Question

Discus four of such issues identified as leading to the collapse of the banks. In each case, name a bank and explain issues leading to its collapse.

Answer 1

Issues that has been identified as leading to the collapse of banks are discussed below-

1. Fraud and reprobate trading- fraudulent activities and rouge trading is one the major cause of bank failure. Rouge traders have multiple time brought down many banks because they were unable to recover losses. Example- Barings Bank in UK in 1994, Societe Generale in France due to fraudulent transaction carried by Jerome Kerviel in 2008.
2. Global financial crisis- the 2007-08 financial crisis is largely considered as the worst financial crisis. This crisis was largely caused because of insufficient process aims. some of the banks who were majorly affected are the Washington Mutual and IndyMac Bancorp.
3. Technical failure- some crisi had arised in the past due to technical failures. In 2012 the RBS bank lost payment due to an upgrade in the batch scheduling process. some other banks who faced some kind of technical failures and incured losses is the Knight Capital in America.
4. Ethical Failures- due to negative publicity in 2013, the Cooperative experiend huge losses. The shortfall was between the bank's load balance sheet and its actual sale value.