King
Chapter 1134 - 1134 174 Seeing Through_2

1134: Chapter 174, Seeing Through_2 1134: Chapter 174, Seeing Through_2 including purchasing raw materials for Magic Crystal Cards, investing in basic hardware, sponsoring competitions with Magic Potions…

The purchase of Magic Potions was a transaction from the left hand to the right, aimed purely at inflating the bank’s costs.

From the books, Hudson had already invested one million two hundred and eighty thousand gold coins in the Near East Development Bank since its establishment.

This was just the beginning.

Barring any accidents, the bank’s cost investment on its books would continue to rise.

Creating such high costs was not intended to scare off competitors—not that there were any.

Daring to issue loans in the Near East Region was akin to charity.

The uncontrollable risks were enough to dampen everyone’s investment enthusiasm.

The main purpose was for outside show.

With hefty cost investments as a backdrop, it became reasonable to later collect fees and loan interests.

One’s identity changes the perspective of the problem.

As the bank’s president, Rudolf had to consider the bank’s capital safety and naturally loathed such uncontrollable loan businesses.

One million gold coins poured into the Near East Land could cause an unknown impact, but no one knew how much of these loans could be recovered.

Seventy percent?

Fifty percent?

Or perhaps only thirty percent?

Even breaking even was a possibility.

Huge capital losses always trigger a chain reaction, not only increasing the bank’s bad debt ratio but also potentially igniting a run on the bank.

“Since we are prepared, let’s start doing business!

The primary task of a bank is risk control.

While our cost of obtaining capital is not high, the security of the loans must be ensured.

Each loan must be backed by collateral.

If there is a lack of sufficient assets for collateral, then let the customers find guarantors.

In principle, we only deal with mid to high-end clients, setting the minimum loan amount provisionally at two thousand gold coins.

Below this figure, a fifteen percent interest rate is too low.

Too many customers all at once—they would be unmanageable for us.

The Near East Region’s situation is unique; by standard risk assessments, none of them would pass the review.

For Near East customers, conduct a preliminary review.

Focus primarily on their identity background, military strength, and the specific location of their territories.

After the review, submit the relevant documents to me, and I will decide whether to grant them loans.”

Hudson had no interest in unprofitable business, but some things just had to be done by someone.

As the largest Noble Lord of the Near East Region, he possessed not only rights but also attached obligations.

If there were any subservient potentials worth nurturing below him, Hudson would not mind investing a bit.

Even if it meant a loss economically, he would regain it politically.

Besides, these loans might not necessarily result in a loss.

Even if they turned into bad debts, that would only reflect as a total loss in the bank’s books.

Without personal experience, it’s hard to imagine the power of finance.

Granting loans was only the first step; controlling the economic lifeline of Near East through loans was Hudson’s real objective.

After a moment of hesitation, Hudson added, “Considering the risk factors, we can set some additional conditions, such as: tax exemption on Snow Moon Territory’s goods.

Or, after obtaining the loans, they must spend a certain percentage of the funds purchasing supplies from Snow Moon Territory.

Determine the specific terms based on actual conditions.

The loan business is just starting; don’t set the additional conditions too outrageously!”

He did not wish to utter these bottom-line challenging words, but as everyone was inexperienced with the face of banking, they wouldn’t grasp it in a short period.

If left to evolve through capital alone, without years of exploration, it would be difficult to understand these subtle profit-making methods.

Earning money merely through interest differentials was a very low-end method.

Often, the profits from additional conditions even exceed the loans themselves.

Anyway, the meat was already in the pot; whether the profit came from loan interest or turned into taxes, rent, Hudson wouldn’t mind.

Only when money circulates does it become real; lying in a vault, it’s just a pile of numbers.

In this world where wealth is highly monopolized, this money, just lent out from a bank, would soon become someone else’s deposit, flowing back into the bank once more.

“Duke, launching operations in three places at once, the bank’s cash might not hold up for long.

Especially the Snow Moon Territory branch, holding just under three hundred thousand gold coins, half of which are earmarked for construction payments.

…”

Before Rudolf could finish, Hudson interrupted, “If cash in Snow Moon Territory is insufficient, print Gold Tickets as a supplement.

All major trade associations can issue Gold Tickets; we can follow suit.

Just ensure proper magical anti-counterfeiting marks and limit the number of issues.

Pass the order down; all industries within the territory should accept Gold Tickets issued by Near East Development Bank.

As for whether other merchants will accept it, we won’t require it forcibly.

With our monopoly position in the Near East Region, it’s only a matter of time before Gold Tickets become circulated.

Let’s just do this: the loans we issue should be directly credited to their Magic Crystal Cards.

Provide services for large-scale commodities transaction transfers.

Carrying large amounts of gold coins back and forth is a burden for both parties in a transaction, certainly not as convenient as direct transfers.

At least for the trades we monopolize, such as salt, iron, and grain, we can mandate that they go through transfer transactions.

With a few more occurrences, everyone will gradually get used to it.