Eastern European Banking Model

A traditional banking model in a CEEC (Central and Eastern European Country) consisted of a central bank and several purpose banks, one dealing with individuals’ savings and other banking needs, and another focusing on foreign financial activities, etc. The central bank provided most of the commercial banking needs of enterprises in addition to other functions. During the late 1980s, the CEECs modified this earlier structure by taking all the commercial banking activities of the central bank and transferring them to new commercial banks. In most countries the new banks were set up along industry lines, although in Poland a regional approach has been adopted.

On the whole, these new stale-owned commercial banks controlled the bulk of financial transactions, although a few ‘de novo banks’ were allowed in Hungary and Poland. Simply transferring existing loans from the central bank to the new state-owned commercial banks had its problems, since it involved transferring both ‘good’ and ‘bad’ assets. Moreover, each bank’s portfolio was restricted to the enterprise and industry assigned to them and they were not allowed to deal with other enterprises outside their remit.

As the central banks would always ‘bale out’ troubled state enterprises, these commercial banks cannot play the same role as commercial banks in the West. CEEC commercial banks cannot foreclose on a debt. If a firm did not wish to pay, the state-owned enterprise would, historically, receive further finance to cover its difficulties, it was a very rare occurrence for a bank to bring about the bankruptcy of a firm. In other words, state-owned enterprises were not allowed to go bankrupt, primarily because it would have affected the commercial banks, balance sheets, but more importantly, the rise in unemployment that would follow might have had high political costs.

What was needed was for commercial banks to have their balance sheets ‘cleaned up’, perhaps by the government purchasing their bad loans with long-term bonds. Adopting Western accounting procedures might also benefit the new commercial banks.

This picture of state-controlled commercial banks has begun to change during the mid to late 1990s as the CEECs began to appreciate that the move towards market-based economies required a vibrant commercial banking sector. There are still a number of issues lo be addressed in this sector, however. For example, in the Czech Republic the government has promised to privatize the banking sector beginning in 1998. Currently the banking sector suffers from a number of weaknesses. A number of the smaller hanks appear to be facing difficulties as money market competition picks up, highlighting their tinder-capitalization and the greater amount of higher-risk business in which they are involved. There have also been issues concerning banking sector regulation and the control mechanisms that are available. This has resulted in the government’s proposal for an independent securities commission to regulate capital markets.

The privatization package for the Czech Republic’s four largest banks, which currently control about 60 percent of the sector’s assets, will also allow foreign banks into a highly developed market where their influence has been marginal until now. It is anticipated that each of the four banks will be sold to a single bidder in an attempt to create a regional hub of a foreign bank’s network. One problem with all four banks is that inspection of their balance sheets may throw up problems which could reduce the size of any bid. All four banks have at least 20 percent of their loans as classified, where no interest has been paid for 30 days or more. Banks could make provisions to reduce these loans by collateral held against them, but in some cases the loans exceed the collateral. Moreover, getting an accurate picture of the value of the collateral is difficult since bankruptcy legislation is ineffective. The ability to write off these bad debts was not permitted until 1996, but even if this route is taken then this will eat into the banks’ assets, leaving them very close to the lower limit of 8 percent capital adequacy ratio. In addition, the ‘commercial’ banks have been influenced by the action of the national bank, which in early 1997 caused bond prices to fall, leading to a fall in the commercial banks’ bond portfolios. Thus the banking sector in the Czech Republic still has a long way to go.

In Hungary the privatization of the banking sector is almost complete. However, a state rescue package had to be agreed at the beginning of 1997 for the second-largest state bank, Postabank, owned indirectly by the main social security bodies and the post office, and this indicates the fragility of this sector. Outside of the difficulties experienced with Postabank, the Hungarian banking system has been transformed. The rapid move towards privatization resulted from the problems experienced by the state-owned banks, which the government bad to bail out, costing it around 7 percent of GDP. At that stage it was possible that the banking system could collapse and government funding, although saving the banks, did not solve the problems of corporate governance or moral hazard. Thus the privatization process was started in earnest. Magyar Kulkereskedelmi Bank (MKB) was sold to Bayerische Landesbank and the EBDR in 1994, Budapest Bank was bought by GE Capital and Magyar Hitel Bank was bought by ABN-AMRO. In November 1997 the state completed the last stage of the sale of the state savings bank (OTP), Hungary’s largest bank. The state, which dominated the banking system three years ago, now only retains a majority stake in two specialist banks, the Hungarian Development Bank and Eximbank.

The move towards, and success of privatization can be seen in the balance sheets of the banks, which showed an increase in post-tax profits of 45 percent in 1996. These banks are also seeing higher savings and deposits and a strong rise in demand for corporate and retail lending. In addition, the growth in competition in the banking sector has led to a narrowing of the spreads between lending and deposit rates, and the further knock-on effect of mergers and small-hank closures. Over 50 percent of Hungarian bank assets are controlled by foreign-owned banks, and this has led to Hungarian banks offering services similar to those expected in many Western European countries. Most of the foreign-owned but mainly Hungarian-managed banks were recapitalized after their acquisition and they have spent heavily on staff training and new information technology systems. From 1998, foreign banks will be free to open branches in Hungary, thus opening up the domestic banking market to full competition.

As a whole, the CEECs have come a long way since the early 1990s in dealing with their banking problems. For some countries the process of privatization still has a long way to go but others such as Hungary have moved quickly along the process of transforming their banking systems in readiness for their entry into the EU.

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Instances a Pay Stub is Needed

Pay stubs are not necessary for employers to give according to the law. It is an explanation when people are not able to provide a pay stub when required. You will find some difficulty for specific dealings. Verification is done for dealings that need a proof of income document.

A proof for your income is the purpose of a pay stub. If you do not have a pay stub you cannot comply this requirement on some businesses. It can be insignificant to somebody who has one. It is important to attest that the right salary is provided to you. As an employee, a pay stub provides information like your contributions, deductions and taxes withheld.

A proof of income is needed when you apply for personal loan. Being able to pay the loan is what it guarantees. Some differences may be observed among the lenders. They might ask for a pay stub last month or those from many months before.

Auto loans are another thing that needs a proof of income. It also an assurance that you are able to pay for it. Presenting the pay stub shows your income proof. Income necessary for the auto loan depends upon the car purchase’s required amount. Presenting a proof of income shows that you are capable of paying.

In the beginning of the year when you file for taxes, possessing pay stubs makes the job easier. You will see in the last pay stub your taxes paid and income received. Having a pay stub specifies any health benefits received too. Present a pay stub if you want to correct any mistakes found in your wage and tax statement.

Another transaction that requires a proof of income is house rental. The document will serve as proof that you can manage to pay for the house rental. Apartment complexes will require you a months’ worth of pay stubs. How long you have been in your current workplace will be indicated in your pay stub. They will likely reject an application from someone who just started working for a company. Unsteady cash flow is what that signifies to the owners. Working for longer years on the same company will make your rental applications easier to approve.

Lenders will also look for pay stubs from those who want to refinance their mortgage. The document would mean that you have the means to pay for the loan. Possessing pay stubs will make the loan application process easier.

Another instance where pay stubs are really useful are in accident compensations. Your income that will be missing out is what the document will indicate.

In this site you can find sources of material regarding pay stub generators.

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Essential Aspects of Franchise Tax Status

Paying tax is an obligation that individuals and corporations of a certain state must honor. It is through tax payment that a nation is able to raise funds to undertake government projects. Taxes are a major source of government spending. There are various types of taxes that must be paid by individuals. In Texas, there is a certain type of tax called the franchise tax. The following are some of the things you need to know concerning franchise tax.

Franchise tax is a type of tax in Texas which is charged on entities that are either doing business in Texas or they were formed in Texas. This kind of tax is imposed on such entities as a way of paying for the privilege of doing business in Texas. The payment of franchise tax gives you the right to conduct your business activities in the state of Texas. You also need to know that all businesses are supposed to file franchise tax reports. This is necessary when the business is paying franchise tax or not.

When operating in Texas, you are supposed to confirm your franchise account status so that you know if you have the right to do business in Texas. The status of your account could be active, forfeited, eligible for withdrawal or termination, not established, franchise tax ended, or franchise involuntary ended. Your status becomes eligible for withdrawal or termination if your business entity has satisfied all the Texas franchise tax obligations to be able to file for withdrawal or termination with the Texas Secretary of State. Your right to do business in Texas can also be forfeited by the Secretary of State. Your entity’s status can read not established if you have not done the franchise tax questionnaire. The status can read franchise tax ended if your business has stopped doing business in Texas or your business has stopped existing in Texas. You are supposed to request for a certificate of account status from the Secretary of State. You should also get a tax clearance letter.

It is also vital for you to know that not all entities are eligible for franchise tax payment because some are not subject to the payment. Some of the entities that have to pay franchise tax in Texas are limited liability companies, corporations, joint ventures, business associations, professional associations, partnerships, trusts, savings and loan associations, professional corporations, banks, among other legal entities. Entities that are not supposed to pay the franchise tax include unincorporated political committees, real estate mortgage investment conduits, particular grantor trust, certain unincorporated passive entities, sole proprietorships, general partnerships whose direct owner is made up of natural persons, entities exempt in Tax Code Chapter 171(subchapter B). You can go to the Secretary of State website to find out if your company or entity is subject to franchise tax.

It is also vital for you to make sure that you understand how the franchise tax amount is calculated. This will assist you know the exact amount you are supposed to pay to the state of Texas. You should be aware of the fact that franchise tax is calculated using your business margin.

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Factors To Consider Before Ordering Food Online

Most people order food online nowadays. The reason behind the ears is the development over the years to be an easy experience since one can easily order from home. In an average city there are over twenty online food delivery services indicating that this is a growing market. It is clear that a lot of people use these services. Even though these services are readily available, it is important to know how to choose one that will offer the best and quality services. In the article below we shall discuss the factors that one should consider in order to make an informed decision on where they would like to order the online food.

An important factor to consider is the location of the service provider. In case an online food delivery services far from home it will take a longer time to arrive than one that is close. In order to determine the location one can consider what they want and the nearest delivery service that offers exactly that. Taking into account the amount of time it will take for the food to arrive is paramount. In an emergency, it is not advisable for one to order food from a service provider that is quite a distance from their location. A person should consider making another choice of food is what they want is not as close as they would have liked it.

It is important for a person to consider the mode of payment that is offered. Modes of payment differ from one online food delivery service to another. Most online delivery services offer most or all modes of payment available in the city or country. However, others offer very limited options for payments. Before even ordering it is important to know what options are available for payment so that they can know whether they can pay for the services. Most developed online food delivery services have a variety of payment methods to choose from.

Furthermore, it is important to consider the store schedule. Some stores open from ten in the morning. and others open earlier or later. A person can order food from an online delivery service by calling or ordering in advance from their website. If it is an emergency they are advised to order from the store’s website as this is an advanced order and the staff will work on it as soon as they arrive. Having the store schedule will also help the person estimate how long the food will take to be delivered.

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