Vous êtes sur la page 1sur 17

Chapter Twenty

International Banking and the Future of Banking and Financial Services

Key Topics
Types of International Banking Organizations Regulation of International Banking Foreign Banking Activity in the United States Services Provided by International Banks Managing Currency Risk Exposure Challenges for International Banks in Foreign Markets The Future of Banking and Financial Services
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

Types of International Banking Organizations


Representative Offices Agency Offices Branch Offices
Limited-service facility: markets home-office services; does not take deposits or book loans

Does not take deposits from the public but extends commitments to make or purchase loans
The most common organizational form for most international banks: a local office that represents a single large financial-service corporation Foreign subsidiary possesses its own charter and capital stock; may not necessarily close down if its principal owner fails

Subsidiaries

Joint Ventures Edge Act Corporations

Domestic US companies owned by the US or foreign bank but located outside of he home state of the bank that owns them; limited to international transactions
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

Types of International Banking Organizations (cont.)


Agreement Corporations
Subsidiaries of a bank organized under Section 25 of the Federal Reserve Act; devote the bulk of their activities to serving international customers

International Banking Facilities (IBF)

Shell Branches offshore locations Export Trading Companies (ETC) McGraw-Hill/Irwin


Bank Management and Financial Services, 7/e

Computerized account records that are not part of the domestic US accounts of the bank that operates them

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Goals of International Banking Regulation


Protecting the Safety of Depositor Funds Promote Stable Growth in Money and Credit Foreign Exchange Controls Restrict the Outflow of Scarce Capital Protect Domestic Financial Institutions and Markets from Foreign Competition

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Regulation of Foreign Bank Activity in the U.S.


International Banking Act of 1978
Branches and agency offices of foreign banks must secure federal licenses for the US operations Foreign branching in the US is regulated, with a designated home state Larger foreign branches and agencies (>$1 billion) are subject to legal reserve requirements
Tighter control of foreign bank operations in the US. Empowered the Fed to examine the US offices and affiliates

Foreign Bank Supervision Act of 1991

International Lending and Supervision Act of 1983


Basel Agreement

Federal regulatory agencies should prepare capital and lending rules for US-supervised banks

Calls for all banks to achieve a minimum total-capitalMcGraw-Hill/Irwin to-total risk-adjusted assetsThe McGraw-Hill Companies, Inc., All Rights Reserved. 2008 ratio
Bank Management and Financial Services, 7/e

Customer Services Supplied By Banks in International Markets


1. Making Foreign Currency Available to Customers 2. Hedging Against Foreign Currency Risk Exposure

If Net Exposure > 0, the bank is long on currency i and if Net Exposure < 0, the bank is short currency i. What happens when the currency depreciates/appreciates and the banks is long/short? Gain/Loss in a Position With Currency i= Net Exposure *(spot exchange rate (t)-spot exchange rate (t-1) )
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Hedging Against Currency Risk Exposure


Forward Contracts A customer works through a bank to negotiate a contract calling for the delivery of a particular currency at a stipulated price on a specific future date Currency Futures Contracts Contracts promise delivery of stipulated currencies at a specified price on or before a terminal date (long hedges and short hedges) Currency Options Right but not an obligation to deliver of take delivery of a designated FOREX futures contracts at a set price any time before the option expires Currency Swaps Contract between two parties to exchange one currency for another and help reduce the risk of loss as currency prices change
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Customer Services Supplied By Banks in International Markets (cont)


3. Supplying Customers with Short and Long Term Credit and Credit Guarantees 4. Supplying Payment and Thrift Instruments 5. Underwriting Customer Note and Bond Issues in the Eurobond Market 6. Protecting Customers Against Interest Rate Risk 7. Helping Customers Market Their Products Through an Export Trading Company
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Ways of Supplying Customers with Credit Note Issuance Facilities Eurocommercial Paper (ECP) Depository Receipts (DR)

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Payment and Thrift Instruments


Payment Services Thrift services
Tap CDs Tranche CDs Floating Rate CDs Floating Rate Notes
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Sight Drafts Time Drafts

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

Future Problems for International Banks


Growing Customer Use of Securities Markets to Raise Funds Developing Better Methods to Estimate Risk in International Lending Adjusting to New Market Opportunities Created By Deregulation and New International Agreements

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Solutions to Troubled International Loans


They May be Restructured They Can be Sold in the Secondary Market They Can be Written Off, Either a Portion or in its Entirety

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

International Loan Risk Evaluation Systems


The Checklist Approach The Delphi Method Advanced Statistical Methods Published Country-Risk Indicators
Euromoney Magazine Institutional Investor Index International Country Risk Guide

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

New Opportunities
Opportunities Created By NAFTA and CAFTA Opportunities in the Expanding European Community Opportunities in Asia as Barriers Erode

McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

The Future of Banking and Financial Services


Convergence Consolidation Survival of Community Financial-Service Institutions Reaching the Mass Media Invasion by Industrial and Retailing Companies The Wal-Mart Challenge
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Quick Quiz
What organizational forms do international banks use to reach their customers? What are the principal goals of international banking regulation? Describe the principal customer services supplied by international banks serving foreign markets. What types of risk exposure do international banks strive to control? What types of tools have these banks developed to help protect themselves and their customers against various risks?
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Vous aimerez peut-être aussi