthly on a notional JPY1 billion for three years or you pay EUR 3M EURIBOR quarterly to receive EUR 6M EURIBOR semi-annually.
The second example, where the indexes are the type but with different tenors, are the most liquid. Floating-for-floating rate swaps are used to hedge against or speculate on the spread between the two indexes. For example, if a company has a floating rate loan at JPY 1M LIBOR, at the moment, this company has a net profit of 40bps. With this, they have effectively locked in a 35bps profit instead of running with a current 40bps gain, floating-for-floating rate swaps are seen where both sides reference the same index, but on different payment dates, or use different business day conventions
The ING Group is a Dutch multinational banking and financial services corporation headquartered in Amsterdam. Its primary businesses are retail banking, direct banking, commercial banking, investment banking, asset management, ING is an abbreviation for Internationale Nederlanden Groep. The orange lion on INGs logo alludes to the Groups Dutch origins under the House of Orange-Nassau, ING is the Dutch member of the Inter-Alpha Group of Banks, a cooperative consortium of 11 prominent European banks. ING Bank was included in a list of global systemically important banks in 2012, as of 2013, ING served over 48 million individual and institutional clients in more than 40 countries, with a worldwide workforce exceeding 75,000. The company is a component of the Euro Stoxx 50 stock market index, ING Group traces its roots to two major insurance companies in the Netherlands and the banking services of the Dutch government. It changed its name to De Nederlanden van 1845, two decades in 1863 the life insurance company Nationale Levensverzekerings Bank was founded in Rotterdam.
These two insurance companies would make multiple acquisitions before merging to form the combined company the Nationale-Nederlanden in 1963. The combined insurance company would expand significantly during the 1970s and 1980s, in 1881, the Dutch government created the Rijkspostspaarbank, a postal savings system to encourage workers to start saving. Four decades they added the Postcheque and Girodienst services allowing working families to make payments via post offices, separately in 1927, the Dutch government initiated a re-organisation of Dutch banks which resulted in the creation of the Nederlandsche Middenstands Bank. NMBs focus was retail banking in the Netherlands and abroad, in 1986, post office banking services were privatised as Postbank N. V. and three years it would merge with NMB bank to form NMB Postbank Groep. It acquired Frankfurt based BHF-Bank in 1999, although disposed of this and it increased its Latin American and Asia Pacifics insurance businesses with the acquisition of ReliaStar and Aetnas Financial Services unit.
It acquired the Polish Bank Śląski and Mexican insurance company Seguros Comercial América, however, it was the 1995 purchase of Barings Bank after its dramatic failure that saw ING Groups investment banking business boosted significantly. The first of these was set up in Canada in 1997, the no frills, high rate savings accounts that could only be accessed online were a successful venture and spawned a number of similar services from rival banks. In 2008, as part of the financial crisis ING Group, together with all other major banks in the Netherlands. This support increased INGs capital ratio above 8%, however as a condition of Dutch state aid and this included the sale of the ING Direct US operations to Capital One and the ING Direct UK operations to Barclays bank in 2012. The spun-off insurance businesses in North America were renamed Voya Financial in 2014, in November 2003, ING Groep N. V. appointed Michel Tilmant, Vice-Chairman of the executive board, as its new chairman and successor to Ewald Kist.
ING has offices in, Due to the separation of ING Group into ING Bank and ING Insurance, ING House was the head office of NN Group and located in the business district of Zuidas in Amsterdam, Netherlands from 2012 to 2014. It was designed by Roberto Meyer and Jeroen van Schooten and was opened on 16 September 2002 by Prince Willem-Alexander of the Netherlands
BNP Paribas is an international banking group with a presence in 75 countries. It is listed on the First Market of Euronext Paris and is included in the CAC40 index, at 31 December 2016, net income attributable to equity holders was EUR7,702 million. BNP Paribas is one of the largest banks in the world, the retail bank operates in the Mediterranean region and in the west of the United States. It was formed through the merger of Banque Nationale de Paris, the company is a component of the Euro Stoxx 50 stock market index. BNP Paribas has the highest brand value in France and its brand value increased EUR590 million to reach EUR14.7 billion in 2015. BNP Paribas was the 2nd leading bank in the zone in 2016. The Banque Nationale de Paris S. A. resulted from a merger of two French banks – Banque nationale pour le commerce et lindustrie and Comptoir national descompte de Paris – in 1966. The Banque de Paris et des Pays-Bas S. A. or Paribas, was formed from two investment banks based respectively in Paris and Amsterdam, in 1872, Les Pays-Bas is French for the Netherlands.
In May 2000, BNP and Paribas merged to form BNP Paribas, on 7 March 1848, the French Provisional Government founded the Comptoir national descompte de Paris in response to the financial shock caused by the revolution of February 1848. The upheaval destroyed the old system, which was already struggling to provide sufficient capital to meet the demands of the railway boom. The CEP grew steadily in France and overseas, although in 1889 there was a crisis in which it was placed in receivership. The former banks headquarter and staff were used to create BNCI with fresh capital of 100 million francs, the bank initially grew rapidly through absorbing a number of regional banks that got into financial trouble. After the Second World War, it continued to grow steadily and it grew its retail business in France and its commercial business overseas in the French colonial empire. After the end of the Second World War, the French state decided to put banks, rené Pleven, Minister of Finance, launched a massive reorganization of the banking industry.
In 1966, the French government decided to merge Comptoir national descompte de Paris with Banque nationale pour le commerce et lindustrie to create one new bank called Banque Nationale de Paris. The bank was re-privatised in 1993 under the leadership of Michel Pébereau as part of a second Chirac governments privatization policy and it went on to develop a strong investment banking business both domestically in France and overseas. During the period 1872 to 1913, it was involved in raising funds for the French and it helped the French government raise funds during the First World War and raised further capital and expanded into investments into industrial companies during the Great Depression. It stagnated and lost assets during the Second World War, after World War II, it missed the nationalisation of the other French banks due to its status as an investment bank and managed to take advantage of that by expanding its operations overseas
The London Interbank Offered Rate is the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks. It is usually abbreviated to Libor or LIBOR, or more officially to ICE LIBOR and it was formerly known as BBA Libor before the responsibility for the administration was transferred to Intercontinental Exchange. It is the benchmark, along with the Euribor, for short-term interest rates around the world. Libor rates are calculated for 5 currencies and 7 borrowing periods ranging from overnight to one year and are published each day by Thomson Reuters. Many financial institutions, mortgage lenders and credit card agencies set their own rates relative to it, at least $350 trillion in derivatives and other financial products are tied to the Libor. In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, Financial institution customers may experience higher and more volatile borrowing and hedging costs after implementation of the recommended reforms.
The UK government agreed to all of the Wheatley Reviews recommendations. Significant reforms, in line with the Wheatley Review, came into effect in 2013, the British government regulates Libor through criminal and regulatory laws passed by the Parliament. Part of this included the fixing of BBA interest-settlement rates. From 2 September 1985, the BBAIRS terms became standard market practice, BBA Libor fixings did not commence officially before 1 January 1986. Before that date, some rates were fixed for a period commencing in December 1984. Member banks are international in scope, with more than sixty nations represented among its 223 members and 37 associated professional firms as of 2008, eighteen banks for example currently contribute to the fixing of US Dollar Libor. The panel contains the following banks, The Libor is widely used as a reference rate for many financial instruments in both financial markets and commercial fields. Standard interbank products, Forward rate agreements Interest rate futures, e. g.
Eurodollar futures Interest rate swaps Swaptions Overnight indexed swaps, in 2012, around 45 percent of prime adjustable rate mortgages and more than 80 percent of subprime mortgages were indexed to the Libor. American municipalities borrowed around 75 percent of their money through financial products that were linked to the Libor, in the UK, the three-month British pound Libor is used for some mortgages—especially for those with adverse credit history. The Swiss franc Libor is used by the Swiss National Bank as their reference rate for monetary policy, the usual reference rate for euro denominated interest rate products, however, is the Euribor compiled by the European Banking Federation from a larger bank panel. A euro Libor does exist, but mainly, for continuity purposes in swap contracts dating back to pre-EMU times, the Libor is an estimate and is not intended in the binding contracts of a company.00 London time. This definition is amplified as follows, The rate which each bank submits must be formed from that perception of its cost of funds in the interbank market
Outside of Europe, a number of overseas territories of EU members use the euro as their currency. Additionally,210 million people worldwide as of 2013 use currencies pegged to the euro, the euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar. The name euro was adopted on 16 December 1995 in Madrid. The euro was introduced to world markets as an accounting currency on 1 January 1999. While the euro dropped subsequently to US$0.8252 within two years, it has traded above the U. S. dollar since the end of 2002, peaking at US$1.6038 on 18 July 2008. In July 2012, the euro fell below US$1.21 for the first time in two years, following concerns raised over Greek debt and Spains troubled banking sector, as of 26 March 2017, the euro–dollar exchange rate stands at ~ US$1.07. The euro is managed and administered by the Frankfurt-based European Central Bank, as an independent central bank, the ECB has sole authority to set monetary policy.
The Eurosystem participates in the printing and distribution of notes and coins in all states. The 1992 Maastricht Treaty obliges most EU member states to adopt the euro upon meeting certain monetary and budgetary convergence criteria, all nations that have joined the EU since 1993 have pledged to adopt the euro in due course. Since 5 January 2002, the central banks and the ECB have issued euro banknotes on a joint basis. Euro banknotes do not show which central bank issued them, Eurosystem NCBs are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated. The ECB issues 8% of the value of banknotes issued by the Eurosystem. In practice, the ECBs banknotes are put into circulation by the NCBs and these liabilities carry interest at the main refinancing rate of the ECB. The euro is divided into 100 cents, in Community legislative acts the plural forms of euro and cent are spelled without the s, notwithstanding normal English usage.
Otherwise, normal English plurals are used, with many local variations such as centime in France. All circulating coins have a side showing the denomination or value. Due to the plurality in the European Union, the Latin alphabet version of euro is used. For the denominations except the 1-, 2- and 5-cent coins, beginning in 2007 or 2008 the old map is being replaced by a map of Europe showing countries outside the Union like Norway
It has subsidiaries in, amongst others, Hungary, Czech Republic, Kosovo, Bulgaria, Bosnia-Herzegovina and Switzerland. The largest of these subsidiaries by far is Raiffeisenbank which accounts for 74 percent of the companys pretax profit, the RZB Group is the third largest Austrian bank. As of end-2010, the balance total of the RZB Group amounted to 136.5 billion euros. The incorporation meeting of the shareholders of the centre of the Austrian Raiffeisen cooperatives was held on 16 August 1927. The founding took place roughly four decades after the establishment of the first Austrian savings, the original company name was Girozentrale der österreichischen Genossenschaften. From 1953 on, the new name was Genossenschaftliche Zentralbank Aktiengesellschaft, since 1989, the bank has been named Raiffeisen Zentralbank Österreich Aktiengesellschaft, abbreviated as RZB. Along with this, the staff increased significantly, rising to 85 employees at the end of its first decade of existence. In 1938, one day after the German occupation of Austria, it was taken over by a provisional administrator, the bank was not returned to its pre-war owners until 1955.
In the 1950s, GZB began to expand and transform its foreign operations and this was clearly reflected in the banks growth, with the number of staff rising to almost 200 by 1957. At the end of the 1950s, the bank began to found specialised companies or to invest in them, working with the co-operatives allowed the institution to offer each and every Raiffeisen bank and its customers a universal range of financial services. The product portfolio of the Raiffeisen Banking Group was further expanded with the founding of Raiffeisen Building Society, Raiffeisen Insurance, Raiffeisen Leasing and this very early strategic decision to expand into Central and Eastern Europe proved to be one of the most important decisions in RZBs history. Along with Austria, RZB considers CEE to be its home market, the subsidiary bank Raiffeisen Bank International was formed merging Raiffeisen International Bankholding AG and the corporate banking business and related participations from RZB. RZB currently holds a stake of approximately 78.
5% and operates one of the largest banking networks in CEE, in 2005, it bought Ukrainian Bank Aval, and renamed its subsidiary Raiffeisen Bank Aval. In 2007, Raiffeisen made €1.48 billion, 79% of it from operations abroad, a group of 10 central and eastern European banks, which included Raiffeisenbank Chairman Herbert Stepic as spokesman, asked the ECB to extend their bailout. In June 2013, Raiffeisen supported the nationalised Volkesbanken by purchasing a package of poor loans worth $300mn from them, roughly half of the loans Raiffeisen and its subsidiaries have made in Ukraine were in U. S. dollars, while many loans in Hungary were in Swiss francs. As local currencies tumble, those loans have become more expensive for borrowers to pay off, the bank has asked the Austrian taxpayer to buy preferred shares of Raiffeisen valued at €1.75 billion in a capital-raising measure. The coupons would pay 9. 3% annual interest and must be repaid within five years, in 2015 the Raiffeisen Bank made a profit once again.
This in part lead to the bank postponing the 2014 announced sale of its Polish subsidiary Raiffeisen Bank Polska SA, another factor that affected the banks decision to wait with the sale was the elaborate demands by Polish regulators for bank sales
After the demise of Communism, the company started a strong expansion into Central and Eastern Europe and by 2008 it had acquired 10 banks. In 1997, it went public and today the company is listed on the exchanges of Vienna and Bucharest and included in the indices CEETX, ATX, Erste Group now includes all companies of the Group. In a ranking by Forbes Magazine of the worlds largest stock corporations in 2013, after restructuring and going public, Erste Bank – at the time the uniform organization – embarked on its expansion strategy into Central and Eastern Europe. The first takeover was the Hungarian Mezőbank in 1997, after carrying out another capital increase, the expansion continued. In 2000, majority stakes were acquired in the Czech Česká spořitelna, in 2000, three small Croatian banks were merged to create Erste & Steiermärkische Bank d. d. following their takeovers as of 1997 by Erste Bank and the Steiermärkische Bank und Sparkassen AG. In 2003, Riječka banka was merged with Erste & Steiermärkische Bank, the stake owned by Erste in these subsidiaries has been 55. 1% ever since.
The number of the employees at the end of 2008 was 9,985, in July 2005, Erste Bank signed the purchase agreement for the acquisition of 83. 28% of the shares in Novosadska banka a. d. Novi Sad, from the Republic of Serbia, with the acquisition of the bank, Erste Bank entered the Serbian market which promises enormous growth potential. In 2007, Erste acquired 100% of Bank Prestige in Ukraine, in April 2013, Erste Group sold its Ukrainian subsidiary for around EUR63 million to the owners of the Ukrainian Fidobank. The sale was in line with Erste Groups strategy to focus on the business in the eastern part of the European Union. Ukraine been growing more and more distant from the EU politically in the last few years, in 2008, the foreign business of Erste Bank was transferred to the newly founded Erste Group. s. Slovakia, Slovenská sporiteľňa Hungary, Erste Bank Hungary Zrt, Erste & Steiermärkische Bank d. d. Novi Sad Romania, Banca Comercială Română Slovenia Banka Sparkasse d. d, in October 2011 it said it expected a full year loss of up to EUR1.1 billion, after making writedowns and provisions of EUR1.6 billion.
This would be its first loss since at least 1988 and it said the writedowns were due to government intervention in Hungary, where it is forced to take losses on Swiss franc mortgages, and a slower than expected recovery in Romania. It will delay a plan to some of the state aid received in 2009. From 2009 to 2012, the Republic of Austria received annual payments from Erste Group of EUR98 million. As of year end 2015, Erste Group achieved a net profit of EUR968.2 million,4. 2% lending growth and a CET1 ratio of 12. 3%. In the spring of 2016,4.500 employees of Erste Group, of Erste Bank Oesterreich, the cornerstone had been laid on June 26th 2012
London /ˈlʌndən/ is the capital and most populous city of England and the United Kingdom. Standing on the River Thames in the south east of the island of Great Britain and it was founded by the Romans, who named it Londinium. Londons ancient core, the City of London, largely retains its 1. 12-square-mile medieval boundaries. London is a global city in the arts, education, fashion, healthcare, professional services and development, tourism. It is crowned as the worlds largest financial centre and has the fifth- or sixth-largest metropolitan area GDP in the world, London is a world cultural capital. It is the worlds most-visited city as measured by international arrivals and has the worlds largest city airport system measured by passenger traffic, London is the worlds leading investment destination, hosting more international retailers and ultra high-net-worth individuals than any other city. Londons universities form the largest concentration of education institutes in Europe. In 2012, London became the first city to have hosted the modern Summer Olympic Games three times, London has a diverse range of people and cultures, and more than 300 languages are spoken in the region.
Its estimated mid-2015 municipal population was 8,673,713, the largest of any city in the European Union, Londons urban area is the second most populous in the EU, after Paris, with 9,787,426 inhabitants at the 2011 census. The citys metropolitan area is the most populous in the EU with 13,879,757 inhabitants, the city-region therefore has a similar land area and population to that of the New York metropolitan area. London was the worlds most populous city from around 1831 to 1925, Other famous landmarks include Buckingham Palace, the London Eye, Piccadilly Circus, St Pauls Cathedral, Tower Bridge, Trafalgar Square, and The Shard. The London Underground is the oldest underground railway network in the world, the etymology of London is uncertain. It is an ancient name, found in sources from the 2nd century and it is recorded c.121 as Londinium, which points to Romano-British origin, and hand-written Roman tablets recovered in the city originating from AD 65/70-80 include the word Londinio. The earliest attempted explanation, now disregarded, is attributed to Geoffrey of Monmouth in Historia Regum Britanniae and this had it that the name originated from a supposed King Lud, who had allegedly taken over the city and named it Kaerlud.
From 1898, it was accepted that the name was of Celtic origin and meant place belonging to a man called *Londinos. The ultimate difficulty lies in reconciling the Latin form Londinium with the modern Welsh Llundain, which should demand a form *lōndinion, from earlier *loundiniom. The possibility cannot be ruled out that the Welsh name was borrowed back in from English at a date, and thus cannot be used as a basis from which to reconstruct the original name. Until 1889, the name London officially applied only to the City of London, two recent discoveries indicate probable very early settlements near the Thames in the London area