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Corporate Social Responsibility
Australia and New Zealand Banking Group Limited (ANZ) and National Australia Bank (NAB) are the largest Australian banks that focus on meeting the needs of the society and the environment. The strategies accepted by the mentioned banks are similar to those that are pursued by UK Barclays Bank. In particular, all of them are the members of the United Nations Global Compact (that is an initiative of the United Nations aimed at introducing the principles of corporate social responsibility into the activities of organizations around the world. These principles cover such issues as protection of human rights, work relations, anti-corruption initiatives, and environmental control.
These banks strive to promote CSR and sustainable development, examining the best practices, and ensuring their dissemination to participants in the financial sector as well as participating in the formation of the global environmental policy. The increase of transparency of business practices, measuring and demonstrating the positive impact of the organizations on the social sphere and the environment are the core principles (Slack 180).
More to the point, they create innovative products and business models for sustainable development and pay attention to projects in the field of sustainable development and social responsibility at a strategic level to maintain competitiveness, effective reputation, and risk management.
By improving the quality of management in the sphere of CSR in terms of a consistent approach, banks organize the process of planning activities, increasing cost-effectiveness for its implementation. The creation of mechanisms for determining and taking into account the interests of stakeholders in banks’ activities as well as informing the stakeholders about the results of activities in the field of CSR corresponds to the international practice. Throughout the history of the mentioned banks, the success of their development has been associated with active participation in the life of the country and society through performing functions both as an economic and as a social institution.
The largest bank in the UK Barclays Bank contains several subsidiaries, which is typical for large corporations. For example, Barclays Merchant Co., Ltd. with 1,650 branches in 50 countries, Barclays Insurance Services Company Ltd., and the Barclays Bank Trust Company present the specter of spheres that are embraced by this organization. It is also worth mentioning Barclays Export and Finance Company Ltd., which carries out leasing, export financing, and factoring operations.
Among the key operations of this bank, there are the acceptance of deposits and the issuance of loans. As the clearing bank, it makes payments for large, medium, and small industrial enterprises as well as for the population. The payment turnover here occurs within the framework of the clearing agreement, which implies offsetting mutual claims and transferring balances.
Barclays Bank includes a wide range of products and services: personal accounts and deposits with flexible schemes of accrual and interest payments, issuance and servicing of plastic cards of international payment systems, urgent transfers, deposit safe deposit boxes, brokerage, and depositary services on the securities market, advisory service, etc. (Burch and Lawrence 255). Also, the clients are offered services of collection, online system, the opening of an operating cash desk, a currency exchange point, and an ATM in the territory of the client along with a wide range of services in the field of crediting and acquiring.
ANZ is the fourth largest bank in Australia after Commonwealth Bank, Westpac, and NAB. It offers commercial and retail banking services through more than 1,300 branches in Australia, New Zealand, and the Asia-Pacific region. The banking services include standard deposit and credit products, credit cards, asset management, insurance, and financial services to agribusiness (Konzelmann and Fovargue-Davies 78).
In addition to the mobile wallet, ANZ Bank also introduces a new technology for its ATMs, which allows reading payment cards without having to place them inside. This technology was developed to reduce the number of financial losses associated with card fraud.
Developing the diversified business, NAB offers a full range of banking services from corporate lending, trading with securities and derivative financial instruments, structural products to direct investments, advising on mergers and acquisitions, attracting debt and equity, and analytical research. NAB provides access to financial products and services to both local and international clients, which include individuals, the largest corporations, financial institutions as well as states and federal and sub-federal authorities and organizations (Moradi-Motlagh et al. 624).
The strength of NAB is the total integration of its services into the online platform, as well as their constant enhancement and adaptation to the specific needs of customers. In conjunction with two start-ups, NAB develops a large-scale digital platform connecting patients with practicing physicians. Together with NAB, the startups of Medipass Solutions and Localz received funding from the bank. NAB and Medipass Solutions develop a new way to integrate patients, doctors, and medical funds, using the approaches that are similar to those of Uber.
Failure of the Banking Sector in 2008
In 2008, the financial crisis manifested itself as a strong decline in the basic economic indicators in the most advanced economies, which later developed into a global economic recession. The crisis is linked to several factors, including the general cyclical nature of economic development, straining of the credit market and the resulting mortgage crisis, high prices for commodities, and surplus of the stock market (Kalemli-Ozcan et al. 502). The mortgage crisis in the US, which in early 2007 affected high-risk mortgages was the precursor of this crisis. The second wave of the mortgage crisis occurred in 2008, extending to the standard segment, where state mortgage corporations refinance loans issued by banks.
Either the whole “bubble” mortgage lending in 2006-2008 was based on the expectation that the rate would decrease, but it will grow slightly or remain the same. In practice, however, the LIBOR rate varies quite often and significantly.
Since the beginning of the 21st century, the indicator there was a downward trend, which influenced the success of such mortgage loans. Since 2004, the growth of this indicator began. In 2006, it was 4.29 percent per annum, and by the end of 2007, it had reached 6 percent and continued to grow steadily (Haas and Lelyveld 350). Naturally, the borrowers could no longer pay on loans. As a result, since the beginning of 2007, the number of defaulted borrowers has started to increase, and all the investments of banks began to decrease. Also, agflation, the rise in prices for agro-industrial goods, is another reason for the financial crisis.
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The price index of FAO was constantly growing, reaching the highest position of the indicator of agglomeration in 2008 (Haas and Lelyveld 351). Against the backdrop of this movement of indicators since the summer of 2008, the value of shares of large enterprises began to decline, and the international indices went down. In many ways, this was because companies participated in too risky transactions in search of profits, which caused irreversible damage.
In conclusion, it should be emphasized that all the analyzed banks, including UK Barclays Bank, ANZ, and NAB, have much in common. For instance, they put corporate social responsibility on the top of their values, pursuing to serve the society and environment. Having a membership in the United Nations Global Compact, the project that strives to promote CSR principles by encouraging organizations from all over the world, these banks act as a part of something global and responsible. In particular, UK Barclays Bank, NAB, and ANZ adjust their products and strategies to the requirements of the modern ever-changing world. In an attempt to follow the principles of sustainable development, they consider social issues of their countries and the world in general.
Among the products of the mentioned banks, there are personal deposits, investments, brokerage, and advisory services, etc. Each of the banks has several subsidiaries that operate in different locations. Such an approach allows adhering to the diversified business, thus contributing to a wide range of activities. More to the point, the online platforms offer the opportunity to receive some services remotely. In general, the identified banks try to employ modern technologies in their work to meet the customers’ requirements and remain competitive. A series of measures are also developed to secure customers from card frauds and other crimes.
The collapse of Lehman Brothers in 2008 made a huge impact on the world economy, leading to the financial crisis and the decline of plenty of banks. The so-called mortgage “bubble” can be regarded as the one that was responsible for this. In particular, the LIBOR rate, FAO index, and agflation went down, thus forcing plenty of organizations to declare
Burch, David, and Geoffrey Lawrence. “Financialization in Agri-Food Supply Chains: Private Equity and the Transformation of the Retail Sector.” Agriculture and Human Values, vol. 30, no. 2, 2013, pp. 247-258.
Haas, Ralph, and Iman Lelyveld. “Multinational Banks and the Global Financial Crisis: Weathering the Perfect Storm?” Journal of Money, Credit and Banking, vol. 46, no. 1, 2014, pp. 333-364.
Kalemli-Ozcan, Sebnem, Elias Papaioannou, and Fabrizio Perri. “Global Banks and Crisis Transmission.” Journal of international Economics, vol. 89, no. 2, 2013, pp. 495-510.
Konzelmann, Suzanne J., and Marc Fovargue-Davies, eds. Banking Systems in the Crisis: The Faces of Liberal Capitalism. Routledge, 2012.
Moradi-Motlagh, Amir, et al. “Performance and Stock Return in Australian Banking.” Journal of Modern Accounting and Auditing, vol. 8, no. 5, 2012, pp. 616-626.
Slack, Keith. “Mission impossible?: Adopting a CSR-Based Business Model for Extractive Industries in Developing Countries.” Resources Policy, vol. 37, no. 2, 2012, pp. 179-184.