Part A.: International banks tend to operate differently in different economies to maximise shareholders’ value. Critically analyse international banks risk management procedures. 1. Introduction 2. Main body 2.1. Shareholders’ value and maximizing shareholders’ value: · What is shareholder wealth? The increased return to a shareholder in the form of dividends and/or capital appreciation. · Why do banks move abroad? Seek growth & profits v domestic markets (mature, competitive, overly regulated). Diversification, improve economies of scale & scope, improve brand awareness. Conditions – entry barriers have to be lowered, growing economy. Competitive advantage – superior management team, advantages in technology, access to financial markets, sizeable capital, superior products and services (wealth management – good P/E ratio) follow clients abroad · How do banks increase shareholder wealth? · Invest in Net Present Value positive projects – banks have a raft of products, services and expertise which could be marketable in emerging markets. Find profitable markets. Diversification · Reduce cost of capital – wide access to funding, domestic and wholesale markets. Eurocurrency markets (what are the advantages & disadvantages – chapter 2 covers the eurocurrency market). To minimise cost of capital got to minimise risks. 2.2. International banks risk management procedures: · Types of risk? · Credit risk · Interest rate risk · Currency risks – devaluations, balance of payments, prone to capital flight, does the country have a strong balance sheet, fixed/floating FX rate · Political risks – corruption, cronyism, violence, social contract · Country risks – protect foreign interests, legal structure, · Operating risks – international banks more complex, sufficient monitoring, enough skilled personnel, principal-agent problem, Nick Leeson, Jerome Kervie · Economic risks – do they know the market, credit risks, concentration risk. · How can a bank mitigate these risks? · Know the market & customers and increase presence at a steady pace (representative office-low presence, foreign branch-high presence) start with low cost, low risk products & services (revolver loans & overdrafts) · Counterparty & country limits reduce risk, check management team, accounting info, monitoring loans. · Share risks – syndicated loans. · Use derivatives to hedge FX risk, credit risk and interest rate risk. 3. Conclusion/Concluding remarks Part B: Discuss the income opportunities available to international banks and critically evaluate the potential impact of regulatory reforms (with reference to Basel III) since the financial crisis on such income. 1. Introduction 2. Main part 2.1. Income opportunities · Banks have four main types of revenue (income). - Net interest income (interest income – interest expense): comes from basic products such as loans, overdrafts, credit cards, payment services. + International banks have a lot of experienced staff and well establ.

1. Part A.: International banks tend to operate differently in
different economies to maximise shareholders’ value. Critically
analyse international banks risk management procedures.
1. Introduction
2. Main body
2.1. Shareholders’ value and maximizing shareholders’ value:
· What is shareholder wealth?
The increased return to a shareholder in the form of dividends
and/or capital appreciation.
· Why do banks move abroad?
Seek growth & profits v domestic markets (mature, competitive,
overly regulated). Diversification, improve economies of scale
& scope, improve brand awareness.
Conditions – entry barriers have to be lowered, growing
economy.
Competitive advantage – superior management team, advantages
in technology, access to financial markets, sizeable capital,
superior products and services (wealth management – good P/E
ratio) follow clients abroad
· How do banks increase shareholder wealth?
· Invest in Net Present Value positive projects – banks have a
raft of products, services and expertise which could be
marketable in emerging markets. Find profitable markets.
Diversification
· Reduce cost of capital – wide access to funding, domestic and
wholesale markets. Eurocurrency markets (what are the
advantages & disadvantages – chapter 2 covers the eurocurrency
market). To minimise cost of capital got to minimise risks.
2.2. International banks risk management procedures:
· Types of risk?
· Credit risk

2. · Interest rate risk
· Currency risks – devaluations, balance of payments, prone to
capital flight, does the country have a strong balance sheet,
fixed/floating FX rate
· Political risks – corruption, cronyism, violence, social
contract
· Country risks – protect foreign interests, legal structure,
· Operating risks – international banks more complex, sufficient
monitoring, enough skilled personnel, principal-agent problem,
Nick Leeson, Jerome Kervie
· Economic risks – do they know the market, credit risks,
concentration risk.
· How can a bank mitigate these risks?
· Know the market & customers and increase presence at a
steady pace (representative office-low presence, foreign branch-
high presence) start with low cost, low risk products & services
(revolver loans & overdrafts)
· Counterparty & country limits reduce risk, check management
team, accounting info, monitoring loans.
· Share risks – syndicated loans.
· Use derivatives to hedge FX risk, credit risk and interest rate
risk.
3. Conclusion/Concluding remarks
Part B: Discuss the income opportunities available to
international banks and critically evaluate the potential impact
of regulatory reforms (with reference to Basel III) since the
financial crisis on such income.
1. Introduction
2. Main part
2.1. Income opportunities
· Banks have four main types of revenue (income).
- Net interest income (interest income – interest expense):

3. comes from basic products such as loans, overdrafts, credit
cards, payment services.
+ International banks have a lot of experienced staff and well
established products which can be tailored to new markets
where there is a demand for financial services.
+ Chapter 2 in the module guide has a very good section on
syndicated loans which is a popular international banking
product for risk reduction
- Net fees and commission income: include insurance,
intermediary service, leasing, factoring, foreign exchange
currency services, cash management, trade finance (issuing
financial papers for companies.
- Net trading income: includes international banks role as
market maker (dealer), broker, trading derivatives (principally
interest/currency) commitments and guarantees (such as letters
of credit and bills of exchange).
- Investment income: includes underwriting, mergers and
acquisition activities, and asset and wealth management.
2.2. Regulatory reforms (with reference to Basel III) since the
financial crisis and its impacts on such income.
· The Basel Accords refer to the banking supervision Accords -
recommendations on banking regulations)—issued by the Basel
Committee on Banking Supervision (BCBS)
· The Basel Committee consisted of representatives from central
banks and regulatory authorities of the G10 countries plus
Luxembourg and Spain
· The committee does not have the authority to enforce
recommendations, although most member countries as well as
some other countries tend to implement the Committee's
policies
· Basel III: list all differences between Basel I and II vs Basel
III
- Capital Definition and Requirements
- Capital Conservation Buffer
- Countercyclical Buffer

4. - Leverage Ratio
- Liquidity Ratios
- Capital for CVA Risk
· Impacts of regulatory reform on income opportunities:
- Impact on cost of capital
- Impact on lending activities
- Impact on other activities
- Impact on bank’s profit…
3. Conclusion
International Banking
UGB322
Individual assignment
Weighting – 100% of the marks for this module
This is an individual assignment of 3000 words. (+ or – 10%)
The hand in date is: Friday 15
th
January 2016 23:59 GMT

5. Please submitted via Jira the online submission system
(https://webservices.sunderland.ac.uk)
Requirements:
This assignment is in two parts with each part carrying a
maximum mark of 50%.
Part A.
International banks tend to operate differently in different
economies to maximise
shareholders’ value. Critically analyse international banks risk
management
procedures. (50%)
Part B
Discuss the income opportunities available to international
banks and critically
evaluate the potential impact of regulatory reforms (with
reference to Basel III) since
the financial crisis on such income. (50%)

6. The University policy on cheating collusion and plagiarism will
be applied to this
piece of work.
Guidance:
Students should approach this assignment as an academic essay,
weighing the
arguments for and against each issue, making comment on the
literature and drawing
logical conclusions. Harvard referencing is a key requirement of
the assignment to
demonstrate wider reading and to underpin the discussions,
ensuring they have
sufficient depth.
https://webservices.sunderland.ac.uk/
Generic Assessment Criteria – Undergraduate Bachelor’s degree
These should be interpreted according to the level at which you
are working
Categories

7. Grade Relevance Knowledge Analysis Argument and Structure
Critical Evaluation Presentation Reference to Literature
P
a
s
s
86 –
100%
The work examined is exemplary and provides clear evidence of
a complete grasp of the knowledge, understanding and skills
appr opriate to the Level of the
qualification. There is also unequivocal evidence showing that
all the learning outcomes and responsibilities appropriate to that
Level are fully satisfied. At this level it is
expected that the work will be exemplary in all the categories
cited above. It will demonstrate a particularly compelling
evaluation, originality, and elegance of argument,
interpretation or discourse.
76-85% The work examined is excellent and demonstrates
comprehensive knowledge, understanding and skills appropriate
to the Level of the qualification. There is also
excellent evidence showing that all the learning outcomes and
responsibilities appropriate to that level are fully satisfied. At
this level it is expected that the work will be
excellent in the majority of the categories cited above or by
demonstrating particularly compelling evaluation and elegance
o f argument, interpretation or discourse and
there may be some evidence of originality

8. 70 –
75%
The work examined is of a high standard and there is evidence
of comprehensive knowledge, understanding and skills
appropriat e to the Level of the qualification.
There is also clearly articulated t evidence demonstrating that
all the learning outcomes and responsibilities appropriate to that
level are satisfied At this level it is
expected that the standard of the work will be high in the
majority of the categories cited above or by demonstrating
particularly compelling evaluation and elegance of
argument, interpretation or discourse.
60 –
69%
Directly relevant to
the requirements
of the assessment
A substantial
knowledge of
relevant material,
showing a clear
grasp of themes,
questions and
issues therein
Good analysis,
clear and orderly
Generally coherent and
logically structured, using

9. an appropriate mode of
argument and/or
theoretical mode(s)
May contain some
distinctive or
independent thinking;
may begin to
formulate an
independent position
in relation to theory
and/or practice.
Well written, with
standard spelling
and grammar, in a
readable style with
acceptable format
Critical appraisal of up-to-
date and/or appropriate
literature. Recognition of
different perspectives.
Very good use of source
material. Uses a range of
sources
50 –
59%
Some attempt to
address the
requirements of
the assessment:
may drift away

10. from this in less
focused passages
Adequate
knowledge of a fair
range of relevant
material, with
intermittent
evidence of an
appreciation of its
significance
Some analytical
treatment, but
may be prone to
description, or to
narrative, which
lacks clear
analytical
purpose
Some attempt to construct
a coherent argument, but
may suffer loss of focus
and consistency, with
issues at stake stated only
vaguely, or theoretical
mode(s) couched in
simplistic terms
Sound work which
expresses a coherent
position only in broad
terms and in uncritical
conformity to one or
more standard views

11. of the topic
Competently
written, with only
minor lapses from
standard grammar,
with acceptable
format
Uses a variety of literature
which includes some
recent texts and/or
appropriate literature,
though not necessarily
including a substantive
amount beyond library
texts. Competent use of
source material.
40 –
49%
Some correlation
with the
requirements of
the assessment
but there are
instances of
Basic
understanding of
the subject but
addressing a
limited range of
material

12. Largely
descriptive or
narrative, with
little evidence of
analysis
A basic argument is
evident, but mainly
supported by assertion
and there may be a lack
of clarity and coherence
Some evidence of a
view starting to be
formed but mainly
derivative.
A simple basic style
but with significant
deficiencies in
expression or
format that may
pose obstacles for
Some up-to-date and/or
appropriate literature
used. Goes beyond the
material tutor has
provided. Limited use of
sources to support a point.
irrelevance the reader
F

13. a
il
35 –
39%
Relevance to the
requirements of
the assessment
may be very
intermittent, and
may be reduced to
its vaguest and
least challenging
terms
A limited
understanding of a
narrow range of
material
Heavy
dependence on
description,
and/or on
paraphrase, is
common
Little evidence of coherent
argument: lacks
development and may be
repetitive or thin
Almost wholly

14. derivative: the writer’s
contribution rarely
goes beyond
simplifying
paraphrase
Numerous
deficiencies in
expression and
presentation; the
writer may achieve
clarity (if at all) only
by using a
simplistic or
repetitious style
Barely adequate use of
literature. Over reliance
on
material provided by the
tutor.
The evidence provided shows that the majority of the learning
outcomes and responsibilities appropriate to that Level are
satisfied – for compensation consideration.
30 –
34%
The work examined provides insufficient evidence of the
knowledge, understanding and skills appropriate to the Level of
the q ualification. The evidence provided
shows that some of the learning outcomes and responsibilities
appropriate to that Level are satisfied. The work will be weak
in some of the indicators.

15. 15-29% The work examined is unacceptable and provides little
evidence of the knowledge, understanding and skills appropriate
to the Level of the qualification. The evidence
shows that few of the learning outcomes and responsibilities
appropriate to that Level are satisfied. The work will be weak in
several of the indicators.
0-14% The work examined is unacceptable and provides almost
no evidence of the knowledge, understanding and skills
appropriate to the Level of the qualification. The
evidence fails to show that any of the learning outcomes and
responsibilities appropriate to that Level are satisfied. The work
will be weak in the majority or all of the
indicators.