mooth and solid banking business can be achieved only if banks are maintained by well informed and well experienced professionals who can steer the business easily during the time of crises. Secondly size of the banks is to be considered as too many branches will not be cost effective and may lead to the downward trend in the profitability. Finally banks should be able to foresee the future risks that may arise due to various factors and at the same time be prepared to combat such risks with suitable and effective steps.

D. External factors

The external factors that affected the UK banks only to a certain extent were BCCI scandal and the great depression.

The Bank of Credit and Commerce International SA was setup in the year 1972 in Luxumberg by Pakistani Financier, Agha Hasan Abedi. Within ten years of time, it had developed to a huge extent, having 400 branches operating in 78 countries. In the early 80s it became the 7th world’s largest bank.

It had 248 top officers functioning at utmost secrecy and refused to come under the one regulatory authority. The vast and speedy growth of BCCI caused enormous capital problems as the deposits of deposit holders had been used in funding the operative expenses of the Bank. Price water house was the accountants of BCCI. They announced in 1990 an unaccountable loss of hundreds of millions of dollars. This loss was made good by Sheikh Zayed bin Sultan Nahya, by increasing his shareholding to 78%. Many irregularities surfaced – one among them is 1.48 billion worth of loans to its own shareholders. Secondly giving loan to single person or family more than the capital of the concern and it would be very risky to do so.

The standing banking practices requires that the bank should not give more than 10% of its capital to single customer.

The bank was implicated in drug money laundering.

The sandstorm report of price water house revealed widespread fra