A Tale of Two Companies and Their Banks

“It was the best of times, it was the worst of times, it was… “, well, you get the picture. Over the past several months I’ve been consulting with two separate companies as an outsourced CFO. Both companies need bank financing to stabilize their operations and achieve growth, both companies have struggled through trying economic times, both companies know they need to invest in processes, procedures and personnel in order to grow and achieve desired returns for their owners. I want to share with you how these two companies have been working through the process of structuring bank loans, hiring personnel and investing in internal systems in order to develop companies that can deliver desired shareholder returns. But first, some background information.

Company A has been in existence for just over 4 years. The company acquired the assets of an existing business and in the first 3 years grew the operations in excess of 15% per year. Coupled with a strategic acquisition, Company A is now almost twice the size of the business it acquired.

Margins have been good and the company has been able to distribute cash to the owner each year. With the rapid rise in the business the company was stretching its internal processes and personnel to the limit. Additionally, existing systems and equipment needed to be upgraded in order to support future growth.

In the middle of year 4 the storm clouds began forming for Company A. The company needed to hire additional personnel to manage the growth it had experienced and to support anticipated continued increases in revenue.

Unfortunately the rapid rise of the business meant that woefully stressed systems and personnel lead to quality lapses which resulted in several large customers leaving for competitors. Additionally, two management team members left the company and started a competing business. They took other customers by offering cheaper prices for similar services. Hurried investments in capital equipment that were designed to reduce labor costs were being run inefficiently and had resulted in large increases in supply expense. Company A was now losing money and needed to make changes quickly in order to right the ship. Additionally, the company’s current bank debt needed to be refinanced in order to alleviate cash flow concerns.

Company B has been in existence for just over 5 years. The company was a start-up that the owner was able to bootstrap to achieve recurring revenue levels that allowed the company to achieve profitability quickly. Cash flow was the focus and the company had been able to return cash to the owner each year. The company had been built with the owner overseeing all strategic initiatives and managing all activities of the company. As the company grew the operations of the business could no longer be effectively managed by an individual person.

During year 5 the owner of Company B realized that experienced personnel needed to be brought on board to effectively manage the business. Prior growth had been funded through customer advance payments and the company had no bank debt.

As recurring revenue was building it was time to make the appropriate investments in personnel and systems in order to take the company to the next level. Personnel hiring would be critically managed and coincide with incoming cash in order to manage the new expenses on a cash positive basis. New customer opportunities were growing and would be funded in part by bank debt along with customer advance payments. Company B was beginning to show profitable operations and needed to make the right investments in order to manage growth.

Both companies needed assistance in order to manage through the difficult times they were experiencing. So which one would fair better in discussions with the bank given their circumstances?

Things were looking rather bleak for Company A. Various missteps resulted in losing customers and allowing former management team members to start a competing business. Personnel were hired too late to alleviate quality concerns and now there were too many employees to support the existing business. Capital equipment investments that were supposed to reduce labor costs had dramatically increased supply costs and further draining cash from the company. Current bank terms had put the company in a position where the line of credit was continuing to increase because of the losses from operations. The company needed to refinance existing bank agreements in order to avert a situation that could cripple the business.

In order to see how Company A managed through this difficult time, we have to look back to when the company was initially formed. At that time the new owner realized that there was a unique opportunity to grow the business quickly based on the business environment. This meant that it was imperative from the beginning to have a core management team lead by a strong CEO. The CEO knew that it was important to develop strong banking relationships and put in place processes for managing the financial performance of the business. The new owner put cash in the business to fund a substantial portion of the acquisition and the CEO negotiated the banking relationship. The bank provided term debt to help fund the transaction and a line of credit to finance working capital needs.

Because the new owner put adequate cash in the business, the bank didn’t require any personal guarantees related to the loans and financial covenants were set at reasonable levels. Company A was required to have annual audits as part of the bank financing but this was something the new owner and CEO viewed as necessary for the business even if it wasn’t a bank requirement.

When difficult times hit, Company A had a good track record with the bank and had made substantial principal payments on the existing term debt facilities. The CEO met periodically with the bank to explain what the company was going through and what management was doing to address those issues, including bringing in an experienced CFO to assist in working through the tight liquidity situation. The CEO and CFO showed the bank that there were adequate assets in the company to refinance the existing debt and line of credit in order to free up cash flow. Personnel levels were reduced primarily through attrition but through this process the company was actually able to upgrade the quality of the overall workforce. The company worked with the manufacturer of the new equipment to address the issues that had lead to increased supply costs and was able to fix those issues over a few months.

Historical audits provided the bank with the comfort that Company A realized the importance of strong financial controls. The bank refinanced the existing loan agreements and even agreed to provide financing for new equipment purchases the company needed to make. No personal guarantees were required from the owner and debt covenants were set at reasonable levels. With the assistance from the bank the company was able to manage through a time of tight liquidity.

Things were actually looking pretty good for Company B. The company had managed to grow the business by being very frugal and only spending money when necessary. The company was debt free because the owner was able to get customers to make advance payments in order to fund necessary capital equipment expansion. The owner now just needed to bring on some experienced personnel to take the company to the next level. Some assistance from the bank in the form of a line of credit would be needed to make this happen, but this all seemed to be pretty doable from the standpoint of the owner.

Once again we need to look back to when the company was initially formed to fully understand the overall situation. Company B was formed because the owner had a unique opportunity to address a specific customer need. The owner was able to negotiate a large deposit from the customer and didn’t need to secure bank financing.

All of the operations of the business were managed by the owner in order to minimize expenses and conserve as much cash as possible. Since the owner managed all of the operations, including signing checks, there was no value perceived to having an audit or review of the company’s financial statements. This would simply be an unnecessary expense to the business and less cash to the owner.

When Company B needed financial assistance the owner met with the bank to discuss providing some availability in the form of a line of credit or term debt facility. The owner explained the company’s needs and that a CEO and other personnel were being hired to help grow the company. The bank asked about the availability of audits or reviews of the company’s books in order to help assist the bank in determining the quality of the company’s records. The owner explained that an audit or review had been considered an unnecessary business expense and that an outside accountant had only been used to prepare tax returns. The bank indicated that given the lack of an audit or review, coupled with no loan history with the bank, any business loan would need to be personally guaranteed by the owner. And that was assuming the owner had adequate personal assets to qualify as collateral. The bank suggested that the owner consider putting personal cash deposits in accounts at the bank that would act as the necessary collateral for a business loan. What the owner had viewed as being a relatively easy problem to solve was now proving to be problematic to the overall business and the owner personally. The owner decided to look at other banks but kept hearing the same story over and over again.

So what lessons are learned from these two companies and how can you as a business owner apply these to your company?

Even though times were difficult, Company A was able to renegotiate its bank debt which lifted a huge financial burden from company management and the owner.

The bank had stepped up and provided desperately needed financing and shown its support to the owner because of the following factors:

  1. Company A treated the bank as a business partner from Day 1 – The company always kept the bank informed as to their financial condition and never surprised the bank on short notice with bad news. Communication was always straight forward and above board. When the company needed the bank to do something they simply presented a plan and asked for what they wanted. They didn’t always get everything they asked for, but what they did get was usually adequate to meet their most urgent needs.
  2. Company A knew the importance of having an outside accountant prepare yearly audited financial statements – The CEO knew that a yearly audit would provide the bank, the owner and company management a level of comfort that the reported operating results were accurate. The outside accountant also provided good tax planning advice that helped the company save on taxes.
  3. Company A knew the importance of preparing yearly budgets and evaluating monthly performance against those budgets – Company A had developed a budgeting process that they have refined over time and continue to refine today. Budgeting operating results is an art and not a science, but it is important to get started at some level and improve the process as you go along. Without some type of a budget it is difficult to know where changes need to be made in the business in order to improve operating results.

Even though times were relatively good, Company B found it difficult to develop any kind of working relationship with a bank. Banks were unwilling to provide financing on any terms that were perceived to be reasonable by the owner for the following reasons:

  1. Company B didn’t view the bank as a business partner and hadn’t developed a lending relationship with the bank – The company was always able to finance growth in the business by convincing customers to advance payment for services to be provided. While this worked well for the company in eliminating the initial need for bank financing, there were never any discussions with the bank to explain the company’s overall business plan and how a bank would be needed at some point.
  2. Company B didn’t see any value in having an outside accountant prepare yearly audits or reviews of the financial statements – The owner simply viewed this as an expense the company didn’t need to incur. There was no thought that down the road these type of financials would be necessary when it came time to secure bank financing and to try to get that financing without providing personal guarantees.
  3. Company B didn’t have any process for preparing internal budgets that could then be used to measure actual results – The company would typically embark on new projects based on high level analysis performed by the owner. Consideration was not always given to how a new project might impact the long term value of the company, but focused more on if it would create cash for the company in the short term.

So what lessons can you as a business owner take from the examples of these two companies?

  1. Always treat the bank as a business partner – For many business owners the bank will always be your largest creditor. The bank is vested in your success and should be communicated with as if they were a partner in your business because in reality they are. Many bankers are able to advise business owners on a number of matters that impact their businesses and you should willing draw on that expertise.
  2. Give adequate consideration to having an outside accountant prepare audits or reviews of your financial statements – These external financials will give the bank, and yourself, a level of comfort in the numbers being reported. An accounting firm provides good oversight to your business and can act as a trusted advisor as you are evaluating investment alternatives, including when it comes time to sell your business.
  3. Preparing a yearly budget that is then compared to actual results is probably the single most important step that you as a business owner can take to improve your overall company – Not only does a well prepared budget give you meaningful insight into your business, it will also improve your chances of survival in a highly competitive business environment. It is imperative that you create a plan each year that you can measure actual results against and to which you can hold yourself and your employees accountable.

At the Owners University we teach business owners how to improve their businesses in order to increase their overall value. Our program is designed to educate you, on your timetable, how to improve your business.

Universal Banking – Answer For The Best Banking Design?


In recent years, universal banking has been growing its popularity in Indonesia. Mandiri Bank, for example, has taken strategy to become Indonesia’s universal bank; this bank has also initiated to develop an integrated financial risk system in terms of sounding financial performance and increasing shareholder value. In Germany, and most developed countries in Europe, universal banks have initiated its operations since nineteen century. There is mounting evidence that in those countries, universal banks have taken an important part in the development of real sectors and the financial system. In those countries, the growing numbers of universal banking practices are really supported by the regulation of central of bank.

Despite, in The United States, they are strict to regulate universal banks by blocking commercial banks from engaging in securities and stock markets practices. They argued that the practice of universal banking might be harmful for the financial system. ((Boyd et.al, 1998) cited in Cheang, 2004) The “risk” might be the key reason why the central bank of The U.S is worried about the universal banking system. Since, if the central of bank allowed banks to adjust their operation to be universal banks, the relationship among, banks, financial and stock markets would be closer. Consequently, this would give an uncertainty to the banks condition and performance. For example, if there were a disaster in stock market, banks would get problems in their financial positions. Thus, they would tend to be insolvent.

In addition universal banks would also threaten the market share of other specialized institutions, because more customers would choose universal banks that offer more option to their investment. Hence, more specialized institutions are likely to be ruined in the U.S financial industry.

One majoring factor, which is triggering a bank to be universal bank, is to increase the profit by enlarging their market share. According to João A. C. Santos (1998) universal bank itself can be defined as the financial institution, which enlarges its service range in terms of offering a variety of financial products and services in one site. Thus, by operating universal banking, banks could get a greater opportunity to expand to another financial area, such as : financial securities, insurance, hedge funds and etc.

Although the trend of banks has recently tended to universal banks, it is undoubtedly true that universal banks would also face further risks because a wide range of financial services is strongly associated with increasing risks and escalating monitoring costs. These are the major concerns why banks have to implement more advance technology in terms of financial risk management. Moreover, the practices of universal banks would cause significant risks to economy’s payment system. Since, the operation of universal banks connects closely to the financial and stock markets that are very fluctuate in a short term.

To win in the tight competition among financial institutions, banks have to alter their maneuver to lead in the market. Universal bank could be the wise choice for the bank manager, because they can attract more customers with a wide range of services. Furthermore, by altering their operation to the universal banking system, banks would get benefits from the efficiency and economies of scale.

In order to understand about the universal banking practices, this paper would examine the exclusive matters, which related to the risks and benefits in a universal bank. Moreover, this paper would also focus the whole impact of this institution to the financial system and the economy as a whole.


General problem related to financial intermediation, include universal banks and another type of banks, is about asymmetric information . It is the main problem that causes costs to increase and influence the performance of financial institutions. In Universal banks, the problems that would increase are slightly different with specialized banks; they are similar in that they should cope the risks problem associated with their financial position. Although, in universal banks, the risks are more bigger due to the wide range of financial instruments that they organized. Therefore, banks have to increase their spending on monitoring costs that are more complicated than specialized institutions or conventional banks.

Possible answer why more banks sacrifice to the escalating risks and transform it operation into the universal banking is that they want to compete and expand their market share, in order to seek a greater opportunity profits by serving more choices to their customers. Many banks has experienced a great performance after they alter their operation, the main concerns are that they could reach better economies of scale which can reduce the amount of spending in operational costs and also a greater opportunity to get more profits. The research finding which was conducted by Vender, R. (2002, cited in Cheang, 2004) about the efficiency of revenue in financial conglomerates and the level of both profit and cost in universal banking, has proved that both financial conglomerates and universal banking contain good performance in several indicators of bank profitability. His finding also suggests that the sustained expansion of financial conglomerates and universal banking practices may increase efficiency in the financial system.

This opinion is strengthen by another experts, like : George Rich and Christian Walter (1993). They state that universal banks which posse benefits over specialized institutions, are able to take advantage of reduction in the average cost of production and scope in banking. It is essential for banks that operate on a international level and in order to fulfill customer needs with a variety of financial services. They also mention a classic example how universal banks in some countries, such as : Switzerland, Germany and more European countries has experienced benefits by operating universal banking. In addition, they also state that the fear if universal bank would threaten specialized institutions has not proven. In Switzerland and Germany, for example, specialized institutions could achieve a better improvement in terms of cooperating with big banks. Universal banks are one of potential market channel which can sell their products directly to the customers, so specialized institutions also get additional return due to the increases in the number of universal banks. Therefore, this proves that universal banks do not threat other institutions; in fact, they support specialized institutions to market their products.

According to Fohlin, universal banking would lead to a bank’s concentration due to the increases the number of branch. Based on Germany’s experience, such branching-based expansion has led to the efficiency in banking because it could increase economies of scale in advertising and marketing, and open an enormous opportunity to enhance diversification and steadiness for banks.

A universal bank has unique position to tackle asymmetric information. As stated by Joao A. C. Santos (1998), that a universal bank has potential benefits on the reduction of agency cost and acquires profits due to information advantages. Although in other sides, universal banking also face problems related to the cost, conflict of interest and safety and soundness. But the default risk, which is generally happened in financial intermediation, would decrease substantially because universal banks are easier to control over their customers. Most of lenders in universal banks are their customers, so they can understand about the capacity of the customers from the information that they gather.

Nicholas Cheang (2004) also points out how universal banks could reduce a crucial problem in financial institution, asymmetric information. He argued that they could preserve a close relationship with their borrowers, by gathering more relevant information to make an important decision for investment. Their advantageous positions also vital to optimize the distribution of fund allocation, because banks have already known which investment that would give more margins to them. So, they don’t need to worry too much about the risk.


Financial institution plays a vital role in terms of mobilizing funds in the economy. Consequently, stability in financial system is really important to manage by government in order to prevent wider implications to the real sectors. Financial disasters which happened in most countries in Asia in 1997 are the classic examples how importance to save banks to recover the economy.

As the financial supermarkets, which are handling a variety of financial instruments, they must face a greater risk than specialized institutions. As a consequence, this institution needs to be monitored closely in order to prevent more implications to the economy. According to Benston (1994), the escalating risks in universal banking would lead to a great problem because it can cause generous distress in the financial system. Hence, it will greatly increase the risk to the economy’s payment system. In another term, Rime and Strioh (2001) who examine the financial system in Switzerland in which universal banking are becoming more important in this country, state that difficulty in monitoring large universal banks is a major concern. This is the reason why universal bank has to spend more money in monitoring cost and develop an advanced system in information technology. In other words, it could say that the consequence of inefficient monitoring could lead to financial instability. (Cheang, 2004)

A wider range of universal banks in financial system makes the fund channels of banks to the customer are larger than specialized institutions. So, the economy will improve because universal banks will support more funding. This can be seen by the fact that a universal bank practice in Germany has triggered the progress of some enterprises performance in this country. (Stiglitz, 1985). It is understandable that when the allocation of fund can distribute widely and effectively to the potential enterprises, the economy will improve. In this context, universal banks have played as the key institution which mobilize fund to the potential lender.

Edwards (1996), has also proved that a universal bank is not just significantly contributed to economy from the external funds that they provide, but also from the improvement of the information flows. (cited in Cheang, 2004) Therefore, this proves that universal banks have played a significant role in terms of reducing the default risk by providing important information about the lender or customers. Furthermore, the safety of the financial system would be improved by the existence of universal banks.


The development of universal banks has to in line with the policy direction of central bank, because it is important to keep the stability of financial system and the economy as whole. There are three important areas that must be concerned related to universal bank operations, such as : the strengthened of capital and advanced risk management system. Consequently, in order to manage universal bank, people need to be aware about the unique of the risk type in universal banking. Furthermore, policy maker must also consider about the implication of universal banks in financial system.

4 Reasons To Choose Local Banking Over National Banks

There are traditionally two different types of banks to choose from. Instead of choosing a national bank that has locations all around the country, a neighborhood bank can provide you the same services. Many reasons exist for opting for local banking, which is why you need to be careful about getting the advertising of what a national bank offers.

1. Local banks provide better loans. When you’re trying to get a loan, you may find it easier to obtain one through a neighborhood bank as opposed to a national bank. The reason for this is because they understand the challenges of local businesses and residents.

2. Interest rates are better. When you’re looking for a high rate for your savings account, checking account or even a CD, you may find that the rates are higher when you bank locally. Local banks often don’t spend a lot of money on advertising. Instead, they use that money to pay higher rates to their customers.

3. Customer service is friendlier. National banks have countless clients. It’s impossible for the bank to know who you are. As a result, you become just a number. A neighborhood bank will be able to get to know you and your family and bend the rules easier.

A local bank does not have corporate headquarters to answer to. The benefit is that they aren’t as strict with their policies and procedures, which is often to your advantage. This means that you will get more customized service when you talk to anyone at the bank about any financial concerns you have. Many will take the time to sit down and talk to you like a real person instead of treating you like another account number.

4. Fees are lower. The neighborhood banking centers have lower fees on checking accounts. This includes fees on transactions, use of a debit card and even with checks. They must do this in order to compete with the other banks effectively. As a result, many customers would rather save money on a day to day basis with their bank than having a bank branch in every city of the country.

When you are looking for a new bank to do business with, there are options out there for you to consider. While a national bank does a lot of advertising, it isn’t always the best route to take. There are a number of reasons why it is better to choose local banking over national banking. The customer service alone can be worth it. However, the better interest rates, better loans and better fees certainly don’t hurt, either.

Offshore Banking Without Leaving Home

As a rental property owner in Costa Rica, I went to a local bank to open an account. I had a huge file of papers required to start the process: passport, second photo ID, certified utility bill, and legal proofs of property ownership. Four and one-half hours of forms filing, photocopying, certification stamping and document signings later, I emerged the proud owner of a Costa Rican bank account. Moreover, this was before all the FATCA banking laws affected the international banking industry.

Fast-forward to this year: With all the new FATCA laws, it’s getting harder and harder for U.S. citizens to open up overseas bank accounts. Most foreign banks require that you be physically present and most prefer that you prove residency by providing a certified local utility bill with your name on it. Like most things in life, if you look hard enough, you might find exceptions.

Meet Roberto Moreno, of Moreno di Donato Law firm in Ecuador: Roberto is a well-known attorney in Ecuador whom I met through International Living. He recently shared with me that he had permission from a large, Ecuadorian bank to facilitate the opening of new accounts. He, in essence, is providing introductions to the bank and conducting a certain amount of due diligence on behalf of the bank.

This means, that by working through Roberto, you can open up a bank account in Ecuador for about $500 in legal fees.

Ecuadorian Banking Benefits

Ecuador uses the U.S. dollar as currency. CD rates in Ecuador for smaller accounts are generally around 5%, and for accounts of $100,000 or more, and might be as much as 8% for longer CDs of a year or more. In addition, holding money in an Ecuadorian bank account can be part of the process of gaining Ecuadorian residency and later, citizenship. If your goal is Ecuadorian residency or citizenship, you should have a lengthier conversation with an attorney like Roberto.

Short-term investors should be cautioned, however, as Ecuador currently has a 5% capital control of amounts over $1000. That means that when money is taken out of Ecuador, there is a 5% exit fee on the amount. This may not be a major problem. If you are earning 8% on your CD and paying 5% in the exit tax, you are still netting 3% on an annual CD, which at this time, is more than you’re earning in the U.S. on an annual CD.

Panama – An Additional Bonus!

As most Expats know, Panama has become a world-wide banking and financial center. However, opening up bank accounts for U.S. citizens has become more and more difficult – and virtually impossible – without visiting Panama. Roberto explained to me that the bank he works with in Ecuador has a branch in Panama. This means that Roberto can also open a Panamanian bank account for U.S. citizens without the bother of having to leave home.

In Panama, the currency is the Balboa, but it is tied one-to-one to the U.S. dollar – the Balboa has never been worth more or less than the U.S. dollar. That may change in the future, but it is stable at present.

At the time of this report, 5-year Panamanian CDs were in the 8% range and without capital controls. Of course, this could change at any time.

For an additional fee – a little more expensive – for a Panamanian bank account, Roberto’s fee is about $1,000. However, this is typically cheaper than a visit to Panama.

With all the changes in the International Banking community, I don’t know how long this unique window of opportunity will remain open.

Working with Roberto was far easier than visiting my local Costa Rican bank. Here’s what it took:

• Completing and signing application forms

• Color copy of my passport

• Color copy of a second picture I.D.

• A check to Roberto for his legal fees.

No up-front deposit was required to open my accounts. When I received my account information, I made arrangements to fund the accounts with international wire transfers. Neither Roberto nor anyone else was handling my deposit monies, nor did they have access to my funds. In addition, if I need future assistance with my accounts, I can engage Roberto to help me, as his fees are very reasonable.

Why do I need an Ecuadorian and Panamanian bank account? Well, the truth is, I don’t. But as FATCA laws roll out, I think it’s important to have options. This opportunity may go away someday, but these offshore bank accounts likely won’t.

This is a great opportunity for folks considering relocating to Ecuador or Panama. Additionally, travel spending is easier when you have a local bank account. Moreover, as an investment, an 8% CD is a pretty good rate. If you are considering buying property in one of these countries, the funds can already be there.

Don’t Forget Your U.S. Reporting Responsibilities

If you have more than $10,000 combined in foreign accounts, you’ll have to file Form TD 90-22.1, also known as the FBAR form. Any interest earned in foreign accounts need to be reported on your individual tax return. A bank account is considered a Foreign Financial Asset. If you have more than $50,000 in foreign financial asset, you will need to find out if you also need to file IRS Form 8938.

Online Banking and How to Log Into Your Bank Account the Very First Time

If you use online banking, then you know the utmost convenience it offers in making online transactions. Nowadays, visiting the banks personally, doing that paperwork in an old-fashioned way and sweating out in the long queues have become a thing of the past. Online banking has made it possible to make every transaction at the click of a button. It has changed the whole story of our lives as earlier people have to take leave from office just to make a single transaction.

Online login is simple to use and you can access the bank services in the same way as you access them at the bank, but in the convenience of your home. So, if it is scorching summer outside and you need to do some shopping, just rely on net banking which acts as a savior at times. So, no more hassles down the road, no more struggles with the traffic and no more leaves from the work, just access your online banking account to get started.

What other purposes online login can fulfill?

Online login has tremendously aided the banking industry to go paperless and is an eco-friendly option. It has extended its benefits to the common people as well. Now, you don’t need to keep paper records of the banking documents in a separate folder. You don’t have to mess with remembering which document you have put in the folder. With net banking, you can save your important documents virtually. Probably, this is the reason it has been opted for by many customers.

Since keeping records of important documents is tedious and time consuming, all these banking documents can be recorded online that you can access anytime. Your transaction history, financial statements and other necessary documents are securely saved in your online account in an organized manner. You can print them at your will. The net banking also helps in a hassle free interaction with the banks. You can send emails, receive bank statements instead of going for sending fax or courier and it’s almost free.

General steps to get an online banking login

To get started with an online banking account, you will need to be ready with the following things:

  • Your preferred email address
  • Your sort code
  • Your bank account number
  • Your debit card

Step 1:

You can begin with the process by typing the URL of your bank in your browser. There you will come across an option to login. When you hover your mouse to the login option, a drop-down menu will appear that will be asking you about what type of account holder you are.

  • A Personal Account Holder
  • A Business Account Holder
  • A Credit Card Holder

Once you select the nature of your account, click to proceed further.

Step 2:

After landing on the next page, you will be asked if you are a new customer. Select the option and enter the following details correctly when asked:

  • Your personal details such as full name and date of birth
  • Your account number and sort code
  • Your complete debit card number and CVV number
  • Agree to the terms and conditions and you finally made it

You can now access the various services listed on your account. Happy banking!


The whole process to get an online banking login is pretty easy if you stick to the steps mentioned here. Some banks also provide a video walk-through of the process to help out new customers. Your remaining queries can be easily sorted out from there. Stay powered with online banking!

The Diminishing Popularity Of Banks

The last decade or so has seen a rise in the Australian economy but it has also seen in a downfall in banking. Banking, as we know has become a necessity and loans are increasingly becoming a popular means of sufficing an immediate requirement. Banks in Australia have always been traditionally focused and some of the top banks focusing on fulfilling basic consumer requirements of include:

Adelaide Bank

This bank is a listed publicly and has its head office in South Australia. It provides different types of financial services through a detailed distribution network and by forming new national alliances.

AMP Banking Australia

AMP is one of the leading wealth management companies in Australia with an excess of AUD$84 billion in assets.

ANZ (Australia and New Zealand) Bank

ANZ Bank is considered as one of the biggest banking companies in Australia as well as New Zealand and was also ranked among the top 50 banks in the world. The world headquarters for ANZ is situated in Melbourne where it started off in the 1830s.

Bank of Queensland (BOQ)

Bank of Queensland is the second largest Queensland-based banking and financial institution and is listed among the top 5 biggest banks in Australia.


It was formerly called the Bank of South Australia and today it is one of the largest financial institutions in South Australia and is also the main provider of personal finance, housing and rural banking in the State. Today BankSA is owned by St George Bank.

Commonwealth Bank of Australia

The Commonwealth Bank of Australia is one of leading banking and financial institutions, which has positioned itself for future growth and is aiming to make banking accessible to all Australians.

Macquarie Bank Limited

The Macquarie Bank offers different types of investment banking opportunities and also caters to selected retail financial service markets as well as commercial banking in Australia.

National Australia Bank

The National Australia Bank is an internationally acclaimed financial services group that has been providing comprehensive range of financial services in Australia as well as 15 other countries.

RBA – Reserve Bank of Australia

The Reserve Bank of Australia (RBA) is the central bank and its primary responsibility is the monetary policy. Some of the key roles of the RBA include maintaining the stability of the financial system and enhancing the efficiency and safety of the Australian payments system.

These are some of the most popular banking institutions in Australia. Off late, it has been noticed by various research groups that Banks are falling way behind in their promises to upkeep customer satisfaction and to consistently thrive to offer competitive interest rates on their loans. As a result, more and more people are turning towards newer and non-traditional forms of accessing capital such as non-bank lenders and now social lending or peer to peer lending networks.

This phenomenon can be disastrous for banks as has been experienced by banks in the UK following the launch of Zopa. Zopa is considered a pioneer in peer to peer lending and anyone can take an online loan from the Zopa borrowing platform. The salient point is that the borrower can set his or her repayment amount with a maximum interest rate. The interest rate is definitely lower than what banks are offering and hence more people are finding it advantageous from their point of view.

Social lending has landed on the Australian shores with Lending Hub http://www.lendinghub.com.au now being seen in the same light as Zopa and Prosper. Of course the funding vehicle is still under development but one can safely predict that the social lending networks will start to take lending market share from the banks. Another aspect that has pushed social lending ahead is the fact that it is more community oriented, which banks are not (although the banks like to portray themselves as being people and community focused they have spent the last 4-5 years closing branches and making banking highly automated and less consumer focused).

According to a recent study in Britain, it has been found that 74% of people feel a positive attitude towards borrowing from a social lending community as opposed to borrowing from their own high street banks. Almost 49% people feel that the banks have not been able to keep their promise of offering customer satisfaction. Another 81% believe that the banks are self-interested while a good 76% believe that they are greedy.

All in all these features make banking institutions highly unpopular especially now in the light of the unprecedented growth of social lending communities and peer to peer lending solutions.

Are You Off the Hook For Your Loan If Your Bank Goes Belly Up?

As the banking industry continued to hemorrhage in 2008, 25 U.S. banks failed. Among them were Washington Mutual and IndyMac, the first- and third-largest bank failures in U.S. history, respectively, but there were also scores of smaller regional banks throughout the nation.

According to the American Bankers Association, 98% of the nation’s 8,500 banks are considered well capitalized, making the chance of any one bank going bankrupt highly unlikely. Still, bank failures increased markedly in 2008 and will likely continue in 2009 under current economic stresses.

Most U.S. banks are insured by the Federal Deposit Insurance Corporation (FDIC), so in the case of a bank failure, any one individual’s bank deposits, up to $250,000 at any individual institution, are protected by the FDIC. (The coverage limit, which Congress increased last year due to the banking crisis, will remain in force at least through December 31, 2009, but may then revert back to $100,000 if Congress takes no further action.)

But what happens to your mortgage, car loan or credit card account if the bank that loaned you that money goes out of business? Could their loss be your gain?

Unfortunately, you are still on the hook for any and all debt you have incurred. If your bank fails, you’ll need to pay close attention to how you handle your loan payments in the ensuing months.

Here’s what to do:

1. Continue making your monthly payments on time, and as usual. Don’t fool yourself into thinking that the upheaval of a bank failure is an excuse to skip payments. Doing so will only hurt your credit, as late payments will be reported to the credit bureaus; if you skip payments on a credit card account, late payments could also increase your interest rate.

In the event of a bank bankruptcy, the FDIC will assume control of the bank until it finds a stronger bank willing to buy the assets of the failed bank. Because your loan is a legal contract, neither the FDIC nor any bank that buys the failed bank can change the terms of your loan, and you, as borrower, are still bound by the same terms to repay the loan as originally agreed

Credit card account terms, however, are not fixed like a house or car loan. If another bank purchases a failed bank’s credit card accounts, the new bank is not required to honor the interest rate or other terms of the original account, like annual fees, over-limit fees or late fees. Still, it’s in the new bank’s interests not to reshuffle the deck, because making radical changes could trigger an exodus as the old bank’s credit card customers reject the new terms en masse

In short, most credit card holders won’t notice any changes in how they can use their cards, but if you could be considered a borderline credit risk by the takeover bank, it’s possible they’ll change your account terms or even close it. Cardholders with a high credit score have the least to worry about.

Financial planner and author Suzie Orman advises keeping copies of your cancelled checks and loan payments for at least six months following the takeover of your bank to avoid potential problems if your payments aren’t recorded during the transition. (If that were to happen, you would then need to check your credit report to ensure the takeover bank has not reported your payments as late or delinquent.)

If you’re already delinquent on your mortgage payments, there’s a chance that bank foreclosure proceedings will be temporarily stopped, giving you a chance to negotiate an agreement on payments that help you stay in your home.

2. Read your mail and any correspondence concerning your bank’s failure. It’s important to be aware of any changes regarding to whom you write your checks and where you mail them, but continue writing your checks and mailing payments to the same address until you are notified otherwise. Be careful, bank failures represent another opportunity for scammers looking to steal money from unsuspecting bank customers by concocting bogus emails or websites redirecting your payments.

Check the FDIC website for specific details on how accounts and loans at each of the banks that failed in 2008 are being handled.

Although the FDIC insures bank accounts, experiencing a bank failure when your personal savings are involved is still unsettling, and most customers would prefer to avoid that possibility altogether. To protect yourself:

1. Be sure your bank is FDIC-insured.

2. Be sure that your deposits at any one bank, whether they’re certificates of deposit, money market accounts or savings and checking accounts, don’t exceed the $250,000 FDIC coverage limit.

3. Be cautious about opening any one-year or longer-term CDs that exceed $100,000 before December 31, 2009. Unless Congress acts to continue the extension of the FDIC coverage limit to $250,000, a CD over $100,000 may not be fully insured after that date.

4. Check the strength of any institution with which you’re considering banking by visiting an online bank rating service. Although many bank failures can’t be anticipated, understanding the overall strength of your bank can be helpful in assessing the risks.

Nigerian Banks – Unmasking the Culprits in the Banking Crisis

An old African saying; “When the wind blows the bottom of a chicken, it reveals a lot beneath it.”

Current mayhem in the financial sector opens up an opportunity for Nigeria to rid itself of the political and economic cancer it has endured for decades; corruption. As the events unfolded and the crackdown on debtors and bank leaders of the banking sector gather thrust the Security and Exchange Commission (SEC) and the Economic and Financial Crimes Commission (EFCC) engaged on tougher measures to reign in the perpetrators.

Recently the central bank audited ten banks, declaring five close to insolvency and leaving five more intact. They then removed the five bank chief executive officers and directors of Afribank, Finbank, Intercontinental, Oceanic, and Union Bank, and the injected USD2.6 billion into these institutions that were on the brink of collapse. It hopes to audit the remaining 14 and provide its findings by the end of September. According to CBN the five undercapitalized banks posed a risk to the entire banking system. Their executives are accused of using investors and depositors’ funds for personal gains and were engaged in lending said funds to their friends and family for personal use.

In an attempt to revamp and clean up this sector the banks governor pledged to sanitize the banking system that has fuelled growth in the country. To protect investors and depositors, the authorities, following the outcome of their examination of balance sheets, took some measures designed to strengthen the banking system and protect those at risk.

Unlike the global financial crisis which was blamed on excessive leverage on the mortgage front, the problems facing the financial system in Nigeria are mostly home grown with gross abuse by lenders and debtors on loans advanced. Some of these debtors are the most influential in the society and have the habit of not repaying borrowed money. Nigeria’s central bank has demanded repayment of $4.7bn of loans from them. The central bank published a list of more than 200 customers, including companies and state governments. The list includes some of Nigeria’s most well-connected and most powerful figures in the country. (i.e. popular billionaires, politicians, retired military Generals amongst others.) The cozy relationship between the banks helmsmen and their debtors has been partly blamed for this crisis and the governor’s efforts have been welcomed as a rare attempt to confront and challenge these interests.

According to one market insider, “Once someone is prominent in a particular industry you assume they are untouchable. What Sanusi has done now is to say nobody is too big to be held accountable, whether they are an Ibru or an Akingbola.”

Cecilia Ibru, former Chief Executive Officer of Oceanic Bank and Erastus Akingbola former Chief Executive Officer of Intercontinental Bank were arguably the highest-profile casualties of them all. Both are suing the CBN requesting the regulatory agency reverse their dismissal.

CBN is working along with other regulatory agencies to ensure that sanity and discipline get embedded in Nigeria’s financial institutions. By providing a comprehensive list of debtors to EFCC it has tasked the financial crimes unit to assist recover loans and clean up the financial sector. The central bank has threatened legal action against defaulting customers. However, the unprecedented action against the banks has sent the Nigerian currency, the naira lower but also raised hopes that the Nigerian financial system may finally be reformed.

Conflict of interest

Nigeria and its regulatory agencies should support all legitimate efforts aimed at the safety and soundness as well as sustainable growth and development of banks and the banking industry in Nigeria. In doing so it should ensure that those holding public posts should not use their position to abuse the system. Some of the debtors named by CBN are holding public office positions with some of the government agencies making one wonder if this is appropriate. Some of the alleged debtors include Alhaji Aliko Dankote, Professor Ndi Okerele Onyuike, and Eratus Akingbola. Given the sensitivity of their positions they should explain how their information appeared as debtors of the non performing loans of the troubled banks.

SEC has queried the Director-General of the Nigerian Stock Exchange (NSE), Prof. Ndi Okereke-Onyuike over the appearance of the name of a company she chairs on the debtors’ list. In a response, the Nigerian Stock Exchange (NSE) insisted that its Director General got the approval of the Securities and Exchange Commission (SEC) to be a non-executive Chairman of Transnational Corporation (Transcorp) Plc. Transcorp is alleged to have a non performing loan to Union Bank of Nigeria. (One would have expected a response from Professor Ndi Okereke and not NSE as the query was directed to her and she is the Chairman of Transcorp).

However, the board (NSE) called for the immediate suspension of any of the affected executives of the five banks who are members of the Council of the NSE pending the conclusion of the investigation of allegations against them by the Central Bank of Nigeria (CBN). Alhaji Aliko Dangote in his defense rebutted CBN’s disclosure, claiming that the publication was a gross misrepresentation. Alhaji Aliko Dangote was recently named the 17th President of the Council of the Nigerian Stock Exchange.

Erastus Akingbola the former Group Chief Executive of Intercontinental Bank was dismissed as the Vice President of the Nigerian Stock Exchange (NSE).The Chartered Institute of Bankers removed him as President and replaced him with the vice president. In a statement, the institute said it will “collaborate with the CBN to ensure the protection of the interests of all stakeholders in the banking industry.”

Credibility test for EFCC and the government

Mrs. Farida Waziri, head of the EFCC has accused the defaulters of pure economic sabotage and has stated that they should not be allowed to escape with their loot. The EFCC/SEC/CBN should demand that these bank practitioners have ethical standards, professionalism, and embrace transparency in their industry.

The EFCC should support all efforts aimed at cleansing the banking industry and the economy of its corrupt ways and continue to collaborate with the Central Bank of Nigeria (CBN) to ensure the protection of the interests in the banking industry. Obviously, this requires thorough investigation within this sector and its borders with persons found guilty being legally sanctioned.

The pursuit of the debtors will be a test of the EFCC’s credibility. In December 2007 Nuhu Ribadu was re¬moved as head of the commission after pursuing influential Nigerians on corruption allegations. Hilary Clinton the U.S. Secretary of State expressed her reservations on a visit to Nigeria last month. She stated; “the once vigorous corruption watchdog had fallen off in the last year”.

According to one Nigerian investment banker; “There is a lot of rhetoric, but when it comes to moving against anybody, it becomes more difficult.”

Sebastian Spio-Garbrah, a Eurasia Group analyst, said, “The EFCC going after bank defaulters will be a curious spectacle of intra-elite fighting ahead of the critical 2011 elections.”

The National Secretary of Alliance for Democracy (ACE), Mr. Emma Ezeazu said “the rot in the banking system has a nexus with country’s electoral problems.” Ezeazu, who supported actions in the banks, said he sensed a situation where some politicians who benefited from using bank loans to finance elections would soon oppose Lamido’s Sanusi’s moves.
One Nigerian analyst commented “When the dust settles, one of the most shocking aspects of this crisis is going to be the magnitude of the gap between the rot in the system and what its leaders wanted us to believe.”

What is Recovered So Far

The EFCC first announced three weeks ago that they had recovered N25.5 billion (USD170m) from wealthy debtors who owed money to five banks. This was followed a few days later by the recovery of an additional N19 billion (USD165 million). The commission’s spokesman, Femi Babafemi, said the N19 billion was recovered through personal commitments and outright payments by the defaulters to Afribank, Intercontinental Bank and Union Bank. As of 09/08/09 the EFCC spokesman confirmed over N70 billion (USD450 million) in total has been recovered and stated that the ongoing process is expected to yield more recovery.

Explain the Measures Taken for Bringing Out the Banking Sector Reforms in India


~ India had an extremely regulated system of banking.
~ This system suffered from various draw backs.
~ To overcome these draw backs, various reforms were undertaken in two phases.
~ As a result, India achieved stability and efficiency in the banking system.

~ A highly regulated banking system had various drawbacks like lack of competition, low capital base, inefficiency and high intermediation costs.
~ Thus, the depositors and borrowers were highly dissatisfied.
~ More over, after the nationalisation of banks in 1969, the pre-dominance of the public sector increased leading financial repression.
~ Also modern technology had no place in the banking system and the quality of service was inadequate.
~ Improper risk management systems and weak prudential standards gave rise to poor asset quality and low profitability.
~ In order to improve the adverse condition of the then existing banking system, various reforms were introduced since 1991.
~ These reforms were carried out in two distinct phase.

~ These reforms were carried out on the recommendations of the NARSHIMAM COMMITTEE (1991:Part 1)
~ These reforms can be categorised as:

1)Strengthening Measures.
2)Operational Flexibility Measures.
3)Competitive Efficiency Measures.
4)Legal Environment Measures.
5)Customer Services and Priority Sector Lending Measures.

~ These measures help the bank to strengthen itself to face the fluctuation in the economic environment.
~ These measures comprise the following reforms:

# Capital adequcy:
~ The ratio of minimum capital to risk assets is called the CAPITAL ADEQUACY RATIO.( CAR)
~ The CAR has been increased to 9%. At present almost 78% banks have a CAR above 10%.
~ This improves the trust and confidence of the banks in the eyes of the depositors.

# Prudential Norms:
~ These norms were initiated by the RBI to bring professionalism in commercial banks.
~ They include asset classification, income recognition and provision for bad debts.
~ These norms ensure the presentation of accurate financial position of banks as per international accounting practices.

#Valuation Norms:
~ These norms were more helpful to nationalised banks.
~ It made it possible for nationalised banks to raise funds through public issues.

# Transparency and Disclosures:
~ These norms ushered in more transparency and disclosure in published account.

~ These norms provided flexibility to banks in their functioning. They include the following measures:

# Reduction of SLR and CRR:
~ The CRR ratio was reduced considerably from 15% (1991) to 6% (2010).
~ Similarly the SLR ratio was also reduced from 38.5% to 25%.
~ These reduced ratios enable the bank to release more funds for commercial lending (Loans & Advance)

# Deregulation of Interest Rates:
~ This norm gave banks the freedom to fix their:
^ Prime lending rates (excluding export credit).
^ Variable interest rates on all deposits (except savings deposits)

# Setting-up Subsidiaries:
~ Banks are encouraged to set-up their subsidiaries.
~ This helps to diversify activities like mutual funds, venture capital, merchant banking, housing finance etc.
~ This increases the profit margin and consolidates the bank’s position in the financial market.

# Freedom of Operation:
~ Banks were allowed to open new branches and upgrade extension counters.
~ They are also permitted to close down non-viable branches (except in rural area).

~ These measures improve the competitive efficiency of banks.
~ These measures paved way for private sectors and foreign banks to enter the banking business.
~ The government’s share holding in the nationalised banks was considerably brought down to 51%.

~ These measures provided legal assistance to the banking system for quick recovery of dues.
~ The RBI set up Debt Recovery Tribunals to provide a mechanism to recover loans.
~ Also, a High Power Committee was form to suggest appropriate foreclosure laws.

~ Banks are suggested to provide at least 40% of lending to priority sector.
~ However, priority sectors have been redefined and subsidy has been reduced.
~ Banking Ombudsman Scheme was introduced for quick settlement of customer disputes.

~ These reforms are being carried out on the recommendations of NARSHIMAM COMMITEE II (yr 1998).
~ The following reforms have been undertaken:

– Insurance
– Credit cards – asset management
– Leasing – investment banking
– Infrastructure financing – factoring etc.

– forward rate agreements – cross currency forward contracts
– interest rate swaps – liquidity adjustment facility
-forward cover to hedge inflows (FDIs)

~ Electronic fund Transfer.
~ Centralized fund management system.
~ Negotiated dealing system.
~ Structured Financial messaging solution, etc.
~ Real Time Gross Settlement system (RTGS).

~ Introduction of risk based supervision of banks.
~ basel II Norms.

~ Increase flow of credit to priority sectors.
~ Definition of priority sector widened.

~ Setting up of Risk Management Committees.
~ Specialised committees monitor various risk like credit risk, operational risks, market risks, etc.

~ The limit for foreign direct investment in private banks has been increased to 74%.
~ 10% capital on voting rights has been removed.

~ Universal banking refers to the combination of commercial banking and investment banking.
~ It includes a vast range of other financial services beyond commercial banking.
~ They include insurance, leasing, investment advisory etc.

~ The enactment of securitisation, Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is an important step in the banking sector.
~ It led to setting up of asset management companies and enhancing of creditor rights.
~ An asset management company is authorised to acquire the NPAs of the banks.
~ In case of NPAs, a secured creditor can serve a notice to the borrower to discharge the liabilities within 60 days, failing which, he is entitled to take over the possession/management of secured assets.
~ Several institutional measures have been initiated to contain the level of NPAs, like:

^ Corporate Debt Restructuring (CDR)
^ Debt Recovery Tribunals (DTRs)
^ Lok Adalats.

~ RBI has issued guidelines for mergers and amalgamations of private sector banks.
~ These guidelines cover details regarding:

^ Process of merger proposal
^ Determination of swap ratios.
^ Disclosures and norms buying / selling shares by the promoters before / during the process of merger.

~ The Government of India has issued a managerial autonomy for public sector banks. (Feb 2005)
~ This enables them to compete with private sector banks.
~ Public sector banks are allowed to:

^ Explore new lines of business.
^ Make suitable acquisitions.
^ Close or merge unviable branches.
^ Open branches abroad.
^ Set up subsidiaries.
^ Exit from an existing line of business.
^ Decide human resource issues.

~ In recent years, prevention of money laundering has assured greater importance.
~ In Nov 2004, RBI revised Know Your Customer (KYC) guidelines.
~ Banks have to frame their policies within the network of KYC guideline. They relate to customer acceptance, customer identification, risk management and monitoring transaction.

~ There is increased use of IT in banking.
~ Banks have introduced various facilities like:

^ Online Banking
^ E-Banking
^ Internet Banking
^ Telephone Banking, etc.

~ These measures improve customer service of commercial banks.
~ They include:

^ Banking Ombudsman.
^ Customer Service Committee of the Board.
^ Credit Card Facilities.
^ Settlement of claims of deceased Depositor.

Computer Knowledge For Banking Jobs

Today is the computer age and it is found that most industries that employ skilled professionals to carry out jobs effectively and efficiently use computers; this is found even in the booming industry of banking. The banking industry that provides a lot of services like financial assistance to people, corporate banking, investment and savings find it much easier to computerize their services. Internet banking has turned into a boom for the busy people that can easily transfer and receive money and also get the exact updated information of the amount of money in their accounts.

With the use of computers dominating the industrial world, it is but natural for banks also to insist that their employees have a basic knowledge of computers; this makes for those joining banks to easily grasp the jobs that are to be performed on the computers. It is also to be understood that knowledge of computers makes it easy for one to be trained to take up clerical and probationary officers posts. It would be still better if one could do a computer course for 6 months to master the basic skills from a reputed institute; most banks have already started setting up this eligibility criteria, so as to emphasize this point.

There could be some that still asked the question whether it is very essential to have computer knowledge to join banks; the answer is that it is absolutely necessary as most banks are computerized in their banking and have adopted core banking. Most public and private banks are finding the use of computers to be very necessary to network between branches and to provide effective and faster service. So with most banks moving towards core-banking it is turning absolutely necessary; applying for bank jobs requires one to have a knowledge of MS Office, DOS, internet and e-mail, for that matter most operations are computer oriented.

How very true it is that a clerk in a bank has to know about computers; this is mandatory in most cases and is found to be a point of advantage for others. Again a bank probationary officer needs to know all about window operating system; a sound knowledge of MS Access, MS Word and MS Excel is very essential, a certificate may also be insisted upon in many cases. This proves essential for retrieve records, files, and documents maintained on the computer by different banks and branches in India.

It is true that with internet banking and ATM catching up as the mode of banking everywhere, it has turned compulsory for employees in banks to have a good computer knowledge even for simple data entry and maintenance of records. This is the reason that most banks test the computer knowledge of job aspirants through a written test that tests basic computer knowledge. So you would find most advertisements and notifications for bank jobs asking for knowledge of computer skills.

Aspiring to write the IBPS Exam for PO’s requires one to know about the origin and different versions of Window operating systems and what GUI stands for, in addition to knowing all about MS Excel, its purpose and program used to save file and xls extensions. That goes to all about computer knowledge for bank jobs.