BANKING SECTOR

The more important activities from the offshore centers are the banking services. More banks placed in CFO represent the branches and subsidiaries of the international banks. Their first activity is receiving deposits on different markets and their sending to their origin establishments.

The offshore banks make, in companies’ accounts, capital tax free operations in foreign currency, on companies, value added, dividends or interest and exchange control. Banks offer special services to natural persons such as managing goods, successional planning, and currency trade and withdrawal regimes. Such proposals regard the non-banking services such as the fiduciary and surveillance services. Assets management in CFO is motivated by different factors: further protection against origin country quest, fiscal optimization.

The contribution of the financial sector in GDP in CFO is large enough.

But there is not enough information on the subject. For example, this indicator reaches 53% from GDP in Jersey, 40% in the Virgin British Islands, 25% in Gibraltar and only 7% in Barbados.

The number of banks registered in centers differs a lot: from one bank in Sf. Lucia to 427 in the Caiman Islands (appendix 1).

The extension of the cross-border financial assets in connection to the % GDP is enormous in certain centers. For example, in the last years, in the Caiman Islands, this indicator has risen to 56871%, in Guernsey to 7384% and in Jersey to 6879% from GDP. GDP is in these centers.

The results of the assessment are shown in Chart no. 1 on 27 offshore financial⁶⁾. Within the assessments, the compatibility level with the banking surveillance principles of the Basel Committees (BCP – Basel Core Principles)⁷⁾.

Chart no. 1 Level of compatibility with the Core Principles for an effective financial control

⁶ Offshore Financial Center Program a Progress Repport. Prepared by the Monetary and Exchange Affairs and Statistics Departments. March 14, 2009. IMF www.imf.org/external/np./mae/oshore/2009/eng/031403.htm.

⁷ Core principles for effective banking supervision. Basel committee on Bouncing Supervision, Basel, September 1997.

1086 Challenges of the Knowledge Society. Finance and Accounting

Source: Report of OFC, Module 2 and FSAP Assessment: Offshore Financial Centers The assessment program: An Information Note. http://www.imf.org/external/np./mae /offshore/2009/eng/082902.htm

The chart list contains 25 principles. The results regard banking surveillance in 27 offshore centers⁸⁾ which were compared with the assessment results from 60 countries (9 developed countries, 15 transition countries, 36 developing countries). The obtained results show the compatibility degree level with the principles, in 60 international financial centers and 27 offshore centers, which is relatively high. In certain cases, it is higher in the offshore centers just as in the cases of those 60 countries assessed within the program.

If we consider the compatibility level with the basic principles, two groups of countries distinguish in the offshore centers: countries with high compatibility level and countries with reduced compatibility.

About 35% from the countries show a reduced compatibility level with the Basel Committee Principles. These are countries with 1% offshore total assets. In average, these are not offshore banks and the assessment results show that the national banks surveillance principle is followed.

The great offshore centers, with an important activity, won’t lose their good reputation and focus on the surveillance of the sectors which are connected to their cross-border activity and their business. Most of the centers are according to the surveillance principle exercised through the receiving countries (principle 24), and also with the consolidated surveillance principle (principle 20) and global consolidated surveillance (principle 23). Such a correspondence takes place in the case of the principle regarding the fight against capital laundry (principle 15).

When the activity of the offshore banks as lenders is reduced, the principles regarding the credit policy and loans classification are not met (principles 7 and 8).

The smaller centers are the ones who ignore the national banks surveillance principles (principle 16) and the market risk (principle 12).

In the same time, the centers are encouraged to increase their internal and external surveillance funds. On their side, the financial institutions wish to increase the services range which is a need of a greater correspondence to the principles limited to the market and credit risks.

The often cities lack in Basic Principles implementation for an effective banking control, concern the following fields:

- caution regulations and adequate capital (principles 6-14);

- control implementation methods (principles 16-19);

- place for the control authorities in the structure (principle 1).

Reductively, in about half of the organizations, the need for intensive activities in the field of bank risk management control was noticed. The banking customers’ experience in the field of loans is reduced.

The control representatives have much knowledge on banking activities and banks, enhancing their use and complementary expertise use regarding, for example, the risks.

Date: 2014-12-29; view: 996