Essay - Financial Institution Statement for the Shareholders Several Events Have Occurred...

Financial Institution

Statement for the Shareholders

Several events have occurred over the past few months that will have an impact on our commercial and investment activities in Germany and ***** United States. We will discuss each of the ***** and ***** likely result on the bank's profitability, strategic business direction, ***** asset and liability consequences. The events to be analyzed are the raising of short-term rates by ***** European Central Bank, the United States Securities and Exchange Commission (SEC) requiring separation ***** underwriting services ***** s*****ck research, declining reserves held at ***** United States Federal Reserve, the downgrading of credit ratings ***** corporate clients, and Berlin searching for an underwriter of municipal bonds.

***** latest price indices from Europe indicate an acceleration of inflation in the European Union countries. To address the inflationary pressures ***** European Central Bank recently increased the equivalent of the United ***** discount rate. In the United States little inflationary pressure allows the US to maintain its short-term *****s at historically low levels. It appears ***** short-term rates ***** remain at their current levels. Such changes in European short-term ***** will have minimal ***** on the ***** profitability as most of the bank's assets are denominated in ***** dollars. If the European Central Bank continues to raise rates, the situation requires reevaluation as currency risk increases. We can further lessen the impact of interest rate relationship changes by currency hedging. Purchasing currencies that we ***** assets valued in should minimize our currency risk. We will also be looking ***** make ***** acquisitions to gain a presence in other geographic markets lessening the impact of United States or European Union problems. We expect that *****re will be fluctuation in our earnings as reduce the effects ***** currency changes. Increasing United ***** short-term rates have much more potential impact than rising European short-term rates, but as the United States economy improves there will be more pressure on United States *****. Our view is that the ***** States ***** will recover sooner ***** the economies in the rest of ***** world including Europe.

The SEC's new regulations ***** the separation ***** underwriting and stock research functions have a significant impact on our investment banking. Our visibility into equity markets in any ***** where the right solution for a comp***** may ***** an equity offering of one kind or an***** will be severely restricted. Ho*****ver we *****lieve ***** we c***** separate our stock ***** and underwriting organizations into separate companies under our corporation and meet the new *****. The ultimate impact ***** the new regulations is still to be seen. At this point we feel that a conservative view is the appropriate view. We will set aside some capital in a cont*****gency fund until the implementation of the ***** regulations gives us a clearer picture of what ***** can do ***** what we cannot do. This action will impact ***** amount ***** ***** that we ***** available for lending *****, but we think that the ***** liability for not adhering