Why are banks in the US on the downfall?

The U.S. economy is showing signs of recovery, but despite that fact, the number of bank failures in the U.S. has continued to increase with 123 entities going out of business so far this year. The authorities shut down three banks - Orion Bank based in Naples, Pacific Coast National Bank in San Clemente and Century Bank F.S.B of Sarasota on November 13, taking the count of failed banks to 123 this year, according to PTI.

The Federal Deposit Insurance (FDIC), which was named the receiver of the failed banks, took over Orion Bank, with about $2.7 billion in assets and $2.1 billion in deposits and Century Bank with $728 million in assets and $631 million in deposits. Pacific Coast National Bank was also shut down. It had $134.4 million in assets and $130.9 million in deposits. In addition, FDIC had entered into a purchase and assumption agreement with Iberia Bank of Lafayette, Louisiana, to assume all of the deposits of Century Bank, FSB.

However, the maximum number of collapses this year took place in July, when 24 banks were closed down, while 20 entities bite the dust last month.

Despite the slowly improving economic situation, soaring unemployment rate have resulted in rising defaults, primarily impacting the small and medium banks.

Agencies

Check out the 'World's 50 safest banks' list

Not a single Indian bank has made it to the 'World's 50 safest banks' list. This is despite the fact that during recession, when banks in the U.S. and Europe needed government support for survival, banks in India were strong enough to sustain on their own.

New York based Global Finance ranks the banks worldwide annually through a comparison of long-term credit ratings and total assets of the 500 largest banks around the world. Germany's KfW Bankengruppe tops the list, followed by France's Caisse des Depots et Consignations (CDC) and Netherlands' Bank Nederlands Gemeenten (BNG). Credit ratings from Moody's, Standard and Poor's and Fitch have been used for this compilation.

A mid-year update was published by the magazine for the first time in March this year, due to the global financial crisis. All the major banks of Canada earned a spot on the list. Among them the Royal Bank of Canada earned the highest safety score, taking 10th place among the international banks. The only major Canadian bank not present in the list was the National Bank of Canada.

According to the magazine, after two tumultuous years that saw many of the world's most respected banks drop out of the top 50 safest banks list, the dust appears to be settling. Those banks that kept an alert before the financial crisis began have consistently topped the table and maintain their standing among the top echelon in this year's ranking. At the same time, the big name banks that lost their safest bank ranking during the credit crunch are still absent from the list as they struggle to rebuild their credit standing. Also, more than ever customers all around the world are viewing long-term creditworthiness as the key feature of the banks with which they do business.

Agencies

Suspected money laundering made record in 2008:Swiss govt

Switzerland, on the 'grey list' of tax havens, saw a surge in suspected activities related to money laundering in 2008, with assets worth Switzerland an all-time high $ 1.65 billion involved in them.

After the world's top 20 economies resolved to crack down on tax havens worldwide at a meeting here last week, the Organisation for Economic Cooperation and Development (OECD) named Switzerland among countries not having substantially implemented international tax standards.

This classification put Switzerland on the 'grey list' of tax havens, but Switzerland reacted sharply to such descriptions and said it was not actually a 'tax haven'.

However, the Swiss Federal Department of Justice and Police (FDJP) has said in a report that the number of Suspicious Activity Reports (SARs) in connection with money laundering jumped from 795 in 2007 to 851 last year.

This included nine related to suspected terror financing and involved assets worth over one million Swiss francs ($ 884,600).

"The increase was due mainly to the greater volume of reports from the banking sector, which reached a new record high. The total value of assets involved doubled to reach an all-time high of CHF 1.87 billion Swiss francs ($ 1.65 bn)," the FDJP said in a statement.

In 2008, the Money Laundering Reporting Office Switzerland (MROS) received 851 SARs, with nearly 67 per cent of them coming from the banking sector. Among them, most were related to investment fraud.

The statement noted that third on the list of offences was bribery related to individual corruption, which, due to their complexity involving numerous businesses, generated several SARs.

"Although the acts of corruption took place abroad, the suspected bribe money was deposited in Switzerland," it added.

Interestingly, Opposition parties in India have said that assets worth about $ 1.5 trillion are stashed away in Swiss banks by Indian citizens.

The FDJP said that in the CHF 1.87 billion, three SARs totalling CHF 700 million ($ 620.5 million) are involved. Among them, two cases involved fraud while the other one was related to corruption.

This included a single report involving an asset value of 942,000 Swiss francs ($ 834,999) and the case was forwarded to the appropriate prosecuting authority, which subsequently dismissed the case.

"None of the incoming SARs relating to terrorist financing was based on the State Secretariat for Economic Affair's so-called Taliban Regulations.

"All but one SAR with an unclear economic background were based on information received from third parties (press reports, information from third persons or prosecuting authorities) indicating possible terrorist involvement.

"After careful scrutiny, MROS forwarded seven of the nine SARs to the Office of the Attorney General of Switzerland, which has in the meantime dismissed or suspended three of the cases. Four cases are pending," the statement noted.

Agencies