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Secrets of The Banking Industry

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Secrets of The Banking Industry

Introduction

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This controversial article is going to be another one of those important articles, mostly because we will provide you with facts and not the type of narrative that goes well with your feelings.

Let’s dive into the topic, “Secrets of the Banking Industry”, without wasting any time.

Exploring Banking Industry

Today we’re talking about the institutions that keep our money safe or not and all the people and mechanisms behind them.

Yes, it’s the banking industry we’re talking about, and have nothing but juicy facts to share with you.

The first form of banking was born in Assyria and Sumeria around the year 2000 BC, in the form of merchants making grain loans to farmers and traders.

Historians place the key point of modern banking system development to Medieval and Renaissance Italy and spread throughout the Holy Roman Empire, and to northern European regions in the 15th and 16th centuries.

With a rise in telecommunication development, the banking industry saw an impressive increase in size and geographic spread, starting with the 20th century.

The financial crisis back in 2007 to 2008 was the cause for many banks to go bankrupt and provoked a wave of banking regulations.

Understanding how banks work and what all of those financial terms refer to, are key in making the best decisions regarding your money, because who would want anything bad to happen with their savings.

This is why today, we’re uncovering some of the hidden secrets banks hold and the scandals that rocked the banking industry.

World’s Most Regulated Banks

US banks are the most regulated in the world.secrets of the banking industry

Wherever you are in the world you most probably use a bank, for your allowance, salary, savings account or mortgage payments, you need a bank service.

We use our debit or credit on a daily basis. So, we have to agree that banks have made our lives easier.

If you’re traveling or moving to the US, keep in mind that all banks that are operating inside of or from America are highly regulated, both at a federal and a state level.

The purpose there is to make most services equal across all over the country and they even have bank examiners that are employed to supervise banks and ensure compliance with those regulations.

Make sure you know what you’re in for in the bureaucratic world, before leaving for the US.

Parmesan Cheese as Collateral for Loans!

Italian banks take Parmigiano-Reggiano aka Parmesan cheese as collateral for loans.secrets of the banking industry

There is a bank in Italy that instead of having a safe with gold or diamonds, they filled it with Parmesan cheese wheels.

Since 1953 the regional bank Readito Emiliano has accepted curious collateral for small business loans in the forms of giant wheels of Parmigiano-Reggiano cheese.

Imagine just how many parm wheels they have.

That’s pasta for life goals right there.

But they only accept this form of collateral, only from the farmers in the region that are well known all over the world for the Parmesan cheese they make.

How Rich People Hide their Money

Rich people hide their dirty money in offshore accounts all over the world.secrets of the banking industry

When you spend a lifetime making a fortune and building an empire, it doesn’t seem fair when the bank and the government comes and takes half of it away because of taxes and fees.

Fortunately for the rich, there are countries and institutions that understand this problem and have come up with solutions.

One of them is sending your money to an offshore account in Malta or Luxembourg… Countries that are called tax havens.

If you open an account in one of these countries and live there for a short period of time, you get full benefits of the local citizens, like lower taxes and zero fees. That’s why a lot of rich people seem like they don’t have big fortunes because you can’t track their offshore accounts. 

Other tax haven countries are Puerto Rico, Belgium, Cyprus and Gibraltar.

Links with Drug Dealers

Colombian drug dealer Pablo Escobar had more money than banks could deposit.secrets of the banking industry

The Netflix super hit show “Narcos” has made millions of fans all over the world and brought to the screen the famous Colombian drug lord Pablo Escobar.

Perhaps you’ve heard of him.

He was the biggest and most influential drug dealer in the world.

He managed to sneak tons of drugs into the US by using all sorts of creative ways.

In their best days and at the peak of the cartels’ success, they would make as much as 70 million dollars per day and around 25 billion dollars per year.

They would even spend over $1,000 per week, just to purchase rubber bands to wrap the stacks of cash, they stored in warehouses.

Pablo Escobar made so much money, the banks could not deposit it and a fun fact Pablo’s first deposit to a bank was of three million dollars by the age of 26.

Cyclic Nature of Financial Crisis

Financial crises are cyclic.

Even if you think a financial crisis, is a once in a blue moon collective mistake, learn that they have been around since the beginning of money and are actually cyclic in nature, meaning they can be predicted. secrets of the banking industry

The US economy has followed the same cycle of financial crises, for up to two hundred years now and experts warn that if this pattern continues… We can expect another financial crisis starting this year with a peak in 2019.

Financial crises don’t always have a devastating impact on the economy and usually mean a loss of paper wealth due to a high level of debt.

The 2007 to 08 crisis began as a crisis in the subprime mortgage area and ended up with a collapse of several investment banks leading to general worldwide chaos.

When Saddam Hussein Robbed Banks!

Saddam Hussein robbed the central bank in Iraq, for 1 billion dollars in a single day.secrets of the banking industry

The biggest robbery in the world goes to the one and only now dead Saddam Hussein.

Before the 9/11 incident and the whole Iraq war, he was the president of the country and had quite a lot of money stashed.

Just before the US started bombing in 2003, Saddam Hussein is reported to have robbed the central bank of Iraq taking 1 billion dollars in just one day and hid them in the walls of his palace, where they were recovered after his death.

Saddam Hussein also transferred 950 million dollars to his son Qusay. But the money was never recovered since he died fighting American troops.

Stockholm Syndrome During Bank Robbery!

Stockholm syndrome gets its name from a bank robbery in Sweden’s capital, and the behaviour of the thieves that carried out the crime.

Robbing banks is often the most intense and entertaining part of a movie.

A lot of strategy and planning goes into it and the outcomes are not always happy endings.

Psychologists have studied the behaviour of thieves and hostages and they manage to understand, how they communicate after they’ve been caught.

It all started in 1973, when four hostages were taken during the Norman storage robbery in Stockholm Sweden.

After the police released them, the hostages defended their captors and refused to testify against them. This led to an academic interest in the phenomenon soon after called Stockholm syndrome. It means that hostages during captivity, paradoxically form a sympathetic bond with their captors as a survival strategy.

Watch out for this part in your next big robbery movie.

Convincing Customers with New Services

Banks might make a lot of money, but they spend most of their money convincing you to buy other services they offer.

You might think that your local bank is a good guy that keeps your money safe and gives you all of these payment options… Just so you keep using them and keeping your money within their accounts.secrets of the banking industry

You might also think they only offer loans and saving options and that’s it. Well, that’s true but there’s more to banks than that.

 

In fact, they spend a lot of money trying to convince you to buy more products developed by them like internet banking, credit cards, insurance, prepaid cards, downloading their app, etc.

That’s why you see so many advertisements and banners promoting all sorts of services because once they have you as a client they will try to sell you everything they have.

World’s Richest Family?

The wealthiest family in the banking world is the Rothschild family.

When you think of the richest man in the world, Jeff Bezos immediately comes to your mind right. That’s correct but throughout history, there were and still are families that have trillions of dollars’ worth. This family might be the subject of conspiracy theories, but the money they had was very real.secrets of the banking industry

The Rothschild family is a wealthy family descending from Mayor Amschel Rothschild from Germany, who established his banking business in the 1760s.

He founded international banking families through his five sons, who established themselves in London, Paris, Frankfurt, Vienna, and Naples.

During the 19th century, the Rothschild family possessed the largest private fortune in the world, as well as the largest private fortune in modern world history.

Through multiple family members, the fortune was gradually divided but history will never forget them. And guess who’s a part of the family now… Nicky Hilton, the sister of Paris Hilton.

Secrets Fees

Banks worldwide have hidden fees.

When you use your credit card or debit card on a daily basis, it’s rather difficult to keep track of how much money you’ve spent or how much you’ve got left. And if you have multiple incomes and transactions going on, you’ll hardly know if two or three dollars goes missing.secrets of the banking industry

That’s right the bank will charge you with just a few dollars or cents for using their services, depending on the country you live in or the card you’re using.

All this money adds up every month and most people don’t notice but the average American spent 329 dollars on banking fees in 2017 alone.

Some banks still have hidden fees like maintenance or ATM withdrawals.

There are common fees that most people know about… but some like emailing, internet banking or redeeming points are also fees. Multiplied by thousands of clients and that right there is how a bank makes its money.

Money Laundering!

Britain’s biggest bank, HSBC allowed drug lords and terrorists to use their bank to launder billions of dollars.

In every country, there’s a leading bank… Usually, the first bank was established there.

In the UK the most influential bank is by far HSBC.secrets of the banking industry

You might remember their logos in airport halls.

They were accused of facilitating shady transactions for drug lords and potential terrorists.

HSBC has moved 881 million dollars for two drug cartels in Mexico and Colombia and accepted 15 billion dollars in unexplained bulk cash, across the bank’s counters in Mexico, Russia, and other countries.

In exchange, they got a 1.9 billion dollar fine for it and lost a lot of credibilities, but they still seem to be doing just fine.

Blockchain Technology in Banking Industry?

Blockchain technology is revolutionized the banking industry.

Blockchain, cryptocurrency, bitcoins, schemes, digital money they’re all buzzwords you see in every article these days.secrets of the banking industry

Some are experts in these, some use them, and some struggle to understand them.

Blockchain technology comes with big advantages of being decentralized and in essence, it tracks and records each and every transaction that happens with a cryptocurrency back to its first user.

It has such a high potential that it can leave banks with no business and that makes banks pretty pissed off.

More than half of the Swiss banking sector revenue comes from fees and commissions, making Switzerland at risk of losing money. As blockchain technology makes cross-border transactions cheaper and faster. It might take a while till we get there though

Scandals in Banks!

Wells Fargo Bank is jumping from scandal to scandal.

Wells Fargo is, unfortunately, the bank that has been going through so many scandals in the past two years, that bad news containing the bank’s name no longer comes as a surprise. But by far the most outrageous one in the recent period was the one with fake accounts.

The bank admitted to having created fake accounts for their clients and charging them with unfair mortgage fees and car insurance they didn’t need.

After this major scandal came to light, a lot of the upper management was replaced and they were forced to pay huge fines, but no imprisonment or federal charges… I wonder why?

World’s Largest Bank?

The Industrial and Commercial Bank of China (ICBC) Limited is the largest bank in the world by assets.secrets of banking industry

Do you know what bank is the richest?

Which one has the most assets or by far is the most popular?

Well, it’s not an American or European bank that’s for sure… The Industrial and Commercial Bank of China Limited, big old China did it again. The Industrial and Commercial Bank of China or ICBC is a Chinese multinational banking company.

It the largest bank in the world by total assets and is the most valuable bank in the world by market capitalization since February 2017.

There are part of China’s big four banks, which are all state-owned and as of June 2015, they had assets worth 3.616 trillion dollars.

The bank is also the largest bank and public company that ranks number one, on the bankers’ top 1000 world banks

Who Invented Ponzi Schemes?

Ponzi schemes were invented by Charles Ponzi in 1919.

He’ll go ahead and assume most of you Explicit Facters have heard of Ponzi schemes. Whether by being a part of one or working in companies that promote that kind of structure.secrets of the banking industry

It’s a simple scheme that Charles Ponzi invented in 1919, in order to get rich faster. What he did almost 100 years ago is nowadays a well-known trick and model some companies still use.

The unfortunate sign of this scheme is that in the end the chain breaks and innocent people lose money.

Some people even faced jail time for fraud with Ponzi schemes. But after so many years of seeing so many get tricked, it’s amazing that people still get into them.

It’s always a matter of time with these schemes so be careful.

Lost 20 Million Bank Accounts!

Australia’s biggest bank lost records of 20 million accounts.

Another scandal that banks faced… This time in Australia, was for the Commonwealth Bank.secrets of the banking industry

We don’t normally hear a lot of bad things and scandals coming from the Aussies but this time it hit the news hard.

Apparently, the bank lost the records of 12 million customers, which is almost half of the Australian population, after two magnetic tapes were misplaced by an employer.

They came forward and confirmed the rumour and admitted that the data was completely lost.

CBA said the data included customer names, addresses, account numbers and almost 16 years of transaction information of those clients… dating from 2000 to early 2016. The incident happened in May of 2016 but they didn’t want to alert the media nor the clients, so they came clean a while after.

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