| Author |
Topic |
David H'Levi
Sniggerdly
Pandemic Legion |
Posted - 2007.03.20 10:36:00 - [ 1]
I thought that the "Banking = Bad Mojo" discussion in the recent would-be bank IPO was actually getting pretty interesting, though admittedly off-topic. So let's try again.
1. Is it possible to form some sort of investment bank in EVE, beyond simply a trading corporation or a mutual fund? Why or why not?
2. What would the creator of another bank have to do to overcome the bad-mojo left by EIB, if anything?
I'll kick it off with the following thought:
EVE's structure makes banking as we know it impossible. Because (as others have said) there are no property rights, no need for secure currency, and no need for bills of credit, banks are left to be either loaning institutions or investment houses.
But, since EVE characters ARE disposable (as someone pointed out), credit rating doesn't mean much in terms of loans, so the people that need money (newer players) usually can't get money.
As investment houses, they're essentially little more than wide ranging trading corporations, either like PCT or RE. PCT is a good IPO, but really couldn't be called a bank, per se. Nor could RE, which has been described as "Charity," by some.
Because of how EVE works, most investment can be done on a private or semi-private level, without needing to resort to banking insitutions. In other words, a talented investment banker can make his or her own fortune in EVE without needed to be hired by a bank. As the work mounts up, the investment banker begins to realize that he's, for lack of a more tactful word, getting screwed. So began Cally, at least in his accounting of it.
The only incarnation of a bank that I can see working is a talented, vetted and proven investor making a mutual fund of investments, and perhaps issuing loans as a side-project to members that s/he establishes as being trustworthy. |
Dark Shikari
Caldari
Deep Core Mining Inc.
|
Posted - 2007.03.20 11:19:00 - [ 2]
You've caught upon the crux of why IPOs in EVE in general do not work.
If a person is smart enough and has a good enough plan to make lots of ISK, they don't need to go public to do it.
Most of the good IPOs out there are there out of the charity of their CEOs.
FIN, for example, is a bond; Eefrit could easily just pay out 4% every month since the start and keep the rest of the profit. Instead, he sometimes pays out even slightly over what he earned...
In a sense, most good IPOs are nothing but a charity.
I'd say that FIN is probably the closest thing to a bank in EVE, due to the secured bonds and buyback. |
Ionia
Advanced Manufacturing |
Posted - 2007.03.20 12:13:00 - [ 3]
 Originally by: Dark Shikari
You've caught upon the crux of why IPOs in EVE in general do not work.
If a person is smart enough and has a good enough plan to make lots of ISK, they don't need to go public to do it.
Most of the good IPOs out there are there out of the charity of their CEOs.
FIN, for example, is a bond; Eefrit could easily just pay out 4% every month since the start and keep the rest of the profit. Instead, he sometimes pays out even slightly over what he earned...
In a sense, most good IPOs are nothing but a charity.
I'd say that FIN is probably the closest thing to a bank in EVE, due to the secured bonds and buyback.
Id agree that FIN is closest to what you'd call a bank. Places like BMBE have a purpose but are more like loan sharks than banks irl. Later in the year, when I have enough spare cash, I want to start a self-funded investment bank. As Dark Skikari has pointed out though, its not going to be there to make money, simply to attempt to stimulate the public corp side of eve from the grassroots level. |
Kazzac Elentria |
Posted - 2007.03.20 14:11:00 - [ 4]
For a bank to work in EVE, we would need a real shares exchange market where shares of a corporation could be traded and exchanged on a level like trade goods.
Once that's a reality, the securities of a bank make much more sense. |
BSAC Manager
EVE Mineral Reserve
|
Posted - 2007.03.20 15:56:00 - [ 5]
In conclusion, Banks are a thing of the past.
Is that what awaits future IPO’s and the eve market? To become extinct!
|
Sun Win
Mutually Assured Distraction
|
Posted - 2007.03.20 18:01:00 - [ 6]
I've been doing some thinking about this and in a lot of ways I think that Banks in Eve are a victim of the same problem that caused micro credit non profits to be created in the real world.
Who needs loans? Unknowns. The Knowns have corps and friends and reputations and can do things like Shar where they just post "I have a plan, not gonna go into detail" and people who know them will invest and vouch for them anyway.
Who will have the easiest time escaping with your ISK? Unknowns as well. They are disposable.
On top of that, unknowns probably need small amounts of ISK. But a 10% loan on a 100k ISK loan generates the same workload for a banker as a 10% loan on 10bil ISK but substantially less income. So the unknowns who you might risk small loans to aren't worth dealing with. And the unknowns working in an amount worth dealing with might just take all your ISK and run.
I'm actually working on an idea for a micro-lending type institution. No idea if it'll work/be possible/be fun.
|
David H'Levi
Sniggerdly
Pandemic Legion |
Posted - 2007.03.20 20:21:00 - [ 7]
Originally by: Dark Shikari
You've caught upon the crux of why IPOs in EVE in general do not work.
If a person is smart enough and has a good enough plan to make lots of ISK, they don't need to go public to do it.
I think you're part right and part wrong. An IPO with a loan-like structure would still work, and I suspect it is the only consistently effective structure. An enterprising CEO needs, say, 25b ISK for a probject, launches in IPO with 15b of his own money and 10b of public money, with a commitment to buy back the 10b in public funds as money becomes available, while still paying dividends. So he makes 20% a month on the cash, 60% of which is reinvested into the corporation and 40% is returned to investors each month. After a few months he launches a full buy-back at IPO prices, once he has the ISK to afford it, say, after 100% of the initial stock price has been dividended out. It's a nice mix of an IPO and a bond, provides a decent level of security, and provides the CEO with an incentive to make as much money for the investors as possible. |
Trade Grim |
Posted - 2007.03.20 20:21:00 - [ 8]
Edited by: Trade Grim on 20/03/2007 20:17:26 Originally by: Kazzac Elentria
For a bank to work in EVE, we would need a real shares exchange market where shares of a corporation could be traded and exchanged on a level like trade goods.
Once that's a reality, the securities of a bank make much more sense.
We have 2 exchanges...RESX and one other (I forgot the name as I have them bookmarked in game). I don't believe the lack of an exchange is what's limiting banking...I believe the proverbial nail on the head was stated above in that, why use a bank/investment income if it can all be handled privately? Lastly what is the repercussion for not paying for a large loan if one can simply go purchase another account and have complete freedom. The problem is, there is no game mechanic to support loan defaulting. Without loans, you have no bank and no higher level investing to build on. On another note, I still love the idea of FIN etc in that I would like to work towards becoming independently wealthy through passive income. With enough work with markets/trading, one should be able to have enough passive income to say pay for most if not all ship losses. This is where I think banking would be a great asset to those looking for a passive form of income. This does have some real life implications though, with CCP's support of GTCs for isk, how would this effect future CCP profits given most characters got to a point they could exist completely through passive income and never pay a bill (using say a 3% savings account and purchasing GTCs)? |
SencneS
Rebellion Against Big Irreversible Dinks
|
Posted - 2007.03.20 20:24:00 - [ 9]
I consider FIN and BSAC Manager's Mineral Reserve as Banks. Two very different styles of how to emulate a bank but they do it all too well. For a while I had been melting all my loot from all my missions I ran to build up a sizable personal mineral reserve, which I held onto and waited for the day I could sell it all. I considered my Minerals my own personal "Bank" however I soon realized my Bank wasn't growing it was wasted assets. However I always wanted a way to secure my very own assets so if all hell breaks lose and the alliance outpost is lost, I know I have equal value in shares in secure companies. To this day every ship, BPO I purchase or BPO I make sure I purchase as many shares in FIN. I do have shares in the Mineral Reserve because I like the idea and support it, and I believe one day it'll bring in a heap  |
Trade Grim |
Posted - 2007.03.20 20:37:00 - [ 10]
Originally by: SencneS
I do have shares in the Mineral Reserve because I like the idea and support it, and I believe one day it'll bring in a heap
BSAC scares me due to no redemption policies...feels too much like a company stock options plan. FIN pays out on bi-weekly basis but it scares me because it's run by one person and 'secured' by 2 others. And though he does extremely well, I would be much more comfortable with say an alliance sized institution taking on these responsibilities (including an insurance system for theft...as most real banks cover)...and yes, bank robberies are a VERY real possibilty in EVE. Between pirates hitting assets being transported (akin to someone hitting an armored car in real life) or internal theft (corp theft), banking is a very risky business. There really isn't much room for diversification in eve markets at this point so I will still keep the cash in the matress for the moment (though I do have quite a bit of FIN). |
BSAC Manager
EVE Mineral Reserve
|
Posted - 2007.03.20 21:11:00 - [ 11]
Originally by: Trade Grim
BSAC scares me due to no redemption policies...
BSAC HAS REDEMPTION RULES. Please read the Prospectus Quoted from ProspectusRedeeming Shares: 1) You can redeem your shares for ISK at any time subject to the redemption fees and rules. 2) You can redeem your shares for minerals valued at SMPH at any time subject to Reserve mineral levels. Redemptions Rules: 1) Potentially disruptive redemptions. BSAC reserves the right to delay payment off all or part of a redemption for up to seven calendar days if BSAC reasonably believe that a cash redemption would disrupt the fund’s operation or performance or that the shareholder may be engaged in frequent trading. Please contact BSAC before you attempt to redeem a large ISK amount, you may avoid delayed payment of your redemption. 2) Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. 3) Shares cannot be redeemed unless you return your BSCA Common Stock Shares. 4) Character Change. We cannot compensate you in the event you loose your shares during a character transfer. A direct trade with BSAC is required if shares are to be transferred to a different character. 5) 24hrs cancellation policy. Place your transaction requests carefully, but if you change your mind about a purchase, BSAC will refund your ISK free of charge. This rule does not apply to trades. Fees: Management Fee: 5% of net profits. Sales Fee: none. Purchase Fee: none. Trade Fee: none. Redemption Fee: A 10% fee on sales of shares held less than one month, a 5% fee on sales of shares held less than six month. This fee is paid directly to the fund and therefore is not considered a load. |
Trade Grim |
Posted - 2007.03.20 21:54:00 - [ 12]
Originally by: BSAC Manager
Originally by: Trade Grim
BSAC scares me due to no redemption policies...
BSAC HAS REDEMPTION RULES. Please read the Prospectus
Quoted fromProspectus
Redeeming Shares:
1) You can redeem your shares for ISK at any time subject to the redemption fees and rules.
2) You can redeem your shares for minerals valued at SMPH at any time subject to Reserve mineral levels.
Redemptions Rules:
1) Potentially disruptive redemptions. BSAC reserves the right to delay payment off all or part of a redemption for up to seven calendar days if BSAC reasonably believe that a cash redemption would disrupt the fund’s operation or performance or that the shareholder may be engaged in frequent trading. Please contact BSAC before you attempt to redeem a large ISK amount, you may avoid delayed payment of your redemption.
2) Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase.
3) Shares cannot be redeemed unless you return your BSCA Common Stock Shares.
4) Character Change. We cannot compensate you in the event you loose your shares during a character transfer. A direct trade with BSAC is required if shares are to be transferred to a different character.
5) 24hrs cancellation policy. Place your transaction requests carefully, but if you change your mind about a purchase, BSAC will refund your ISK free of charge. This rule does not apply to trades.
Fees:
Management Fee: 5% of net profits.
Sales Fee: none.
Purchase Fee: none.
Trade Fee: none.
Redemption Fee: A 10% fee on sales of shares held less than one month, a 5% fee on sales of shares held less than six month. This fee is paid directly to the fund and therefore is not considered a load.
Aye thanks for the clarification (I have read the prospectus)...what I meant by 'no redemption policies' is exactly what you've stated...there are certain circumstances where redemption, without penalty, is limited. |
Shar Tegral |
Posted - 2007.03.20 22:20:00 - [ 13]
Originally by: Trade Grim
Aye thanks for the clarification (I have read the prospectus)...what I meant by 'no redemption policies' is exactly what you've stated...there are certain circumstances where redemption, without penalty, is limited.
I think that BASC's policies are only wise. It stops malicious attacks on the fund, which niavete aside will happen, as well as keeps from having the fund manager swamped with frivolous purchases and redemptions. I, myself, would honestly wish for some sort of bond in game. Not shares specifically but an actual bond system. Loans don't quite do things justice, too inflexible - doesn't allow for re-occurance. So instead of making do with, as I see it, a far too limited system (shares) I simply do all of the work manually. So redemption limits are a must to avoid overload. After all, should you not want the people entrusted with your funds spending most of their time maximizing those funds instead of {insert alternate social activity here}. |
Trade Grim |
Posted - 2007.03.20 23:44:00 - [ 14]
All very good points...I, now, do see how the regulations in this case are benificial. I also really like the ideas about the bond system. |
JP Moregain
Gallente
EVE Reserve Bank |
Posted - 2007.03.21 16:24:00 - [ 15]
Nice summary about the issues of why running a bank, in the traditional sense, won't likely work.
Yes FIN is probably the closest there is to one, but it really isn't a bank. More like structured finance or a securitization of the underlying assets. I am not dinging it at all, as it was quite clever and clearly (one of?) the best financial structure(s) created in the game to date. But, it is not really a bank.
Regards,
JP
|
Kazzac Elentria |
Posted - 2007.03.21 19:10:00 - [ 16]
Originally by: Trade Grim
Edited by: Trade Grim on 20/03/2007 20:17:26
We have 2 exchanges...RESX and one other (I forgot the name as I have them bookmarked in game). I don't believe the lack of an exchange is what's limiting banking...I believe the proverbial nail on the head was stated above in that, why use a bank/investment income if it can all be handled privately? Lastly what is the repercussion for not paying for a large loan if one can simply go purchase another account and have complete freedom.
The problem is, there is no game mechanic to support loan defaulting. Without loans, you have no bank and no higher level investing to build on.
Perhaps I didn't clarify enough. A exchange market that is fully supported in game through the market window with it's own menu interfaces, etc... While the player supported exchanges are nice, they have a level of complexity that is beyond your average player. Then instead of just BPOs for things like collateral, bonds, and shares could be held as such. Basically, increase what could be held in line against defaults and you make it easier for the market to bear a real bank. |
Pang Grohl |
Posted - 2007.03.21 21:42:00 - [ 17]
Effret's bonds work because, he's put assets as security against the ISK he borrows. Effret has given up control of the assets to independent parties to act as executors in the case of default on the borrowed ISK. There is specific action that the lenders can take as remedy against the borrower. In order for any form of lending business to be successful this condition has to be satisfied, otherwise any isk that gets turned over may as well be considered a gift.
Sadly, until EVE allows the seizure of property or isk with out the other party's explicit permission, secure lending is going to be limited to very few situations.
|
Kldraina |
Posted - 2007.03.24 00:52:00 - [ 18]
I ran a bank for my corp for a while when I was doing heavy trading, and wasn't a multi-billionaire yet. After a few months I decided it was too much work to be worth it, and closed it down. I think the current game structure makes it rather difficult to do proper banking. Not enough automation. |
Ramblin Man
Empyreum |
Posted - 2007.03.24 01:40:00 - [ 19]
I agree with all the points stated above. The system does not make it in a banker's interest to be a banker -- ergo, we have no bankers. One cannot found an enduring system on altruism. Originally by: Sun Win
I've been doing some thinking about this and in a lot of ways I think that Banks in Eve are a victim of the same problem that caused micro credit non profits to be created in the real world.
Who needs loans? Unknowns. The Knowns have corps and friends and reputations and can do things like Shar where they just post "I have a plan, not gonna go into detail" and people who know them will invest and vouch for them anyway.
Who will have the easiest time escaping with your ISK? Unknowns as well. They are disposable.
On top of that, unknowns probably need small amounts of ISK. But a 10% loan on a 100k ISK loan generates the same workload for a banker as a 10% loan on 10bil ISK but substantially less income. So the unknowns who you might risk small loans to aren't worth dealing with. And the unknowns working in an amount worth dealing with might just take all your ISK and run.
I'm actually working on an idea for a micro-lending type institution. No idea if it'll work/be possible/be fun.
Most interesting post in the thread, imo. I think it'd actually work if you gradated it up the absolute ISK scale. It seems as though it would be possible to let every loan be a "write-off" loan, if you've earned profit on previous loans to that person. Basically, run everything as close to neutral as possible on a per-individual basis, and then let the aggregate drag you back into profitability. It would cut down on accounting a lot if you only needed to check up on repayment before issuing another loan, and I think the amazing relative profits obtainable by newbies would make it a practical scheme. Honestly, how hard is it to raise enough money to buy a newb a cruiser? Now, how hard is it for that newb to pay back 200% of that money, using said cruiser? |
Eefrit
Eve Financial Services
|
Posted - 2007.03.24 08:39:00 - [ 20]
On the one in a million chance any of the devs read the market discussion forum:
WHERE THE HELL IS WALLET EXPORT??
Right now the workload to account for tons of small loans is ridiculous as everything has to be done manually. We've been promised this for how many years now?!
Until this and other small changes (that were promised years ago!) happen it is practically impossible for there to be a bank in Eve.
Sincerely,
Eefrit
|
David H'Levi
Sniggerdly
Pandemic Legion |
Posted - 2007.03.24 11:13:00 - [ 21]
Originally by: Eefrit
WHERE THE HELL IS WALLET EXPORT??
/signed. It makes many more things than banking a cluster-****. |
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