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Group and bank crisis details
- 1. GROUP INFORMATION Salim Shadman Ratul Roll :kj-030-082 Imran Hossain Roll : BE-030-015 Md. Khaled Saifullah Roll : MH-030-017 Minhaz Badhon Roll : kj-030-078
- 2. The 1974 Herstatt Bank Crisis and i Implications for International Regulatory Reform-Emmanuel Mourlon-Dr
- 5. HERSTATE BANK, A PRIVATE OWNED BANK IN GERMNY IT WENT BANKRUPT ON 26TH JUNE 1974 BECAUSE OF A FAMOUS INCIDENT OF SETTLEMENT RISK IN INTERNATIONAL FINANCE
- 6. Cause of the Crisis Dissolution of the fixed exchange speculation High Risk and High Return Faulty Forecasting and not so Stringent internal Regulation
- 8. EARLYWARNINGS Rumors about Dealings Contradiction A Note of The Banking And Statistics Dept. OfThe LZB On 16th June 1971 TheWestfalen Bank Board Hints” 23rd March 1972 Der Spiegel Reports’19 97Criticised Herstatt Accounting Method The President Of Nordrhein Westfalen Recommendation
- 9. Daily Controlling Positions did not ProperlyAnalyze By The General manager Of Herstatt German uthoritiers,Appear To LimitedTheir Actions to nvestigations and Phone calls German Authorities Wrote only a Formal Warning Letter rather Taking Serious steps No Control Over the Auditing Reports The Warning Letter Was Sent off too late Ineffective supervisory responses
- 10. Responses ofThe Regulators After the collapse In 1974, shortly After the Crisis, “Principle la” was introduced In 1976,The Second Amendment to the bankingAct Came into Force Association of German Banks DecidedTo Set Up a Deposit Protection Scheme For German Banks
- 11. INVOLVED PARTIES IWAN HERSTATT GERMAN BANKER VON DER GOLTZ GM OF HERSTATT ULRICH SPOKESMAN, DEUTSCHE BANK FESSLER PRESIDENT, NORDRHEIN BANK KLASEN PRESIDENT BUNDESBANK DATTEL CHIEF, FOREX HERSTATT BANK LBZ (CENTRAL BANK FOR LENDERS) BAKred THE FEDERAL FINANCIAL AUTHORITY BUNDESBANK CENTRAL BANK PLACES COLOGNE ONE OF THE LARGEST CITY BONN CITY IN WESTERN GERMANY
- 12. DIARY OF THE COLLAPSE 22 JUNE, 1974: BANK OF ENGLAND 10 JUNE: HERSTATT BECAME AWARE OF THE LOSS CONSEQUENCES Of HERSTATT AWARENESS 13 & 14 JUNE: FURTHER INVESTIGATION SHORTLY AFTER 10 JUNE: FIRST DISCOVERY OF LOSSES SITUATION OF HERSTATT’S SUBSIDIARY IN LUXEMBOURG LBZ SPECIFICALLY LOOKED FOR THREE ELEMENTS DR. STAUCH SPOKE TO THE HERSTATT ON THE SAME DAY
- 13. CONTINUATION OR LIQUIDATION ? 22nd JUNE, 1974 BUNDESBANK LEARNT ABOUT THE LOSS 23nd JUNE, 1974 BAKred LEARNT ABOUT THE LOSS 24nd JUNE, 1974 DISCUSSION ON GARLING’S OFFER DISCUSSION IN BONN FASSLER NOTED 2 OPTION GERLING NOMINATED ULRICH 25nd JUNE, 1974 DURRE’S ‘GERLING ONLY OPTION’ ULRICH OBJECTION ON ‘GERLING OPTON’ 26nd JUNE, 1974 ULRICH IDENTIDIED 2 PROBLEMS GERLING WITHDRAW OFFER DEUTSCHE & THREE BIG BANK STAUCH INFORMED HERSTATT
- 14. A Predicted failure? 03 Informal contacts with Herstatt 02 Late observation by The Finance ministry 04 Scrutinized auditing reports 06 Vague records of foreign exchange transaction 01 ilence in spite of Real alert in 1972 from SWISS source 05 The ministry didn’t insist for further details
- 15. Made the International Financial Markets alert Decreased fame of German banking system Leads to Launching (BIB) BANK for INTERNATIONAL SETTLEMENT Real time International Transaction System Increased Monitoring by the Authorities International Consequences
- 17. TAKE CARE WHAT YOU ARE DOING of THANK YOU