Current Affairs - Vocabulary - SPLessons

Current Affairs Vocabulary Day 21

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Current Affairs Vocabulary Day 21

shape Introduction

A Newspaper is a printed or online publication that provides readers with news and articles i.e. the current affairs of a country and the world. Current Affairs play a prominent role in several government related recruitment exams in India. To better understand the current state of affairs, a candidate should acquire rich vocabulary primarily used by editors and publications of newspaper articles and editorials. SPLessons has made an effort to provide a comprehensive list of commonly used words in newspaper articles and editorials. Current Affairs Vocabulary Day 21 provides the readers with a collection of useful vocabulary for newspapers.

shape Article

Retail banks’ foreign ventures rarely pay off

A new study shows they do worse than the locals

NOT everybody—or every business—travels well. Retailers from Walmart to Tesco have faltered in forays into foreign lands. Banks, too, often fancy that success at home can be reproduced abroad. In meeting the needs of big companies, they are often right. Global corporations seem to want global banks. But in retail banking, serving households and small businesses, they are usually mistaken.

Or so concludes a report by Lorraine Quoirez and her colleagues at UBS, examining the performance of seven international banks (BBVA, Citigroup, HSBC, ING, Santander, Societe General and Standard Chartered). For several measures, such as net interest margins and returns on equity, the Swiss bank’s analysts constructed benchmarks for each firm. The benchmarks are the averages for all banks in countries where the seven are active, weighted by the importance of each market in each bank’s loan book.

Most of the banks fall short on most measures. For example, UBS expects Standard Chartered’s return on tangible equity to be just 5.7% in 2018, 7.1 points below its benchmark. Société Générale’s projected net interest margin is 0.75 percentage points; par is 1.84.

Part of the explanation is that a global brand does not automatically confer pricing power. So international banks often sacrifice margin in the frequently vain pursuit of market share. HSBC’s Mexican bank, the country’s fifth-biggest by assets, made a net interest margin of 4.1 percentage points in 2016, a whole point below the local average. BBVA Bancomer, the Spanish lender’s local arm and the market leader, scooped 5.7 points.

Banks also tend to overestimate the ease of replicating cross-selling models that have worked at home. And national borders constrain economies of scale. Businesses stretching across several countries are simply harder to run. Legal and compliance expenses multiply. Bigger, more complex banks carry heavier regulatory burdens. At only two of the seven are projected ratios of costs to income below the benchmarks.

A possible benefit of heading abroad is that diversification reduces risk. Even this is not always borne out: four of the seven make provisions, as a proportion of loans, above their benchmarks. Between 2003 and 2017 at only two, HSBC and Santander, were earnings per share less volatile than in a comparable portfolio.

Globetrotting retail banks are not doomed to fail, especially if they can exploit new technology. ING, which the UBS team rates the best of the seven overall, has expanded as a digital bank outside its Dutch home. In Germany it boasts 8m customers. Although it has a thinner interest margin than the locals, its costs are far lower too, largely because it has no branches. Its return on equity beats those of German rivals by ten percentage points or more.

Perhaps wisely, since the financial crisis banks have retreated from foreign retail ventures, seeking to cut costs and bolster capital. UBS lists no fewer than 274 disposals of operations abroad since 2010. Last year mergers started to pick up. But the volume remains low and most deals have been domestic. Banks may be right to think twice before heading abroad again.

shape Vocabulary

Word Definition Synonyms Usage
Faltered (Verb) Lose strength or momentum.
  • Hesitate
  • Delay
  • Drag one’s feet
  • Stall
When war
seemed imminent
the government
Forays (Noun) A sudden attack or incursion into enemy territory, especially to obtain something; a raid.
  • Raid
  • Attack
  • Assault
  • Incursion
The garrison
made a foray
against Richard’s
Tangible (Adj) Perceptible by touch.
  • Touchable
  • Palpable
  • Tactile
  • Material
The atmosphere
of neglect and
was almost
Confer (Verb) grant (a title, degree, benefit, or right).
  • Bestow on
  • Present with/to
  • Grant to
  • Award to
  • Decorate with
The Minister may have exceeded the powers conferred on him by Parliament.
Vain (Adj) Producing no result; useless.
  • Futile
  • Useless
  • Pointless
  • Worthless
A vain attempt to tidy up the room

Word Definition Synonyms Usage
Pursuit (Noun) The action of pursuing someone or something.
  • Chasing
  • Pursuing
  • Stalking
  • Tracking
The cat crouched in the grass in pursuit of a bird.
Compliance (Noun) The action or fact of complying with a wish or command.
  • Conformity
  • Consent
  • Assent
  • Acquiescence
  • Amenability
  • Concession
The action or fact of complying
with a wish or command.
Constrain (Verb) Compel or force (someone) to follow a particular course of action
  • Compel
  • Force
  • Coerce
  • Drive
  • Impel
Children are
to work in the way
the book dictates.
Borne (Adj) Carried or transported by the thing specified.
  • Braved
  • Endured
  • Narrow
  • Produced
If something is borne in on you, you realize that it is true
Bolster (Verb) Support or strengthen
  • Strengthen
  • Support
  • Reinforce
The fall in interest rates is starting to
bolster confidence.