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CHAPTER TWENTY
International Banking
Service Options
The purpose of this chapter is to learn what
services international banks offer their
customers and to discover the options a bank
manager has under law and regulation to
organize a multinational bank.
McGraw-Hill/Irwin
Bank Management and Financial Services, 6/e
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
Types of Foreign Banking
Organizations
Representative
Offices
Agency Offices
Branch Offices
Joint Ventures
Edge Act
Corporations
Agreement
Corporations
International Banking
Facilities
Shell Branches
Export Trading
Companies
McGraw-Hill/Irwin
Bank Management and Financial Services, 6/e
© 2005 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, 6/e
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
Regulation of Foreign Bank Activity
in the U.S.
International Banking Act of 1978
Foreign Bank Supervision Act of 1991
International Lending and Supervision Act
of 1983
Basle Agreement
McGraw-Hill/Irwin
Bank Management and Financial Services, 6/e
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
Customer Services Supplied By
Banks in International Markets
Making Foreign Currency Available
Hedging Against Foreign Currency Risk Exposure
Supplying Customers with Short and Long Term Credit
and Credit Guarantees
Supplying Payment and Thrift Instruments
Underwriting Customer Note and Bond Issues in the
Eurobond Market
Protecting Customers Against Interest Rate Risk
Helping Customers Market Their Products Through an
Export Trading Company
McGraw-Hill/Irwin
Bank Management and Financial Services, 6/e
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
Tools for Reducing Currency Risk
Forward Contracts
Currency Futures Contracts
Currency Options
Currency Swaps
McGraw-Hill/Irwin
Bank Management and Financial Services, 6/e
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
Ways of Supplying Customers with
Credit
Note Issuance Facilities
Eurocommercial Paper (ECP)
American Depository Receipt (ADR)
McGraw-Hill/Irwin
Bank Management and Financial Services, 6/e
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
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
Opportunities Created By NAFTA
Opportunities Created in the EU and Eastern Europe
Opportunities Created in Asia

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Chap020.ppt

  • 1.
  • 2. CHAPTER TWENTY International Banking Service Options The purpose of this chapter is to learn what services international banks offer their customers and to discover the options a bank manager has under law and regulation to organize a multinational bank.
  • 3. McGraw-Hill/Irwin Bank Management and Financial Services, 6/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Types of Foreign Banking Organizations Representative Offices Agency Offices Branch Offices Joint Ventures Edge Act Corporations Agreement Corporations International Banking Facilities Shell Branches Export Trading Companies
  • 4. McGraw-Hill/Irwin Bank Management and Financial Services, 6/e © 2005 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
  • 5. McGraw-Hill/Irwin Bank Management and Financial Services, 6/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Regulation of Foreign Bank Activity in the U.S. International Banking Act of 1978 Foreign Bank Supervision Act of 1991 International Lending and Supervision Act of 1983 Basle Agreement
  • 6. McGraw-Hill/Irwin Bank Management and Financial Services, 6/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Customer Services Supplied By Banks in International Markets Making Foreign Currency Available Hedging Against Foreign Currency Risk Exposure Supplying Customers with Short and Long Term Credit and Credit Guarantees Supplying Payment and Thrift Instruments Underwriting Customer Note and Bond Issues in the Eurobond Market Protecting Customers Against Interest Rate Risk Helping Customers Market Their Products Through an Export Trading Company
  • 7. McGraw-Hill/Irwin Bank Management and Financial Services, 6/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Tools for Reducing Currency Risk Forward Contracts Currency Futures Contracts Currency Options Currency Swaps
  • 8. McGraw-Hill/Irwin Bank Management and Financial Services, 6/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Ways of Supplying Customers with Credit Note Issuance Facilities Eurocommercial Paper (ECP) American Depository Receipt (ADR)
  • 9. McGraw-Hill/Irwin Bank Management and Financial Services, 6/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 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 Opportunities Created By NAFTA Opportunities Created in the EU and Eastern Europe Opportunities Created in Asia