Offshore Banking Hsbc

8/4/2019 Offshore Banking Hsbc

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Page No.

INTRODUCTION 4

ECONOMIC ROLE OF BANKS............................... 5

INTERNATIONAL BANKING OPERATIONS 7

OFFSHORE FINANCIAL CENTERS. 11

LEADING INTERNATIONAL BANKS. 16

WORLD BANK. 17

HSBC.. 29

STANDARD CHARTERED... 38

AMERICAN EXPRESS BANK.. 40

BIBLIOGRAPHY. 59


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INTRODUCTION:

Money and currency are very strange things. They keep going up and

down and no one knows why. You want to win but you lose no matter

how hard you try.

Banking, the business of providing financial services to

consumers and businesses. The basic services a bank provides

are checking accounts, which can be used like money to make

payments and purchase goods and services; savings accounts

and time deposits that can be used to save money for future use;

loans that consumers and businesses can use to purchase goods

and services; and basic cash management services such as

check cashing and foreign currency exchange. A broader

definition of a bank is any financial institution that receives,

collects, transfers, pays, exchanges, lends, invests, or safeguards

money for its customers.

ECONOMIC ROLE OF BANKS

Banking is like any other form of economic activity. Like othereconomic agents, banks are both dealers and producers. They aredealers, in the sense that they bring together lenders and borrowers, andthey are producers as they transform raw base money or cash issued bythe government into more convenient checks or demand deposits, whichhave greater security than cash, and also they transform short-termdeposits into longer-term loans. In the process they do the financialintermediation and maintain liquidity in the system.


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RISK REDUCTIONIn their role as dealers, bankers help to reduce risk in the economy.There are two types of risk: the more familiar default risk and the lessfamiliar withdrawal risk. In reducing these risks, banks make their

profits. Let us consider default risk. A would-be supplier of credit, orlender-creditor, wishes to make a loan, in order to earn interest on excesscash-balances. The creditor may search out prospective borrowers fromamong the public. But the creditor must evaluate the individual risks ofdefault. Further, to the normal costs of acquiring information, there isthe higher risk of concentrating the loan with one or a few individuals.Because of this, the creditor would charge a high interest rate on thisloan, in order to compensate for the risk. By going to a bank, with a

long-standing reputation and a diversified portfolio of assets, the creditormarkedly reduces the risk of any default on the loan. The rate of interestshould be lower in this case.

INTERMEDIATION AND INTEREST RATE EXPECTATIONS

Banks do financial intermediation as they transform short-term depositsinto longer-term assets or loans. Typically, short-term deposits are lessrisky for depositors, and so they require a lower rate of interest. Longer-term loans, on the other hand, offer borrowers a lower risk ofwithdrawal, so borrowers will be willing to pay a higher interest rate tothe bank. For this reason, banks usually transform short-term liabilities(deposits) into longer-term assets (loans).

The banks generally borrow short to finance long term assets and

use this leverage to earn the spreads which accrue to them as income.They borrow short through a sequence of, say, two one-period deposits,offering rates r1 now and expected rate r2 next period. Again, the bankscan borrow long. On the lending side, the bank can offer a two-periodloan at an interest rate I, or it can extend a sequence of two one-periodloans at interest rates i1 now, and expected interest rate i2 next period.


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The time management of both deposits and credit portfolio willdepend on the difference between the short term interest and long termones. The business of the banks is the quantum of spreads that is definedas the difference between the average returns from the created assets and

average costs of deposits.

INTERNATIONAL BANKING OPERATIONSInternational banking operations are essentially to facilitate the movementof goods across the political boundary of countries. Banking system camealong with the development of money as an institution. As civilizationnarrowed down the social distances and mankind learned about the

benefits of exchanging commodities across political boundaries, thepresent-day international trade developed. The transaction ofcommodities across countries required financial intermediation in theinternational level and thus international banking business was born. Whatstarted with movement of gold and silver across country-borders becameultimately an efficient institution of international transfer of not onlyyellow metal but the currencies of sovereign countries. In this way theemergence and growth of international banking is closely interwoven withthe development of international trade and international capital movement.

The above gives the general perspective of the growth ofinternational banking. But there are many aspects of this development.From a historical standpoint, the recent growth of international bankingcan be regarded as a reversion to the situation before World War I whenEuropean banks dominated the world capital market. During the period1940-1960 regulatory control on capital flow and convertibility of thecurrencies reduced the importance of international banking. From 1960

onwards globalization of capital market started and the emergence ofsurplus in petro-dollars in the seventies gave the much needed liquidity tothe international banking business. The latter has been characterized byan increasing turnover in international trade, a phenomenal increase in theinternational flow of capital and also an increasing flow of funds from thebanks to non-bank sectors. To understand the causative factors properly


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the literature has attempted to identify the factors supporting theinternationalization of banking business. Thus factors like non-financialmultinational corporations, the proximity to customers abroad, thecompetitive advantage with better information technology and the benefits

due to international diversification have been mentioned in the literature inthe contexts when these become relevant.

These factors along with other forces of globalization have established thehuge international financial architecture which rule the internationalfinancial market today. The theoretical studies mentioning the factorshelping the expansion of international banking are important, but intoday's scenario the major business of international banks is based on

international trade , international transfer of capital and money andderivatives.

The literature abounds in the exploration of the causative linkin the development of international banking, but not many studies arefound testing the theory empirically. There have been several studieswhich attempt to measure empirically the role of the different factorsbehind the growth of the US banks in the international fields.

DETERMINANTS OF INTERNATIONAL BANKING ACTIVITYIn today's world no country can afford to be autarkic either in the

field of international trade or in international banking. But the latter issubject to much more restrictions in almost all the countries compared tothe former. What determines the growth of international banks in thedomestic banking sector of a particular country? Analytically we canproceed as follows:

Since international trade is closely related to international banking,volume of international trade (imports and exports together) is adeterminant of the growth of international banking and the relationship isdirect. Assuming that no specific restrictions are imposed on theoperation of foreign banks so far as their operations are concerned ininternational banking vis--vis the practice of international banking done


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by home country's banks, it can be said that an increase in the turnover ofinternational trade should have positive impact on the growth ofinternational banking. Alternatively, the ratio of export to gross domesticproduct can be taken as the explanatory variable. This alternative

formulation can be tested.Foreign direct investment has been cited as an important

determinant for the expansion of international banking. In fact, thepresence of international banks facilitates the inflow of foreign capital andit is expected that the increase in foreign direct investment should have apositive impact on the growth of international banking.

Banking service as a commodity is supposed to have positive

income elasticity. As national income is growing, demand for bankingservice should increase. To what extent the increase in income will helpthe growth of foreign banking activity in domestic soil depends on thepreference of the consumers and also the participation of the foreign banksin the trade, both domestic and international, of the host country. If wetake per capita income as the explanatory variable for the growth ofinternational banking activity, then the growth of per capita income mayfacilitate the growth of international banking in the host country on theassumption that foreign banks have complementary role in the domesticbanking structure.

The growth of domestic deposit should have influence on theactivity of foreign banks. But in many countries the foreign banks are notallowed to create a domestic deposit base, though this facility is crucial forthe increase in business. Foreign banks often face difficulties in thecreation of domestic deposit base even when it is allowed, as the cost ofthe maintenance of deposits may be too high compared to business. Many

foreign branches of Indian banks operating abroad have not created thedomestic deposit base for this reason.

An increase in domestic deposit is supposed to have positiveinfluence on the deposit mobilization of all banks including the foreignbanks. That helps the building up of the asset portfolio. To what extentdeposit mobilization will affect the activities of foreign banks depends on


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the competition between domestic banks and the foreign banks in the hostcountry. Foreign banks prefer the creation of a domestic deposit base inthe domestic currency as this helps in the expansion of business. Manycountries do not allow the foreign banks to create a domestic base, as the

latter is perceived to help the foreign bank to mount an attack on thedomestic currency.

Again, the exchange rate changes affect the activities of theforeign banks. An increased volatility of the exchange rate increases therisk factor in international banking, and unless this aspect is properlytaken care of, this acts negatively so far as the growth of internationalbanking is concerned. We are to understand that the balance- sheet of theforeign banks in the head office is in their mother currency. If Indian

rupee appreciates vis--vis their mother currency, that would show agood results in their foreign operations.

An index of activity of foreign banks may be their aggregateasset structure, though the number of branches may be another indicator.Some studies take both. We find that the expansion of internationalbanking in a country depends on several factors like importance of trade inGDP, the dynamism of the exchange rates, the deposit base and someothers as explained in earlier paragraphs. The literature also examines thequantitative strength of different variables using an econometric modelWe will pursue here another type of international banking activity whichis conducted in offshore areas and specially tax-haven locations.


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OFFSHORE FINANCIAL CENTRES

An offshore financial centre (or OFC), although not precisely defined,is usually a small, low-tax jurisdiction specialising in providing thecorporate and commercial services to non-residents in the form of

offshore companies and the investment of offshore funds.

Why Offshore Finance Centre a Preferred Destination

In some situations very small nations with good infrastructures andstrategic locations create offshore financial centres (OFC) as a matter ofpolicy to attract foreign capital so as to invest the same for the growth ofdomestic economy. These countries hardly known outside the region haveescaped the agony of poverty through this process of foreign capital

investment.During last two decades many OFCs have been created as part of the

developing countries efforts to initiate economic growth in their smalldomestic markets through the provisions of international financialservices. These OFCs are classified alon a spectrum of notional OFC tofunctional OFCs. While the former provide minimal financial services

other that simply being a jurisdiction in which nameplate operation of thecompanies can be established, the latter provide a wide range of value

added services. Notional OFCs are costless to establish, and for thatcompetition among tiny states is tough, and it contributes little to theeconomic development of the region.

The functional OFC require elaborate infrastructure likecommunication, airport, labour force and all these call for largeinvestment. As a result the region experiences over all economic growthand the real economies surrounding the region are benefited through

backward and forward linkages.

The OFCs, with support from the local government, offer a largenumber of services to the potential investors in their banking system andthese are :


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excellent communication links with the outside world absence of any tax burden [ or even when tax exists, it is bare

minimum]

non existence of any treaty to exchange tax information withother countries

predominant use of major world currencies no exchange control the facility to disguise the ownership of corporate vehicles

through the use of nominee directors and bearer shares

no reporting requirements for companies like annual reports no system of supervision of companies such as Annual General

Meetings.

Maintenance of secrecy and confidentiality

The list is long and the main idea is to give all facilities to the foreigninvestors so that OFC can earn money by selling confidentiality.

A small sub-category of offshore banks exists in the tax-haven areaslike Cayman Island, Nassau, Bahamas, Bahrain, Monaco, Andorra etc. Alloffshore centers have the common denominators of customer

confidentiality, very low taxes on offshore business and an absence offoreign exchange control. However, the activities in the centers varydepending on location, convenience to other financial markets, legal andaccounting matters and communications. Some of the specialized servicesare the following: company formation and management, administrativeservices for "paper' branch and subsidiary banks, portfolio managementfor trusts, Euro- bond underwriting and placement, incorporation andmanagement of captive insurance companies, ship registration, storage

and transshipment of merchandise etc. Thus in today's world ofglobalization the offshore centers have assumed great significance.

One should be clear about the difference between a tax haven andoffshore centers. A tax haven is a jurisdiction with a high level of bankingand commercial secrecy through which businesses or individuals can hold


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assets and earnings and move the same to other places and differentjurisdictions with little or no tax impact. While many offshore financialcenters are tax havens, many are not. These two are different and thisshould not be confused. Perhaps the governments in the countries creating

the offshore financial centers would like to state that these centres operatein tax efficient zones and these are created to derive benefits of large scalemovement of finance capital.

Capital flight and so called money laundering are two phenomenafrom which the developing countries suffer most. The offshore financialcenters in tax haven regions are often the conduit for the large scaletransfer of funds. The mechanism of transfer and volumes have beenstudied in the literature .

Panama: an Offshore Center

Panama is an independent republic with no exchange control and avery liberal tax laws. It is bilingual, as both English and Spanishlanguages are used here. It has a very good infrastructure both in airtransport and telecommunications. There are a large number of local andforeign financial institutions and also a large spectrum of legal andaccounting expertise. The banking secrecy is protected by various laws.There is no tax on offshore business and its legal system is wellestablished. Panama has a long tradition in commercial banking andoffshore business. The legal system is liberal in the incorporation ofcompanies, Eurocurrency business, banking secrecy and private banking.The huge amount of capital deposited in the banks here are often used inthe domestic investment. Also the fees generated in the business and thesmall level of taxes facilitate the generation of income and employment.Of course, a large amount of cash of doubtful origin pass through theOFCs like Panama and this is part of international money laundering

nexus.


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The Isle of Man : Offshore Financial Centre

The Isle of Man is outside the sovereign jurisdiction of UnitedKingdom. It is in the centre of Irish Sea and eighty miles away from

Manchester. This tiny territory has its own government for the last 1200years and it has obtained the status of an offshore centre. This island takespride in its numerous attractions along with its ability of providing a safetax- free environment for the investors. The well established companylaws of the island allow a variety of corporate vehicles includingcompanies limited by guarantee and hybrid companies, and alsocompanies limited by share capital.

Companies that are not owned by the residents of the Isle of Man

(IM) and those that conduct their business completely outside the IM,even if they may have an office there, are granted exemption from all IMincome taxes. Non- resident companies from other jurisdictions likePanama or Irish non-resident can maintain their base at IM and can applyfor IM residency under Part F of Isle of Man Companies Act, and theyare eligible for income tax exemption. The ownership of the companiesneed not be a matter of public record, and this way complete secrecy canbe maintained.. The companies can carry on lawful business in anycountry and in any currency that they desire according to theirconvenience.

The island has an excellent financial infrastructure, and most banks,accountants and insurance companies are represented there. For example,Ulster Bank (Isle of Man) Limited is a wholly owned subsidiary of UlsterBank Limited, and the latter is a member of Nat West Group, which is one

of the world's largest banking organization. Under the rule of the FinancialSupervision Commission responsible for the Depositors CompensationScheme, deposits are protected up to 75 per cent of the first GBP 20,000per depositor. The investors are offered several options regarding theopening of account, the variations in minimum amount, minimumwithdrawal and interest rate structure. For example, an investor can keep


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money in fixed deposits, the time may vary from one week to five years atan interest rate which is known in the beginning.

Some of the leading international banks : World bank

HSBC

Standard chartered bank

City bank

Abn-amro bank

Bank of Ceylon BNP pabris bank

JP morgan chase bank

American Express bank

Deutsche Bank

THE WORLD BANK GROUP


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Todays world is both very rich and very poor. Around 2.8 billion

people more than half the people in developing countries live on less

than US$2 a day. Of these, 1.2 billion people earn less than US$1 day.

The challenge of reducing these levels ofpoverty, while the worlds

population continues to grow by an estimated 3 billion people over the

next 50 years, is enormous.

They work to reduce poverty worldwide by:

Promoting growth to create employment opportunities; and Helping poor people to take advantage of these opportunities.

Their support governments of member countries in their efforts to invest

in schools and health centers, provide water and electricity, fight disease

and protect the environment. They are not a bank in the common sense

but an international organization owned by the 184 countries both

developed and developing that are their members. They were set up in

1944 as the International Bank for Reconstruction and Development.

When they first began operations in 1946, they had 38 members. That

number increased sharply in the 1950s and 1960s, when many countries

became independent nations and joined the organization.

As their members grew and their needs changed, they expanded and are

now made up of five different agencies. They are like a cooperative,

where their members are shareholders. Through the representatives on


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their Board of Executive Directors, these countries set the policy,

oversee the operations and benefit from the work.

They are one of the worlds largest sources of funding and knowledge

for developing countries. Their main focus is on helping the poorest

people and the poorest countries. They use their financial resources, staff

and extensive experience to help developing countries reduce poverty,

increase economic growth and improve their quality of life.

Assessing the effect of projects they support is essential in developing

countries. Resources are scarce so they use them where they can have

the largest effect. Monitoring helps project managers know if programs

are reaching the people they are aimed at or if these programs are

ineffective and wasteful. The emphasis on monitoring and assessment is

part of their focus on actual results for poor people and on continuous

learning about what does and does not work for future advice and

support.

Over the past 60 years, they have learned that development solutions

need to be designed by countries to suit their own circumstances onesize does not fit all. They bring a mix of money and knowledge to

encourage economic and social development, and help countries to

achieve the internationally agreed Millennium Development Goals.


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They work in partnership with more than 100 developing countries and

are involved in many different areas. Projects they have supported help

these countries to invest in health and education, fight corruption, boost

agricultural production, build roads and ports and protect the

environment. Other projects are aimed at rebuilding war-torn countries

or regions, providing basic services such as clean water, or encouraging

investments that create jobs. In the fiscal year that ended on June 30,

2005, the Board approved US$22.3 billion in loans and grants for 278

projects.WHO RUNS THE WORLD BANK?

The World Bank is run like a cooperative, with their member countries

as shareholders. The number of shares a country has is based roughly on

the size of its economy. The United States is the largest single

shareholder, with 16.41 percent of the votes, followed by Japan 7.87

percent, Germany 4.49 percent, the United Kingdom 4.31 percent and

France 4.31 percent. The rest of the shares are divided among the other

member countries.

ULTIMATE DECISION-MAKING AUTHORITY

Their government shareholders are represented by a Board ofGovernors. Generally, these governors are ministers, such as Ministers

of Finance or Ministers of Development. The governors have the


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ultimate responsibility for making decisions, and meet once a year

during the Annual Meetings.

DAY-TO-DAY DECISIONS

Because the governors meet only once a year, they give specific duties

to their Executive Directors, who work on-site at the Bank. Every

member government is represented by an Executive Director. The five

largest shareholders France, Germany, Japan, the United Kingdom and

the United States appoint an executive director each, while other

member countries are represented by 19 Executive Directors. The 24Executive Directors make up the Board of Directors. They normally

meet twice a week to oversee the business, including approving loans

and guarantees; new policies; the administrative budget; country support

strategies; and borrowing and financial decisions. The president is, by

tradition, a national of the largest shareholder the United States. Elected

for a five-year term which can be renewed, the president chairs the

meetings of their Board of Directors and is responsible for overall

management. Their current president is Paul Wolfowitz, who came into

office on June 1, 2005. The World Bank employs around 10,000 people,

including economists, educators, environmental scientists, financial

analysts, anthropologists, engineers and many others. Their employeescome from about 160 different countries, and over 3,000 staff work in

offices around the world. There has been a move to place more staff in

member countries, where they can work closely with their clients.


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FIVE AGENCIESONE GROUP

INTERNATIONAL BANK FOR RECONSTRUCTION AND

DEVELOPMENT

The International Bank for Reconstruction and Development IBRD

provides loans and development assistance to middle income

countries in Latin America, Asia, Africa and Eastern Europe. IBRD

gets most of its funds by selling bonds in international capital

markets.

INTERNATIONAL DEVELOPMENT ASSOCIATION

The International Development Association IDA plays an

important role in their mission to reduce poverty. Its support is


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focused on the poorest countries, to which it provides interest-free

loans and grants. IDA depends on contributions from its wealthier

member countries including some developing countries for most

of its financial resources.

INTERNATIONAL FINANCE CORPORATION

The International Finance Corporation IFC promotes growth in the

developing world by financing private-sector investments and providing

technical support and advice to governments and businesses. In

partnership with private investors, IFC provides loans and equity finance

for business ventures in developing countries.

WHERE DOES THE MONEY COME FROM?

IBRD main lending agency raises most of its money in the worldsfinancial markets by selling their AAA-rated World Bank bonds, usually

to financial institutions, pension funds and other institutional money

managers, as well as to central banks. In fiscal 2003, IBRD raised

US$17 billion in financial markets. However, unlike other financial

institutions, they do not operate for profit. They use their high credit

rating to pass the low interest they pay for their finance to their

developing country borrowers. They earn interest and fee income on the

loans, and income on the liquid asset investments and capital that is paid

in by their member country shareholders. These earnings, as well as the


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funds raised on the capital markets and part of the paid-in capital and

reserves, are used to make loans to their member countries and to cover

their administrative expenses. IDA funds, which account for about one-

quarter of all of their lending, provide the poorest countries with

interest-free loans and grants. Some 40 donor countries replenish the

IDA facility the worlds largest source of interest-free assistance to poor

countries every three years, allowing them to continue their programs.

IDA also helps mobilize and coordinate aid from donor countries and

other international organizations. The fund was replenished mostrecently in 2002, with about US$23 billion to poor countries over the

three-year period which began on July 1, 2002. About half of the funds

came from donors, with the rest coming from non-donor resources

including IDA repayments and net income transfers from IBRD. Donors

decided at that t time that more of this money up to one-fifth will be

given as grants which dont have to be paid back, instead of interest-free

loans. The grants will make it easier for countries to deal with

development crises such as the HIV/AIDS epidemic. Outside of IDA,

very little of the income is provided by member countries 5 percent of

IBRDs funds around US$13 billion have come from contributions of

rich countries, paid in when they joined the Bank. MIGA is capitalizedby its member countries and receives operating capital from the

Bank. The agency also charges fees for some of its services. IFC

provides a mix of financing loans, equity finance, risk


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management products, and intermediary finance, among others

for each of its projects. However, most of its funding, as well as

leadership and management responsibility, comes from private

sector owners. IFC operates on a commercial basis. It invests

only in for-profit projects and charges market rates for its products

and services.

WHERE DOES THE MONEY GO?

Their main job is to use the money in ways that benefit developing

countries. They provide these funds at zero or low-interest rates,

or as grants to countries that have no access to international

markets. Member countries also come for economic research,

policy advice, and technical assistance in designing and carrying

out development projects. The countries design their ownprograms with technical support from the staff. However, the

programs must have specific development targets such as

reducing poverty, and delivering social services, among others.

The type of financing available to a developing country depends

on its level of need. Countries that borrow from IBRD are

generally middle income countries, where income for each person

is less than US$5185 a year. Seventy-five percent of the worlds

poorest people those who live on less than US$1 a day live in

these countries, which can only borrow from the private markets


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at unfavorable rates. IBRD offers them loans at better terms and

with longer repayment periods. The worlds poorest countries

those where income for each person is

US$875 or less receives grants and interest-free loans from for

projects to provide basic services. In the case of the loans,

countries have 35 to 40 years to repay, with a 10- year grace

period. Revenues from the operations go into reserves, which

have a high level of financial protection and help to fund major

sources of assistance, such as IDA and debt relief. By creatingIFC and MIGA, IBRD tried to make things fairer for developing

countries and make them more attractive to investors. IFC works

with the private sector in developing countries. It takes a minority

stake in a private company in order to attract private investors.

MIGA guarantees insure investors and lenders against financial

and political risk in developing countries, offering cover against

non-commercial risks such as war and civil disturbance.


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HOW THE LOANS ARE MADE

They offer two basic types of loans: investment loans for goods,

work and services to support economic and social developmentprojects in a broad range of sectors; and adjustment loans to

support policy and institutional reforms. During loan negotiations,

they agree with the borrower on the development objective of the

project or program, outputs, performance indicators to measure

the impact and success of the project and a plan to put it all into

practice. Once they approve the loan and it becomes effective,

the borrower puts the project or program into practice according

to the terms agreed with them.

They supervise how each loan is used and evaluate the results.

All loans are governed by the operational policies, which make

sure that operations they fund are economically, financially,socially and environmentally sound.


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FUTURE PLANNING OF THE HSBC COMPANY

STRATEGY:

HSBCs strategy reflects its position as The Worlds Local Bankand is focused on delivering superior growth and earnings overtime by building on the Groups heritage, skills and investment. Inparticular, the group aims to leverage the HSBC brand andnetwork to reach new customers and offer more services toexisting customers, to maximize efficiency by taking advantage oflocal, regional and global economies of scale and to ensure staffare engaged by aligning objectives and incentives.

BEST PLACE TO BANK STRATEGY-----Central to theway the bank applies Group strategy is the developmentof the Best Place to Bank strategy, which is made up ofthree principles, which incorporate every aspect of thegroups relationship with customers, including treatingthem fairly: Make Better Products, Sell Them Properly,

and Keep Them Sold. It is the banks aim that everythingthe bank does should be driven by all of these principlesand that when the bank consistently makes betterproducts, sells them properly and keeps them sold, it willbe the Best Place To Bank.

BEST PLACE TO WORK STRATEGY---Following thesame concept, the bank introduced a Best Place to Work

strategy, which emphasises performance management,reward, personal development aligned to businessstrategy and operating plans, a performance-drivenculture and an engaged workforce.

HSBCs strategy is to be a leading wholesale bank by:


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utilizing HSBCs extensive distribution network;

developing Global Banking and Markets hub-and-

spoke business model as the foundation on which thebusiness can best meet its clients needs.

continuing to build skills and capabilities in its majorcenters to support the delivery of an advanced suite ofservices to corporate, institutional and governmentclients across the HSBC network.


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STANDARD CHARTERED

Standard Chartered was formed in 1969 through a merger of two banks:The Standard Bank of British South Africa, founded in 1863, and theChartered Bank of India, Australia and China, founded in 1853.

Both companies were keen to capitalize on the huge expansion of tradeand to earn the handsome profits to be made from financing themovement of goods between Europe, Asia and Africa.

The Chartered bank was founded by James Wilson following the grant

of a Royal Charter by Queen Victoria in 1853. Chartered opened its firstbranches in Mumbai (Bombay), Kolkata and Shanghai in 1858, followedby Hong Kong and Singapore in 1859.The Standard Bank wasfounded in the Cape Province of South Africa in1862 by John Paterson. It was a commenced business in Port Elizabeth,in January 1863. It was prominent in financing the development of thediamond fields of Kimberley from 1867 and later extended its networkfurther north to the new town of Johannesburg when gold was

discovered there in 1885. It expanded in Southern, Central and EasternAfrica and, by 1953, had 600 offices. In 1965, it merged with the Bankof West Africa, expanding its operations into Cameroon, Gambia,Ghana, Nigeria and Sierra Leone.

From the early 1990s, Standard Chartered has focused on developing itsstrong franchises in Asia, Africa and the Middle East. It hasconcentrated on consumer, corporate and institutional banking and onthe provision of treasury services - areas in which the Group had

particular strength and expertise.


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It has network of over 1,700 branches and outletsfocuses on consumer, corporate, and institutional banking, and on

the provision of treasury servicesStandard Chartered Bank has been actively engaged in

acquisitions and expansionThe Standard chartered credit cards come with varied categories

and each category has some attractive featuresStandard chartered was the first issues a global card in India, i.e.

photo cardStrong Brand name- worldwide presence.Standard Chartered carried regular marketing research.Strategic management of Standard Chartered bank was great

motivator of employees.They did aggressive marketing in terms of sales promotion and

direct sales.More focus on technology and telecommunication (ATM Network,

APS, Quality System)Standard Chartered has been able to sustain its legacy of being

hailed as a trusted provider of credit services to the modern-daycustomers

Highly trained and motivated sales forceStandard chartered is growing at the rate of 37% which is higher

than the market rate of 33%Biggest acquirer of Asian banking assets


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AMERICAN EXPRESS BANK

INTRODUCTION

American Express Bank has presence in over 150 countries. It is a

diversified travel and financial services company. Established in 1850 in

New York, American Express Company was among the first and most

successful express delivery businesses to arise during the rapid westward

expansion of the United States.

American Express India was established in 1921 providing high quality

travel and financial services. American Express in India is the largest

company to have wide network of travel locations in the country.

American Express Travels has entered into a Memorandum of

Understanding (MoU) with Department of Post to enable the designated

Speed Post offices in distributing and encashing American Express

Travelers Cheques.

American Express Travelers Cheques are available in the following

currencies:

Australian Dollar

Canadian Dollar

Euro

Japanese Yen


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Saudi Riyal

South African Rand

Swiss Franc

Pound Sterling

US Dollar

HISTORY

Since its founding in 1850, American Express has conducted business

according to several guiding principles that over the years have becomeinextricably linked with the companys brand, products, services and

perhaps most notably its people. Generations before the phrase

company values entered the corporate lexicon; American Express

employees across the organization were demonstrating the same core

principles upheld by the company today.

American Express operates in over130 countries around the globe.

Established in 1850 in New York City, American Express Company was

among the first and most successful express delivery businesses to arise

during the rapid westward expansion of the United States.

The history of American Express is a fascinating one, filled with

interested and sometimes quirky characters that through a combination


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of brains, perseverance and luck shaped the companys development

during the past century and a half.

The express company that forwarded freight and valuables evolved into

a company that created and sold financial products like money orders

and travelers cheques. Following an era of international expansion, the

company became an entity perhaps best known for its charge card.

Today, American Express is a global payments company.

The attributes that today are the hallmarks of the American Express

brand trust, integrity, and security, quality, and customer service -- all

have their roots in this compelling story. In this history, as well, are the

genesis and development of the company's aspiration to become the

world's most respected service brand.

PEOPLE BEHIND AMEX

American Express was founded in 1850 by Henry Wells, William Fargo,

and John Butterfield as an express business. In 1882, American Express

launched its money order business to compete with the US Post Office'smoney orders. This product quickly spread to Europe where no such

financial product existed. Sometime between 1888 and 1890, J. C. Fargo

took a trip to Europe and returned frustrated and infuriated. American


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Express India was established in 1921 providing high quality travel and

financial services. American Express in India is the largest company to

have wide network of travel locations in the country. American Express

Travels has entered into a Memorandum of Understanding (MoU) with

Department of Post to enable the designated Speed Post offices in

distributing and encashing American Express Travelers Cheques.

W. Richard Holmes has been elected chairman of American Express

Bank, Ltd., (AEB) American Express Company's international bankingsubsidiary, based in New York. He adds this title to his current one of

chief executive officer of AEB, a role he assumed in June, 2000. As

chairman, he succeeds James Cracchiolo, who has stepped down as

chairman of AEB to work full-time with the Company to complete the

spin-off of American Express Financial Advisors (AEFA).

William J. Blomquist, currently managing director and head of AEB's

Financial Institutions Group, and Sergio J. Masvidal, currently managing

director and head of AEB's Private Bank, were elected Vice Chairmen.

Holmes, 52, became president and chief executive officer of AEB in2000. He joined American Express in 1996 as managing Director and

head of Worldwide Private Banking, leading that unit through a period

of significant expansion.


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Holmes has more than 20 years experience in international banking,

having served in various positions at Wells Fargo Bank and at Bank of

America. From 1993 to 1996 he was an executive vice president and

head of Bank of America's Private Bank. He began his professional

career with the accounting firm of Peat, Marwick & Mitchell in 1974.

He holds a bachelor's degree in Economics from St. Johns College,

Cambridge University in England in 1974 and a master's degree ineconomics, also from St. Johns. He is also a Fellow of the Institute of

Chartered Accountants in England and Wales and co-chairman of the

International Private Banking Council.

William J. Blomquist, a 35-year veteran of American Express Bank, was

appointed managing director and head of the Financial Institutions

Group in 1995. He had been managing director and regional executive in

charge of Europe, Middle East, and Africa, from 1990-1995. Prior to

that, he held wide-ranging senior management roles in Switzerland,

Asia, and the Middle East.

Sergio Masvidal was appointed managing director and Head of the

Global Private Bank, based in Miami, Florida, in 2000. He joined AEB

in 1987 as general manager of American Express Bank International, the


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private banking arm of AEB. In 1992, he became president of AEBI and

in 1996 he became Latin American region head for the Private Bank. He

has more than 30 years of experience in the banking industry.


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BOARD OF DIRECTORS

Daniel F. Akerson

Managing Director, The Carlyle Group

Charlene Barshefsky

Senior International Partner, Wilmer Cutler Pickering Hale and Dorr

LLP

Ursula M. Burns

Senior Corporate Vice President and President of Business Group

Operations, Xerox Corporation

Kenneth I. Chenault

Chairman and Chief Executive Officer, American Express Company

Peter Chernin

President and COO, News Corporation

Vernon E. Jordan Jr.Senior Managing Director, Lazard Freres & Co. LLC

Jan Leschly


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Chairman and Chief Executive Officer, Care Capital LLC

Richard C. Levin

President, Yale University

Richard A. McGinn

Partner, RRE Ventures

Edward D. MillerFormer President and Chief Executive Officer, AXA Financial, Inc.

Frank P. Popoff

Chairman, Chemical Financial Corporation

Steven S Reinemund

Former Chairman and Chief Executive Officer, PepsiCo, Inc.

Robert D. Walter

Chairman and Chief Executive Officer, Cardinal Health, Inc.

Ronald A. Williams

Chairman, Chief Executive Officer and President, Aetna, Inc


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AMERICAN EXPRESS BANK IN INDIA

American Express Bank is a diversified travel and financial services

company. It was founded in the year 1850. American Express Travelers

cell is the world leader.

American Express India was established in 1921 providing high quality

travel and financial services. American Express in India is the largest

company to have wide network of travel locations in the country.

American Express Card division also tops upon other credit card issuer.

American Express Credit Cards in India is of basic two varieties, namely

International Gold Amx Card and International Green Amx Card.

American Express Credit Cards

Criteria for availing American Express Gold and Green Cards are as

follows:

Card TypePublic Ltd -

Income(Rs)

Self Employed -

Income(Rs)

Salaried -

Income(Rs)

International Gold

Amex Card150000 150000 150000

International 72000 72000 72000


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Green Amex Card

American Express in India has also launched Tata Finance American

Express Credit Card with Tata Finance Limited which is globally

accepted on the American Express global merchant network. This card is

both issued and serviced by Tata Finance Limited and carries an

American Express Blue Box logo at the bottom.

The American Express India Card Members enjoy discounts of 3% to

7% on airline tickets, convenience of booking tickets over the phone and

40% discounts on overseas hotels rates.

AREA OF BUSINESS

SMALL BUSINESS

Apply for Cards & Financing

CORPORATIONS

Apply for a Corporate Card

Corporate Card

Business Travel

MERCHANTS


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Accept the card

Manage your Merchant Account

PERSONAL

PERSONAL CARDS

Apply for a Card

Membership Rewards

Benefits

Shopping

Gift Cards

TRAVEL

Flights

Hotels

Cars

Cruises

Vacations

Last Minute Deals

Travelers Cheque Cards


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PRODUCTS & SERVICES

INVESTMENT PRODUCTS

We offer a full range of investment products and the highest standard in

investment management. The Private Bank has the flexibility to choose

world-class sub-advisors and investment managers from the world's

leading asset management and specialty fund managers.

FOREIGN EXCHANGE & TREASURY

Around-the-clock trading of an extensive range of foreign exchange

products, including spot trading, options, derivatives and forward

contracts, with particular expertise in non-G7 currencies. American

Express Bank has trading centers in Hong Kong, Singapore, London and

New York.

CREDIT AVAILABILITY

Secured loans to provide short-term liquidity without disrupting your

long-term investment positions, or to increase your exposures for yield

enhancement. You can leverage your assets in one jurisdiction for use in

another, or your personal assets for your business. Pre-approved loanmargins are in place for a wide range of assets. People can call for the

specific loan-to-value percentage for each product.


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FIDUCIARY SERVICES

Legal structures to protect your assets ensure your wishes are carried out

and secure the future for you and your family. Fiduciary specialists are

available in Europe, Asia and the Americas to advise you on the

structures that will provide protection and accomplish your objectives.

INSURANCE

Insurance can provide liquidity at a critical moment, continuity in your

business should you become disabled, and the maximum number ofchoices for your heirs. Policies are issued by established external

insurance carriers selected on a region-by-region basis.

CHOICE OF JURIDICTION

The Private Bank has offices in all of the major offshore private banking

locations. American Express Private Bank offers access to a wide range

of investment products and services that can help you protect and build

your wealth, regardless of your financial objectives.

SIGNATURE PORTFOLIOS

For individual and institutional investors with $1 million or more,Signature Portfolios offer professional management and a choice of

fixed income, equity or balanced orientation.

US Conservative Fixed Income
http://www10.americanexpress.com/privatebank/pdf/SigUSConservativeFixed.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSConservativeFixed.pdf


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US Moderate Fixed Income

Euro Fixed Income

Global Fixed Income

Global Equities

US Equities

US Mid Cap Equities

US Large Cap Equities

Japanese Equities

European Equities

DISCRETIONARY PORTFOLIOS

These investments are designed for clients who want globally diversified

portfolios with professional management of asset allocation and

underlying products.
http://www10.americanexpress.com/privatebank/pdf/SigUSConservativeFixed.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSConservativeFixed.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSConservativeFixed.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSModerateFixed.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigEurFixed.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigGlobalFixedIncome.pdfhttp://www10.americanexpress.com/privatebank/pdf/Sigglobalequity.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSEqu.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigMidCap.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSLargeCapEqu.pdfhttp://www10.americanexpress.com/privatebank/pdf/sigjapan.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigEurEqu.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigEurEqu.pdfhttp://www10.americanexpress.com/privatebank/pdf/sigjapan.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSLargeCapEqu.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigMidCap.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSEqu.pdfhttp://www10.americanexpress.com/privatebank/pdf/Sigglobalequity.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigGlobalFixedIncome.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigEurFixed.pdfhttp://www10.americanexpress.com/privatebank/pdf/SigUSModerateFixed.pdf


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CASH PLUS

Cash Plus Conservative

Cash Plus Moderate

Cash Plus Moderate Euro

Cash Plus Growth

BALANCED ENHANCED

Enhanced Global Conservative

Enhanced Global Moderate Enhanced European Moderate

Enhanced Global Aggressive

TRADITIONAL

Traditional Global Conservative

Traditional Global Moderate

Traditional European Moderate

Traditional Asian Moderate
http://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsCons.pdfhttp://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsMod.pdfhttp://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsModEuro.pdfhttp://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsGrowth.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedGlobalConservative.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedGlobalModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedEuroModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedGlobalAggressive.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalGlobalConservative.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalGlobalModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalEuropeanModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalAsianModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalAsianModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalEuropeanModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalGlobalModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/TraditionalGlobalConservative.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedGlobalAggressive.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedEuroModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedGlobalModerate.pdfhttp://www10.americanexpress.com/privatebank/pdf/EnhancedGlobalConservative.pdfhttp://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsGrowth.pdfhttp://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsModEuro.pdfhttp://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsMod.pdfhttp://www10.americanexpress.com/privatebank/pdf/DiscretCshPlsCons.pdf


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FOCUSED EQUITIES

Focused Global Equities

Focused Asia Ex-Japan Equities

Focused US Equities

Focused Emerging Markets Equities

MUTUAL FUNDS

American Express FundsWorld folio, American Express

Institutional and World Express Funds offer a broad range of mutualfunds designed to meet individual risk tolerance and time horizon

preferences.

PRIVATE BANKER

Your Private Banker can marshal resources on your behalf and craft

solutions to your individual requirements. Wherever the need may arise,

you can have access to the worldwide capabilities and services of the

American Express Company, a global leader in financial services, travel,

and credit and charge cards.

The original card that set the standard for prestige and exclusivity, thePlatinum Card is offered to private banking clients at no annual fee with

qualifying balances. Automatic credit card bill payments can also be

arranged through your Private Banker.
http://www10.americanexpress.com/privatebank/pdf/FocusedGlobalEquities.pdfhttp://www10.americanexpress.com/privatebank/pdf/FocusedAsiaEx-JapanEquities.pdfhttp://www10.americanexpress.com/privatebank/pdf/FocusedUSEquities.pdfhttp://www10.americanexpress.com/privatebank/pdf/FocusedEmerginMarketsEquities.pdfhttp://www10.americanexpress.com/privatebank/pdf/FocusedEmerginMarketsEquities.pdfhttp://www10.americanexpress.com/privatebank/pdf/FocusedUSEquities.pdfhttp://www10.americanexpress.com/privatebank/pdf/FocusedAsiaEx-JapanEquities.pdfhttp://www10.americanexpress.com/privatebank/pdf/FocusedGlobalEquities.pdf


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The original card that set the standard for prestige and exclusivity, the

Platinum Card is offered to private banking clients at no annual fee with

qualifying balances. Automatic credit card bill payments can also be

arranged through your Private Banker.

Travelers Cheques are available in most currencies, including the Euro,

and can be purchased through your Private Banker.

The Private Bank has an extensive global network that has grown and

developed throughout the years to meet the needs of our clients.

American Express Bank currently has 75 offices in 38 countries around

the world.

WEALTH MANAGEMENT

American Express Private Bank offers a range of wealth management

services designed to meet your unique needs.

Protecting Your Wealth

Building Your Wealth

Providing for Future Generations

DEPOSITSTraditional and innovative deposit and deposit-alternative products can

help you meet your needs for liquidity and capital. American Express

Premium Deposits, available in most locations in U.S. dollars and Euro,
http://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#protectinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#protectinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#buildinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#buildinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#providinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#providinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#providinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#buildinghttp://www10.americanexpress.com/sif/cda/page/0,1641,251,00.asp#protecting


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offer an alternative to bank deposits and are particularly suited to

investors who want both security and a competitive rate. These non-bank

deposits are available in terms of 1, 2, 3, 6 or 12 months with

competitive rates relative to the London Interbank Rate, fixed for the

term of the deposit.

Our investment management solutions are designed to grow your

assets while you achieve your unique financial objectives.

Maximum flexibility and access to nearly all the major worldwide

asset classes characterize the Private Bank's family of mutual

funds.

Portfolio management by investment professionals who are among

the best in their industry.

Discretionary portfolios for investors who want globally

diversified portfolios and prefer professional management of their

asset allocation and fund selection.

Alternative investment solutions for sophisticated investors.

Ideas and information that synthesize research from within and

outside of American Express to assist you in making your

investment choices.


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OTHER SERVICES

Your substantial assets require complex estate planning to ensure that

your wealth is protected and managed for your benefit and for the

benefit of future generations.

A variety of structures to choose from, including trusts and private

investment companies, depending on your individual circumstances.

Expert advice to meet your needs for estate planning, tax minimization,

confidentiality, and management continuity and centralization.

A choice of jurisdictions for the most convenient and advantageous

location.


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BIBLIOGRAPHY

Company Annual Report

International Financial Management, by Stonehill and EittemanThe World Bank TreasuryThe World Bank Group

WEB SITES

www.americanexpres.com

www.google.com

http://en.wikipedia.org/wiki/Banker

http://answers.yahoo.com,http://www.hsbc.co.in/www.worldbank.orgwww.ibrd.org
http://www.americanexpres.com/http://www.google.com/http://www.google.com/http://www.americanexpres.com/

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