worlds economy could slow down warns IMF

IMF warns recovery could be derailed The International Monetary Fund on Saturday sounded a note of cautious optimism on the global economy, but warned that recovery will be derailed if officials relenton policy commitments. In a communiqué to mark the conclusion of the IMF's annual meetings in Tokyo this week, members of the fund said: "Key policy steps have been announced, but effectiveand timely implementation is criticalto rebuild confidence." Christine Lagarde said ata press conference following the release of the communiqué that members had shown at meetings over recent days a "very strong commitment" to act. "Wemight not always agree on everything, but thereis consensus that collective action is going to produce results," the managing director said. The communiqué praised recent efforts of European policy makers, but called on officials in the bloc to ensure that the Europe Central Bank's Outright Monetary Transactions programme is tapped."The ECB's decision on OMT and the launch of the European Stability Mechanism are welcome.But further steps are necessary," the communiqué said. The fund shares the ECB's concerns that, if the OMT remains unused, markets will view the programme as lacking credibility and yields on peripheral debt will rise. These concerns are not shared by German officials. The communiqué also called on the United States to resolve the Congressional dispute over the fiscal cliff and urged Japan to make further progress towardsfiscal consolidation in themedium term. The communiqué signalled that emerging markets and developing economies must step up their policy response if global growth deteriorated. The tone of cautious optimism in the communiqué jars with the conclusions of the fund's World Economic Outlook and Global Financial Stability Report. The WEO downgraded forecasts for global growth and the GFSR warned of a dramatic contraction in European banks' balance sheets, especially those of lenders in peripheral Europe. Some European officials have queried the validity of some of the research contained in the reports, such as the WEO's analysis of fiscal multipliers, which suggests that the austerity does far more damage to growth than governments had assumed. In a press briefing on Saturday, Mario Draghi, ECB president, indicatedthat he viewed the GFSR's conclusions on European banks' deleveraging as misleading. "European banks are now pretty resilient. Recapitalisation has made progress. Leverage ratios have gone down," Mr Draghi said. "Our figures for deleveraging are different from the GFSRs-and not for the first time."

worlds economy could slow down warns IMF

IMF warns recovery could be derailed The International Monetary Fund on Saturday sounded a note of cautious optimism on the global economy, but warned that recovery will be derailed if officials relenton policy commitments. In a communiqué to mark the conclusion of the IMF's annual meetings in Tokyo this week, members of the fund said: "Key policy steps have been announced, but effectiveand timely implementation is criticalto rebuild confidence." Christine Lagarde said ata press conference following the release of the communiqué that members had shown at meetings over recent days a "very strong commitment" to act. "Wemight not always agree on everything, but thereis consensus that collective action is going to produce results," the managing director said. The communiqué praised recent efforts of European policy makers, but called on officials in the bloc to ensure that the Europe Central Bank's Outright Monetary Transactions programme is tapped."The ECB's decision on OMT and the launch of the European Stability Mechanism are welcome.But further steps are necessary," the communiqué said. The fund shares the ECB's concerns that, if the OMT remains unused, markets will view the programme as lacking credibility and yields on peripheral debt will rise. These concerns are not shared by German officials. The communiqué also called on the United States to resolve the Congressional dispute over the fiscal cliff and urged Japan to make further progress towardsfiscal consolidation in themedium term. The communiqué signalled that emerging markets and developing economies must step up their policy response if global growth deteriorated. The tone of cautious optimism in the communiqué jars with the conclusions of the fund's World Economic Outlook and Global Financial Stability Report. The WEO downgraded forecasts for global growth and the GFSR warned of a dramatic contraction in European banks' balance sheets, especially those of lenders in peripheral Europe. Some European officials have queried the validity of some of the research contained in the reports, such as the WEO's analysis of fiscal multipliers, which suggests that the austerity does far more damage to growth than governments had assumed. In a press briefing on Saturday, Mario Draghi, ECB president, indicatedthat he viewed the GFSR's conclusions on European banks' deleveraging as misleading. "European banks are now pretty resilient. Recapitalisation has made progress. Leverage ratios have gone down," Mr Draghi said. "Our figures for deleveraging are different from the GFSRs-and not for the first time."

Ethics for banking sector

ethics in banking is of supreme importance for the economyand the society. In my judgment, ethics in bankingmust be firmly anchored onfour pillars. First, banks must comply with all laws, rules and regulations that are usually framed in any country to ensure soundness of operations and to enhance confidence of the society. These laws, rules and regulations may relate to, among others, capital adequacy, maximum shareholding by members of a family, qualifications and tenure of members of the Board of Directors and Managing Directors, representation of depositorson the Boards, credit rating requirements, maximum limits on single party exposure, liquidity and credit/deposit ratios etc. Banks are additionally subject to provisions of company law, tax laws and securities laws. Any attempt to circumvent any legal provisions must be considered unethical. The universe of law and the universe of ethics are not necessarily coterminous, butviolation of law is rarely, if ever, ethical. Second, banks must ensure fair and equitable treatmentof all stakeholders. The interests of various stakeholders such as shareholders, depositors, borrowers and employees do not necessarily coincide. For example, banks may be inclined towards offering low returns to depositors and charging high interest rates from the borrowers in order to maximize profits and dividend for the shareholders. Such conflict of interest must be ethically balanced keeping in view the greatest good of the greatest number. Third, the banks must ensure full, truthful and transparent disclosure of their financial health. As noted before, many of the assets which turned out to be toxic were treated as off-balance sheet items. Theconcerned stakeholders were thus deprived of the right to get a transparent picture of the true financial health and the risks that were being assumed. Fourth, banks must behave as socially responsible corporate citizens. Milton Friedman, a nobel-laureate economist and an ardent proponent of free market economy wrote in 1970 thatthere is one and only one social responsibility of business to use its resourcesand engage in activities designed to increase its profit so long as it stays within the rules of the game. One may interpret this statement to mean that business is simply about maximizing profit without violating laws and regulations. This is obviously an untenable position. It may be observed here that banks did not apparently violate any prevailing laws and regulations, yet their activities inflicted severe negative externalities upon the society, as noted earlier.In this context, it may be mentioned that many of ourcorporate entities, includingbanks, gloat with satisfactionabout fulfillment of social responsibility by offering a few scholarships, making donation to some clinics or offering some support for some charitable activities. While such initiatives are welcome, these touch only the fringe. Social responsibility must be viewed from a wider perspective, taking into account the impact of banks' activities on growth, employment and emphatically in our case, poverty alleviation as well. With the above hindsight, I would suggest a few do's and don'ts for banks to meet ethical standards. This list is by no means exhaustive. Do's: * Ensure a fair return to the depositors and safety of deposits. * Minimize spread between cost of funds and lending rates. * Engage in transparent accounting practices. * Comply with all laws, rules and regulations promulgated by relevant regulatory authorities. * Develop effective risk management systems. * Treat clients with courtesy. * Offer services promptly. * Make proper use of information and communications technologyto enhance efficiency in providing services. * Protect minority shareholders' interest. * Set up management systems which clearly specify the functions of the Board, key management personnel such as the Managing Director, Chief Financial Officer, Company Secretary, Heads of Divisions and Departments etc. * Treat employees fairly andcompassionately. * Arrange for requisite employee training. * Ensure non-discriminationin personnel practices and support employees' and their family members' access to basic health, education and housing needs. * Finance activities which contribute to environmentalprotection, employment creation, poverty alleviation and women's empowerment. * Devise innovative products without assumption of undue risk. * Arrange flexible mortgagepayments for poor people's housing. * Try to expand operations to unbanked or underbanked sectors, regions and population groups. * Emphasize recovery, but with a human face. * Develop an internal code of ethics and set up an institutional arrangement to monitor compliance and suggest remedial actions, where needed. Don'ts: * Don't prove Mark Twain's statement “banks will lend you money if you can proveyou don't need it.”

Different Types of Banks and How Do They Differ We all know that a bank is a place which takes care of its customer’s money, regulates it among the government and general public levels and financially assists its customers. However,it is only a lay man’s knowledge about a bank. Banks are of several types and they differ according to their dealings which are definitely about thefinancial matters. The banking principles and regulations diverge from country to country as well. The different customs and the demand of time also affect and change the legal technicalities. Different types of bankshave different domainsin which they perform their specified functions. Usually, banking is a business initself, and banks are profitable entities but some of the banks operated by government are non-profitable. The various basic types of banks are: - Retail Banks: These banks work with the individuals and small business owners. They deal in the mortgage loans, credit cards and saving accounts. - Business Banks: They deal with the middle scale industrialists and business owners. - Private Banks: The wealth management service, to elite class and large scale businessowners, is provided by private banks. - Investment Banks: Investment banks are engaged in the deals with the economic market. - Central Banks :Last but not the least is the central bank. All the central banks are usually under the government directly and they are responsible to have a check on the rest of the banks and also to control and manage the interest rates. They also offer help to the businesses and corporations but only ifthere is no other choice. Out of all the previously described types of banks, retail banks are sub-divided according to their functions. Following is a short briefing about the kinds of retail banks: - Commercial bank: Commercial bank is to deal with the loans, mortgages, and the credits of high level industries and businesses. In fact, the investment banks were limited to the investment market by the US Congress only after the Great Depression. - Community banks: The locally working corporation that makesthe financial decisions for its customers and partners. - Community Development Bank: The banks that financially serve the neglected population or market of the community. - Private Banks: We alsoconsider the privates banks under retail banks as they deal withthe general public individually too. There was a time when you had to deposit at least a million dollars to open an account in a private bank. However, this opening amount due to growing business has been reduced to quarter of amillion US dollars. - Offshore Banks: The banks with the least laws and low taxation are called offshore. They are usually under the private banks. - Ethical Banks: Ethical banks function on the honest and clear policies and believe in socially responsible financing only.

34% quarterly profit for JPMorgan Chase

JPMorgan Chase on Friday reported a third-quarter profit of$5.7 billion, up 34 percent from a year ago, as the bank showed signs of strength in consumer and corporate lending. The bank surpassed expectations with earnings of $1.40 a share, compared with$1.02 a year earlier. JPMorgan's revenue rose to $25.9 billion, up 6 percent from 2011. As the nation's largest bank, JPMorgan is often considered a barometer of how rivalinstitutions and the greater economy will fare. With growth across virtually all the bank's core businesses, the earnings could bode well for the rest of the industry. In particular, JPMorgan's earnings were buoyed by the mortgage business, which is benefiting from a variety of government initiatives.The company originated $47 billion of new home loans and refinancing, up 29percent from the sameperiod a year earlier. Earnings in the mortgage unit increased by 57 percent."We believe the housing market has turned the corner," said Jamie Dimon, the bank's chief executive, in a release. Still, Mr. Dimon tempered expectations for the market. While emphasizing the growth in the bank's mortgage business, he warned that defaults could continue, along with foreclosures. Mr. Dimon, who has been an outspoken critic of overreachingregulation from Washington, also noted that the housing market could rebound more quickly if lawmakers made certain moves. "I would hope for America's sake we start to fix the things that make the mortgage underwriting too tight," Mr. Dimon said on a conference call with reporters.

Sprint nextel and softbank nears a deal

Sprint Nextel confirmed on Thursday that it was intalks with Softbank of Japan over a"potential substantial investment." A deal would give the struggling American cellphone service provider a deep-pocketed backerto help finance its turnaround effort. Talks are at an advanced stage, and a transaction may be announced soon, a person briefed on the matter said on Thursday. But the person cautioned that details were still being negotiated and a transaction may not transpire. In a brief statement, Sprint said: "Although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur,such a transaction could involve a change of control of Sprint. Sprint does not intend to comment further unless and untilan agreement is reached."If a deal is completed, Sprint would gain substantial financial heft. SoftBank, one ofJapan's biggest cellphone service providers, could provide additional resources for Sprint build out its next-generation network. Sprint has long labored in the shadow of its bigger rivals, Verizon Wireless and AT&T, and in recent years has sought to compete primarily on price. But the company risked being overshadowed by T-Mobile USA's plan to merge with MetroPCS, a deal thatcould create a tougher competitor in the lower end of the cellphone market. Sprint currently has 56 million customers,while the newly enlarged T-Mobile would have 42.5 million subscribers.

USA unemployment rate falls

The nation's unemployment rate fell to 7.8 percent in September, the first time it has fallen below 8 percent since February 2009 and raising hopes that the pace of U.S. job-creation is picking up. The U.S. Department of Labor said today that total nonfarm payroll employmentincreased by 114,000 in September, lowering unemployment 0.3 percentage points, from 8.1 percent in August. That brought the number of unemployed Americans down by 456,000 last month,to 12.1 million. After three straight disappointing months, total employment as measured bythe government's householdsurvey rose 873,000 in September. The employment-to-population ratio, a closely watched measure of the overall healthof the labor market, rose 0.4 percentage points to 58.7 percent, its highest level since May 2010. The numberof hours employees on private nonfarm payrolls work per week also ticked up, a sign that the employersmay soon plan to boost hiring. In another positive sign, the Labor Department revised upward the number of jobs created over the previous two months. The economy added 181,000 jobs in July, initially estimated at 141,000, and 142,000 in August, up from 96,000. The improved performance was evident across several sectors of the economy. Health care, transportation and warehousing, and financial services businesses all added jobs. The manufacturing industry, which had been a bright spot earlier in the year, shed 16,000 jobs amid a broader slowdown in the global economy. The latest jobs data represents a significant improvement over recent months, when slowing economic growth caused tepid hiring. The economy has added an average of 146,000 jobs a month since January. By comparison, 153,000 jobs a month were created on average in 2011. Although estimates vary, the economy needs to produce 90,000 to 125,000 jobs per month to match the number of people entering the labor force. Job-creation would have to rise well beyond those numbers to return the economy to full employment.

USA unemployment rate falls

The nation's unemployment rate fell to 7.8 percent in September, the first time it has fallen below 8 percent since February 2009 and raising hopes that the pace of U.S. job-creation is picking up. The U.S. Department of Labor said today that total nonfarm payroll employmentincreased by 114,000 in September, lowering unemployment 0.3 percentage points, from 8.1 percent in August. That brought the number of unemployed Americans down by 456,000 last month,to 12.1 million. After three straight disappointing months, total employment as measured bythe government's householdsurvey rose 873,000 in September. The employment-to-population ratio, a closely watched measure of the overall healthof the labor market, rose 0.4 percentage points to 58.7 percent, its highest level since May 2010. The numberof hours employees on private nonfarm payrolls work per week also ticked up, a sign that the employersmay soon plan to boost hiring. In another positive sign, the Labor Department revised upward the number of jobs created over the previous two months. The economy added 181,000 jobs in July, initially estimated at 141,000, and 142,000 in August, up from 96,000. The improved performance was evident across several sectors of the economy. Health care, transportation and warehousing, and financial services businesses all added jobs. The manufacturing industry, which had been a bright spot earlier in the year, shed 16,000 jobs amid a broader slowdown in the global economy. The latest jobs data represents a significant improvement over recent months, when slowing economic growth caused tepid hiring. The economy has added an average of 146,000 jobs a month since January. By comparison, 153,000 jobs a month were created on average in 2011. Although estimates vary, the economy needs to produce 90,000 to 125,000 jobs per month to match the number of people entering the labor force. Job-creation would have to rise well beyond those numbers to return the economy to full employment.

France enterprenuers do not agree with tax proposal

Campaigning for President of France earlier this year, François Hollande made no secret that he planned to raise taxes on large corporations. But he promised the taxman would go easy on startups and other small to midsized companies. Now, though, entrepreneurs and investors are in an uproar after discovering that the new Socialist Presidentplans a big increase in taxes on capital gains generated from the sale of businesses, to asmuch as 64 percent. “No country comparable to ours has such a punitive scheme,” the French Private Equity Association said in a statement after the plan was unveiled on Sept. 28 in Hollande’s 2013 budget proposal. Opponents have wasted no time mobilizing. A group ofbusiness people callingthemselves—”Les Pigeons,” which translates in French slang as “The Suckers”—has gathered more than 30,000 supporterson a Facebook page that accuses the government of “crushing entrepreneurial spirits and exposing France to a big risk.” Leaders of the group include the founders of France’s three biggest Internet companies: Web retailer Vente Privée, online dating site Meetic, and Internet-access and mobile-phone operator Iliad. “We should push entrepreneurs to createcompanies, products, services, jobs, rather than push them to protest,” Vente Privée founder Jacques-Antoine Granjon told Bloomberg News. “If you want economic growth, you need a stable backdrop and a just reward for risk andhard work.” His company, founded in 2001, now has annual revenues of 1.1 billion euros and employs more than 1,500 people. The Hollande budget would abolish an existing 30 percent capital gains tax rate—already higher than in most surrounding countries—and replace it with ascheme based on regular income tax rates. That would produce an effective rate as high as 64 percent, the private-equity association says,compared to an average rate of less than 25 percent elsewhere in Europe. Business owners who are retiring or who immediately reinvest their gains in another enterprise would be exempted from the tax. Hollande’s budget planis already under attackfor a proposed new 75percent tax rate on incomes over 1 millioneuros. Several French soccer organizations said last week that the tax would have a “disastrous effect” on their recruiting. Jean-Paul Agon, chief executive of Paris-based beauty group L’Oréal, has warned the tax would make it harder for French companies to attract and keep top talent. Overall, Hollande’s budget plan calls for 20 billion euros in higher taxes and 10 billion in spending cuts. Opponents warn that heavier taxes harm France’s competitiveness and dampen growth, at a time when the economy is stagnant and unemployment is at a 13-year high. The capital gains tax couldbe the coup de grace , Jean-David Chamboredon, who heads French investment fund ISAI, told Bloomberg News. “It’s going to push young entrepreneurs away, to London or elsewhere,” he said. “A 60 percent tax rate practically means yourcompany is being nationalized.”

Europen Central Bank help to ease the economic crisis

The president of the European Central Bankgave a guardedly upbeat assessment of the situation in the euro zone Thursday, saying that troubled countries had made"significant progress" remaking their economies and that the banking system was healthier. "So, not bad," Mario Draghi said, with an airof distinct satisfaction, at a press conference in the Slovenian capital of Ljubljana following a meeting ofthe bank's governing council. But, perhaps wary of seeming too optimisticand encouraging complacency by elected officials, he added that the state ofthe euro zone remained tenuous. Early this year, Mr. Draghi also called a turning point in the crisis, only to see tensions return with a vengeance later on.After a period of intense activity to calm the euro zone crisis, the E.C.B. had not been expected toannounce major newpolicy actions Thursday. And, as expected, the bank left its benchmark interest rate at a record-low 0.75 percent. Instead, the focus hasbeen on elected leaders, and particularly whether Spain will meet conditions for the E.C.B. to start buying its bonds as a way of restarting bank lending in the country. Mr. Draghi asserted that the E.C.B.'s promise to buy bonds in so-called Outright Monetary Transactions had"helped to alleviate tensions" in the markets. He added that the bond purchases, oncethey begin, "will enable us to provide, under appropriate conditions, a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area."