Bank of America is the multinational bank that provides financial as well as banking services to the people of America and they have their headquarters in North America, Charlotte. They have over 4600 financial sectors and provide their services through various ATMs, cal centres, mobile banking and online banking. They are always convicted with various investigations and lawsuits related to the mortgage and various financial disclosures. Their main aim is to help their customers through demonstrating the growth aspects and explaining them regarding how they can convert the opportunities into reality. Further, they offer investment and lending products that serve moderate and low income group people and their families, improve the life standard of the moderate and low income group people and creating sustainable practices for long-term period (Bankofamerica.com 2017).
On the other hand, the operational structure of Westpac Bank of Australia is complied with the major sectors of their clients. Within their unique structure, they maintain the portfolio for the various brands like RAMS, Westpac, Bank of Melbourne, Bank SA, and St. George. Various major divisions of the banks are BT Financial Group Australia, business bank, consumer bank, Westpac Institutional Bank and Westpac New Zealand and various divisions are treasury, core support division, group technology and business and customer services. The vision of Westpac is to become the great service provider around the world and assist their communities, people and customers to grow and prosper. Their prime strategy is to deliver their vision through offering high returns to their shareholders and creating a deep and enduring relationship with their customers (Westpac.com.au 2017).
Owing to the fraud committed by Bank of America in their mortgage issue, US government asked the bank to pay an amount of $1.2 billion as it was found the bank was involved in the fraud case as they were in practice of selling the defective mortgage through their Countrywide unit. it was found by the US government that the payment system in Bank of America for issuance of loan was based on the quantity of loan issued and the quality part was not considered at all. Moreover, while issuing the loan they did not considered the checklist that were designed for assuring that the issued loan was sound and the borrower’s credit worthiness is good. As per the record, Countrywide earned a huge amount of $ 165.20 million by selling the mortgage loans to the customers. For initiating the penalty procedure, US government asked the judge for calculating the maximum amount that can be charged as penalty against the Bank of America (Erbenova et al. 2016). The amount charged against the bank was to punish them for breaking the faith and responsibility towards their customers. The penalty was also an example for teaching the managerial personnel of similar other institutions who will engage themselves into such activity. However, the amount that was charged initially was amounted to $ 863.6 million and it was calculated on the basis of gross losses. The new request for $ 2.1 billion was charged due to the absence of the bank’s executive in the hearing. Nonetheless, the spokesperson from Bank of America, Lawrence Grayson told the media that the claim was no way related to the countrywide programme as the event took place much before Countrywide acquired by Bank of America.
The federal jury of New York found during October that the former former mid-level executive Rebecca Mairone at Countrywide in association with Bank of America were answerable for the fraud that was involved in civil lawsuit. Bank of America stated that they are scheduling for responding to the government’s motion on February 26, 2017 and the oral argument are scheduled on March 13, 2017 (Rajapakse and Gardner 2014).
Capital finance, subsidiary of Westpac bank has a licence to issue credit for financing the purchase of vehicles to the intended customers. They were charged with penalties hat were amounted to $ 493,000 after the detection of ASIC that the company is engaged in services like breaching them against National Consumer Credit Protection Act (NCA) and charged with the repossession of motor vehicle. It was found that when the customers were failed to pay their obligations related to paying-off the loan. As per the requirement of NCA the lender shall send a written communication for the status of their loan and upon default, the customers shall be asked about what they are thinking about the payments and what are the remedies and rights they are entitled to upon default (Fligstein and Roehrkasse 2016).
ASIC noticed that during March 2015 to June 2015 capital finance:
Due to the above instances, the consumers were unaware about the legal rights and protection available to them when they were facing the risk of repossession of their vehicle. As per Peter Kill, the Chairman of ASIC, the providers of credit are responsible are responsible for communicating the customers with required information who are facing difficulties in repayments as car repossession has big impact on consumers and the finance providers have the responsibilities of providing crucial information. The chief Executive of Westpac, Mr. Frazis held responsible for attending the court for the purpose of hearing of the said case. However, capital finance already initiated communicating the affected customers. And they even provided the contact number that is 1300 300 309, if any customer feels that he may get affected by above mentioned conduct (Palmer 2014).
The result of both the cases was intervened by the respective court of Australia as well as USA properly and the banks that is, Westpac bank and Bank of America has taken steps to correspond with their customers who are involved in the given cases.
Their commitment towards corporate social responsibility (CSR) is simple and easy. They integrate the CSR value within their business to achieve the sustainability and enhance the value of the stakeholders. For Westpac, they conduct their business to align the objectives of environmental responsibilities, social and financial obligations. They simply have some core values regarding the behaviours and values in their daily business conduct. As a bank they do not only need the legal licence for operation, but also require the social and communal legitimacy for smooth operation (Urban 2015).
The social accountability of the bank along with the corporate policies includes:
Gender equality policies
Westpac is the 1st bank to commit publicly regarding their aspirational and achieving target for 50% of their leadership roles that are to be held by the women by the year 2017 and they already achieved 48%. They are committed to progress in this sector and want the women to consider them as the employer and the bank of preference as they are always committed to leadership for the women (Davidson et al. 2014). They also achieved the following:
To implement the above they offer the following:
Policies –
Leadership –
Training and development –
State bank of India is a corporate citizen that uses its resources for benefits and command that are derived by the banking operations through society in general. Therefore, it has a formal duty to the under privileged and less fortunate people of the society. Its staff members are influenced to contribute through understanding the expectations of the people around them and take appropriate measures to eliminate the indisputable developmental and social loopholes. They identified various areas for the implementation of CSR policies on India. The major areas of focus has been identified with the CSR initiatives for the bank and takes into consideration the subsidiaries and associates of the bank to make sure that they are aligned with the provisions of Companies Act. They recognized the importance of employing with the community in certain major area of focus that are categorized as healthcare, skill development, education, sanitation, natural calamities, disabilities, sports, environment, culture and gender equality (Onlinesbi.com, 2017).
As women is one of the least empowered and most marginalized sections of Indian society, the fight for the equal rights of women is much more far as compared to the win as there are still severe discrimination exist and cases of violence are also at noticeable level. SBI feel that this section of society must be served with care and dignity so as to empower them for creating a better society where equality will achieved.
To achieve the objectives, SBI initiated the following:
Conclusion
It is concluded from the above discussion that the breach case attempted by Westpac led to the crucial aspect of loan approval procedure and made it more transparent for the borrower. The interest-only loan for vehicle finance was stared for assessment as per the standard principle of loan and normal interest loan. Further, the customers were started getting protection from the NCA that specified that the credit providers shall carry out required inquiries and investigation to assess the credit worthiness of the borrower and to find out whether the loan contract is as per the requirement or not. On the contrary, the mortgage case of Bank of America led to strict regulation for issuing the of mortgage loan. As identified from the case, the quality of loan was given more importance than the quantity of loan. In Bank of America, staffs were getting amount for the quantity of loans issued and the quality part was not at all considered. However, after the case more importance are given for the credibility of the borrower and are carefully assessed to analyse whether the borrower is qualified to get the loan and repayment or not.
On the other part that is with regard to the CSR there are vast differences in the environment of India and Australia. However, with regard to both the banks like Westpac and State bank of India, both are giving significant importance to the gender equality and initiated various programme to provide benefits to the females. However, as there are differences in the environment and operational structure of both the banks, some initiatives that are started by Westpac not yet initiated by State Bank Of India. For example, Westpac are committed to achieve the target of 50% for their leadership position to be held by women and introduced a 40% target for “women in leadership” for the General Managers by the year 2017 and 30% towards the board group of Westpac. Though the female employees are welcome to be employed under the State Bank of India, they are yet to start an approach like Westpac for targeting 50% for their leadership position to be held by women. However, as the scenario is changing towards positive attitude for the women, in near future, they are expected to initiate something like this.
References:
Bankofamerica.com. (2017). Bank of America — Banking, Credit Cards, Mortgages and Auto Loans. [online] Available at: https://www.bankofamerica.com/ [Accessed 24 Apr. 2017].
Davidson, F., Wreford, J., Pervan, G. and Penter, K., 2014, March. Capturing CSR: Doing Good Offshore. In International Workshop on Global Sourcing of Information Technology and Business Processes (pp. 98-113). Springer International Publishing.
Erbenova, M.M., Liu, M.Y., Kyriakos-Saad, M.N., Mejia, A.L., Gasha, J.G., Mathias, M.E., Norat, M.M., Fernando, M.F. and Almeida, M.Y., 2016. The withdrawal of correspondent banking relationships: a case for policy action. International Monetary Fund.
Fligstein, N. and Roehrkasse, A.F., 2016. The Causes of Fraud in the Financial Crisis of 2007 to 2009: Evidence from the Mortgage-Backed Securities Industry. American Sociological Review, 81(4), pp.617-643.
Gon, A. and Mititelu, C., 2016. CSR Practices in Leading Indian Banks. In Accountability and Social Responsibility: International Perspectives (pp. 127-153). Emerald Group Publishing Limited.
Onlinesbi.com. (2017). State Bank of India. [online] Available at: https://www.onlinesbi.com/ [Accessed 27 Apr. 2017].
Palmer, A., 2014. A critique of the counter economic crime regime in the United Kingdom, with reference to the United States of America and Australia (Doctoral dissertation, University of the West of England).
Rajapakse, P. and Gardner, J., 2014. The Unconscionable Conduct and Consumer Protection in Subprime Lending in Australia. Banking & Finance Law Review, 29(3), p.485.
Urban, P.V., 2015. There Goes The Neighborhood: Florida’s Crackdown On Adverse Possession In The Wake Of The Foreclosure Crisis.
Westpac.com.au. (2017). Westpac – Personal, Business and Corporate Banking. [online] Available at: https://www.westpac.com.au/ [Accessed 24 Apr. 2017].
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