By Alex Yeager

The Trans-Pacific Partnership is again drawing criticism, but not for its trade implications.  Instead, the much-maligned deal is now being criticized for the special legal rights it might grant financial institutions.  The agreement is designed to relax trade barriers between the United States, Japan, Canada, Mexico, and eight other pacific-rim nations.  Yet the fear is that under the agreement banks may be able to systematically circumvent domestic court systems to bring special arbitral claims against foreign governments.

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November 30, 2015

By Clifford Hwang

The reception to the proposal for the Asian Infrastructure Investment Bank (AIIB) has been highly divergent.  The United States and Japan are currently “non-committal” in regards to membership. Europe was wary at first; Germany will be one of the AIIB’s largest shareholders. China viewed it as a “diplomatic triumph.” Ultimately, the AIIB’s success will determine how it should have been viewed.

Chinese President Xi Jinping first proposed the launch of a China-led investment in 2013, and after two years of development, the AIIB is now expected to launch at the end of the year. The AIIB, in addition to institutions like the World Bank and the Asian Development Bank, is expected to provide funding for various infrastructure projects in Asia with its capital of $100 billion. With the growing need of infrastructure investment coupled with previous inadequate funding levels, the AIIB is expected to partially fill the investment gap in Asia, which is estimated to be around $800 billion a year. 

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November 11, 2015

By Sam Willie

Reuters reports on a potential banking law in Afghanistan that would create a new framework for Islamic banking in the country. Traditional banks are shunned by an estimated 90% of households in Afghanistan for violating Islamic law by earning interest on investments. To date there are no standalone Islamic banks in Afghanistan, only limited Islamic banking products, offered by a few lenders through aptly named Islamic windows. These Islamic windows are not widely accepted because customers have doubts over their religious permissibility. It is hoped that the new Islamic banking system with religious compliance will increase deposits and in turn boost financing in a country that desperately needs economic growth.

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April 28, 2015

By Jenny Park

U.S. federal and state authorities accused Commerzbank of dealing with Iranian companies blacklisted by the U.S. and of enabling a Japanese company to carry out accounting fraud. Commerzbank agreed to pay $1.45 billion, to admit to its conduct in a statement of facts, and to dismiss employees involved in the investigations. Although Commerzbank avoided an indictment, prosecutors can revoke the settlement if the bank misbehaves in the future. The outcome clashes with the relatively lax consequences of American banks accused of manipulating foreign currencies and other wrongdoings in foreign countries.

Read more in the Dealbook.

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April 02, 2015

By Derek Hunter

Before the financial crisis, the consensus was that global bank behemoths would prosper from diversifying into emerging markets while maintaining their stable operations in developed countries. Institutions like Citigroup do everything from residential lending in Maryland to junk bond trading in India. But after the crash, and its regulatory backlash, that presumption is questionable at best. The Economist analyzes the weakening model of global banking institutions like Citigroup, and questions whether it can persist in the post-crisis regulatory landscape.

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March 24, 2015

By Evan Abrams

European and American banks frequently give business to other financial institutions as a reward for referring business to bank or an inducement to do so in the future. To some this is smart business practice but to others it seems highly anticompetitive.  According to the Wall Street Journal, the U.K. Financial Conduct Authority has launched an investigation into competitiveness among financial institutions, including the practice of reciprocity. Reciprocity may also hurt shareholders by inflating the number of banks working on any one project.

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March 04, 2015

By Evan Abrams

Earlier this month, The Dubai International Financial Centre ruled a Swiss Bank had inappropriately sold $200 million in financial products to a prominent Kuwaiti family. The ruling is notable largely because it is one of the first instances of the Dubai financial court system flexing its muscle. As GulfNews.Com reports such disputes have traditionally been handled by courts in Europe or the United States. However, the article is quick to point out that significant hurdles exist before the court can be considered a true hub for financial disputes.

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October 22, 2014

By Derek Hunter

Just one, actually: Jean Tirole, the winner of 2014 Nobel Prize in Economics. Tirole focuses on the regulation of industries susceptible to monopolies or oligopolies, such as telecommunications, technology, and banking. His research on the banking sector has been particularly influential since the financial crisis. While Tirole supports the post-crisis efforts by domestic governments to strengthen bank capital and liquidity requirements, he emphasizes that financial regulation must be international in scope to be truly effective.

The New York Times discusses Tirole’s career, and his profound impact on the modern regulatory system.

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October 20, 2014

By Jenny Park

The world’s biggest banks met with British regulators to discuss the possibility of settling the investigation into alleged manipulation of the foreign currency market. The banks’ traders are suspected of manipulating the foreign exchange rates that served as benchmarks for investments, of colluding to fix prices, and of front-running customers. With a potential fine of up to $3.3 billion, this investigation is one of many, which includes criminal investigations by U.S. and Britain. These investigations resemble an earlier crackdown on banks, which rigged the benchmark for credit card rates and other loans, which resulted in billions of dollars in penalties.

Read more here.

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October 16, 2014

By Evan Abrams

The small South East Asian island of Singapore has long been a hub for international commerce – a role it has actively sought to develop. The new Centre will aim to bring together key players in the sector to produce scholarly work on international banking and finance law. Dean Simon Chesterman said the Centre will be a “thought leader” that will “generate new insights” in a fast growing field. See the full story from Today Online.

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September 30, 2014