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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.
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
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.
Computerized account records that are not part of the domestic US accounts of the bank that operates them
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
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.
Ways of Supplying Customers with Credit Note Issuance Facilities Eurocommercial Paper (ECP) Depository Receipts (DR)
New Opportunities
Opportunities Created By NAFTA and CAFTA Opportunities in the Expanding European Community Opportunities in Asia as Barriers Erode
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.