Gravurev.ppt

International Banking International BankingMotivations: Access to dollar and Eurocurrency

deposits and international saving markets. Tasks of International Banking:

• Financing exports and imports

• Trading foreign exchange

• Underwriting both Euro-bonds and foreign bonds

• Borrowing and lending in Euro-currency market

• Participate and organize foreign exchange market

• Project financing

• International cash flow management & fund transfer

• Solicitation for local currency deposits to operate as full-service banks

• Serve as consultant for MNC

MENU

Risks in International Risks in International BankingBanking

1. Commercial Risk•Facing difficulties in receiving the repayments of principal and interest on due date.•Lack of financial and economic information about the clients and host countries and differences in accounting disclosure practices and legal procedures.

2. Country Risk•Sovereign Risk: political, jurisdictional and cultural differences.•Exchange Rate Risk: shortage of foreign exchange reserves; change in repayment schedules.

MENU

Advantages and Disadvantages of Advantages and Disadvantages of International BankingInternational Banking

Advantages• High rate of return for investment and relatively low loss ratio• Ability to diversify loan portfolio.• Excess demand for international loans, especially for development

programs.• Usually international loans are safeguarded by official and non-official

insurance agencies, such as export credit insurance.

Disadvantages• Unfamiliar political and social environments and rapidly changing

macroeconomic and financial variables.• Unexpected events and regulators.• Weak demand for domestic loans has relaxed standards for

international loans.• Only a few credit-worthy countries are available.• External debt problems of many foreign international countries,

especially Latin American countries and major international loan loss by many international banks.

MENU

Types of International Bank Types of International Bank OfficesOffices

Correspondent BankingCorrespondent Banking Two way link between banks (home and foreign bank); services offered Two way link between banks (home and foreign bank); services offered

include, but not limited to: accepting drafts, honoring L/C, and furnishing include, but not limited to: accepting drafts, honoring L/C, and furnishing credit information.credit information.

Representative OfficesRepresentative Offices• Cannot accept deposits, make loans, accept L/C or cash checks; just help

and advise parent bank clients when they are doing business in host country.

Agencies RelationshipAgencies Relationship• Like branch banking without having authority to accept deposit from the

public; may accept deposits from other banks; can arrange loans, L/C and trade foreign exchange.

Bank Subsidiaries and AffiliatesBank Subsidiaries and Affiliates• Can be a separately incorporated bank or owned and control by bank

(partially-owned or entirely-owned subsidiaries).

MENU

Types of International Bank Types of International Bank Offices (con...)Offices (con...)

Branch BankingBranch Banking Extension of parent bank; can be full-service bank.Extension of parent bank; can be full-service bank.

International Banking Facilities (IBF)International Banking Facilities (IBF)• An accounting entity as well as a legal entity of a bank to capture a segment of the

Euromarket.• They are not subject to FDIC rules or Fed’s Required Rate Ratio.• Deposits limited to non-residents only and size limitation.• They are exempt from state and local tax.• They could be U.S.-owned IBF (exempt from federal tax) or foreign-owned IBF, such

as Japanese IBF and Italian IBF.

Edged Act BanksEdged Act Banks• Subsidiary of U.S. bank incorporated in U.S. under section 25 of federal banking law

to engage in international banking functions and finance all types of the loans in the world.

• They are physically located in states other than their own within the U.S. (inter-state banking).

• If they are state chartered - called Agreement Corporation, if nationally chartered - called Edged Act Bank.

MENU

Decoratv.ppt

Professor VAZIRI Professor VAZIRI WISHS YOU:WISHS YOU:

GOOD LUCK WITHGOOD LUCK WITH"Final Exam""Final Exam"

Professor VAZIRI Professor VAZIRI WISHS YOU:WISHS YOU:

GOOD LUCK WITHGOOD LUCK WITH"Final Exam""Final Exam"

Exam will cover the materials discussed in the classReview the notes and thebook.Have your calculater readyHave your formulas readyAsk questions if you are confused.Leave a self stamt and adressed envelope for your grade reporting.

CFP Diploma

Finance Diploma

MENU

Lgnbleuv.ppt

ISEFI IN THE MOVE TOWARD INTERNATIONAL CFP COUNCIL

0.0 0.4 0.8 1.2 1.6 2.0 0.0 0.4 0.8 1.2 1.6 2.0

Allemagne

France

Espagne

Pays-Bas

Italie

Royaume-Uni

Suède

Danemark

Norvège

Finlande

Suisse

Autriche

MENU

ENDSENDSMENU