商业银行管理Chap020课件.ppt

1、Chapter TwentyInternational Banking and the Future of Banking and Financial ServicesKey Topics Types of International Banking Organizations Regulation of International Banking Foreign Banking Activity in the United States U.S.Banks Operating Abroad Services Provided by International Banks Managing C

2、urrency Risk Exposure Challenges for International Banks in Foreign Markets The Future of Banking and Financial ServicesTypes of International Banking Organizations Representative Offices Limited-service facility:markets home-office services;does not take deposits or book loans Agency Offices Does n

3、ot take deposits from the public but extends commitments to make or purchase loans Branch Offices The most common organizational form for most international banks:a local office that represents a single large financial-service corporationTypes of International Banking Organizations(continued)Subsidi

4、aries Foreign subsidiary possesses its own charter and capital stock;may not necessarily close down if its principal owner fails Joint Ventures Bank concerned about risk exposure in entering a foreign market alone may choose to enter into a joint venture with a foreign financial firm,sharing both pr

5、ofits and expensesTypes of International Banking Organizations(continued)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 Agreement Corporations Subsidiaries of a bank org

6、anized under Section 25 of the Federal Reserve Act;devote the bulk of their activities to serving international customersTypes of International Banking Organizations(continued)International Banking Facilities(IBF)Computerized account records that are not part of the domestic US accounts of the bank

7、that operates them Shell Branches Offshore locations established in order to escape the burden of regulationTypes of International Banking Organizations(continued)Export Trading Companies(ETCs)The Export Trading Company Act(ETCA)allowed U.S.banking firms and Edge Act corporations to create ETCs;thes

8、e specialized firms must receive over half their income from activities associated with exporting goods and services from the United StatesRegulation of International Banking International banking activities are closely regulated by both home and host countries A strong trend toward deregulation of

9、banking and the related fields of securities brokerage and underwriting took place from the 1960s to the 1990s Changing regulatory rules have contributed to a more volatile international economyRegulation of International Banking(continued)Harmonization The coordination of various nations in their r

10、egulatory activities so that all financial firms serving international markets will operate under similar rulesGoals 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

11、 Protect Domestic Financial Institutions and Markets from Foreign CompetitionRegulation 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

12、a designated home state Larger foreign branches and agencies($1 billion)are subject to legal reserve requirementsRegulation of Foreign Bank Activity in the U.S.(continued)Foreign Bank Supervision Act of 1991 Tighter control of foreign bank operations in the US.Empowered the Fed to examine the US off

13、ices and affiliates International Lending and Supervision Act of 1983 Federal regulatory agencies should prepare capital and lending rules for US-supervised banks Basel Agreement Calls for all banks to achieve a minimum total-capital-to-total risk-adjusted assets ratioServices Supplied By Banks in I

14、nternational Markets The variety of services international banks and their strongest competitors offer has expanded in response to evolving customer needs and intense international competitionTABLE 201 Key Customer Services Offered by International BanksServices Supplied By Banks in International Ma

15、rkets(continued)Making Foreign Currency(FOREX)Available to Customers Customers require sizable quantities of currencies to pay for imported goods and raw materials,to purchase foreign securities,and to complete mergers and acquisitions Other customers may receive foreign-currency or foreign-currency

16、denominated deposits from businesses and individuals abroad who purchase their products or securities These foreign funds must be exchanged for domestic currency and depositsServices Supplied By Banks in International Markets(continued)Making Foreign Currency(FOREX)Available to Customers FOREX tradi

17、ng activity among commercial and investment bank dealers has sharply increased due to volatility among leading currenciesTrading volume often exceeds a trillion dollars a day and is climbing Proprietary TradingWhen dealers speculate on the prices of selected currenciesServices Supplied By Banks in I

18、nternational Markets(continued)Hedging Against Foreign Currency Risk Exposure Currency risk is the potential for loss due to fluctuations in currency exchange rates Customers are not the only ones who face currency risk;international banks themselves must deal with exchange rate risk exposureService

19、s Supplied By Banks in International Markets(continued)Hedging Against Foreign Currency Risk Exposure Currency risks arise most often in international banking whenMaking foreign currencydenominated loans to customersIssuing foreign-currencydenominated IOUs(such as deposits)to raise new fundsPurchasi

20、ng foreign-issued securitiesTrading in foreign currencies for a banks own currency position as well as for the needs of its customersServices Supplied By Banks in International Markets(continued)Hedging Against Foreign Currency Risk Exposure The net exposure of a bank or its customers to fluctuation

21、s in currency values can be determined from the following equation If Net Exposure 0,the bank is long on currency i and if Net Exposure 0,the bank is short currency i.Services Supplied By Banks in International Markets(continued)Hedging Against Foreign Currency Risk Exposure International banks typi

22、cally employ a wide variety of currency-hedging techniques to help shelter their own and their customers risk exposure The most widely used of these currency-risk management techniques include Forward ContractsA customer works through a bank to negotiate a contract calling for the delivery of a part

23、icular currency at a stipulated price on a specific future date Currency Futures ContractsContracts promise delivery of stipulated currencies at a specified price on or before a terminal date(long hedges and short hedges)Services Supplied By Banks in International Markets(continued)Hedging Against F

24、oreign Currency Risk Exposure Currency OptionsRight 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 SwapsContract between two parties to exchange one currency for another and help reduce the risk of

25、loss as currency prices changeEXHIBIT 203 A Straight CurrencyServices Supplied By Banks in International Markets(continued)Additional Services Provided to Customers Supplying Customers with Short and Long Term Credit or Credit Guarantees Supplying Payment and Thrift Instruments Underwriting Customer

26、 Note and Bond Issues in the Eurobond Market Protecting Customers Against Interest Rate Risk Helping Customers Market Their Products Through Export Trading Companies(ETCs)Services Supplied By Banks in International Markets(continued)Ways of Supplying Customers with Credit Note Issuance Facilities(NI

27、Fs)Eurocommercial Paper(ECP)Depository Receipts(DRs)Services Supplied By Banks in International Markets(continued)Payment Instruments Payment Services Sight Drafts Time Drafts Thrift Instruments Thrift services Tap CDs Tranche CDs Floating Rate CDs Floating Rate NotesChallenges for International Ban

28、ks in Foreign Market Growing customer use of securities markets to raise funds in a more volatile and risky world Developing better methods for assessing risk in international lending Adjusting to new market opportunities created by deregulation and new international agreementsChallenges for Interna

29、tional Banks in Foreign Market Solutions to Troubled International Loans They may be restructured They can be sold in the secondary market They can be written offEither a portion or in its entiretyChallenges for International Banks in Foreign Market International Loan Risk Evaluation Systems The Che

30、cklist Approach The Delphi Method Advanced Statistical Methods Published Country-Risk IndicatorsEuromoney MagazineInstitutional Investor IndexInternational Country Risk GuideChallenges for International Banks in Foreign Market New Opportunities Opportunities created by the North American Free Trade

31、Agreement(NAFTA)and the Central American Free Trade Agreement(CAFTA)Opportunities in the expanding European community Opportunities in Asia as barriers erodeThe Future of Banking and Financial Services Convergence Consolidation Survival of Community Financial-Service Institutions Reaching the Mass M

32、edia Invasion by Industrial and Retailing Companies The Wal-Mart Challenge Fighting for Ultimate Survival in a Global Financial SystemQuick 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?