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1、,INTERNATIONAL FINANCIAL MANAGEMENT,EUN / RESNICK,Second Edition,6,Chapter Six,International Banking and Money Market,Chapter Objective: This chapter serves to begin our discussion of world financial markets and institutions.,Chapter Six Outline,International Banking Services The Worlds Largest Bank
2、s,Chapter Six Outline,International Banking Services Reasons for International Banking,Chapter Six Outline,International Banking Services Reasons for International Banking Types of International Banking Offices Correspondent Bank Representative Offices Foreign Branches Subsidiary and Affiliate Banks
3、 Edge Act Banks Offshore Banking centers International Banking Facilities,Chapter Six Outline,International Banking Services Reasons for International Banking Types of International Banking Offices Capital Adequacy Standards,Chapter Six Outline,International Banking Services Reasons for Internationa
4、l Banking Types of International Banking Offices Capital Adequacy Standards International Money Market Eurocurrency Markets Eurocredits Forward Rate Agreements Euronotes Euro-Medium-Term Notes Eurocommercial Paper,Chapter Six Outline,International Banking Services Reasons for International Banking T
5、ypes of International Banking Offices Capital Adequacy Standards International Money Market International Debt Crisis History Debt-for-Equity Swaps The Solution: Brady Bonds The Asian Crisis,International Banking Services,International Banks do everything domestic banks do and: Arrange trade financi
6、ng. Arrange foreign exchange. Offer hedging services for foreign currency receivables and payables through forward and option contracts. Offer investment banking services (where allowed).,The Worlds 10 Largest Banks,Low Marginal Costs Managerial and marketing knowledge developed at home can be used
7、abroad with low marginal costs.,Reasons for International Banking,Low Marginal Costs Knowledge Advantage The foreign bank subsidiary can draw on the parent banks knowledge of personal contacts and credit investigations for use in that foreign market.,Reasons for International Banking,Low Marginal Co
8、sts Knowledge Advantage Home Nation Information Services Local firms in a foreign market may be able to obtain more complete information on trade and financial markets in the multinational banks home nation than is obtainable from foreign domestic banks.,Reasons for International Banking,Low Margina
9、l Costs Knowledge Advantage Home Nation Information Services Prestige Very large multinational banks have high perceived prestige, which can be attractive to new clients.,Reasons for International Banking,Low Marginal Costs Knowledge Advantage Home Nation Information Services Prestige Regulatory Adv
10、antage Multinational banks are often not subject to the same regulations as domestic banks.,Reasons for International Banking,Low Marginal Costs Knowledge Advantage Home Nation Information Services Prestige Regulatory Advantage Wholesale Defensive Strategy Banks follow their multinational customers
11、abroad to avoid losing their business at home and abroad.,Reasons for International Banking,Reasons for International Banking,Low Marginal Costs Knowledge Advantage Home Nation Information Services Prestige Regulatory Advantage Wholesale Defensive Strategy Retail Defensive Strategy Multinational ban
12、ks also compete for retail services such as travelers checks, tourist and foreign business market.,Knowledge Advantage Home Nation Information Services Prestige Regulatory Advantage Wholesale Defensive Strategy Retail Defensive Strategy Transactions Costs Multinational banks may be able to circumven
13、t government currency controls.,Reasons for International Banking,Home Nation Information Services Prestige Regulatory Advantage Wholesale Defensive Strategy Retail Defensive Strategy Transactions Costs Growth Foreign markets may offer opportunities to growth not found domestically,Reasons for Inter
14、national Banking,Prestige Regulatory Advantage Wholesale Defensive Strategy Retail Defensive Strategy Transactions Costs Growth Risk Reduction Greater stability of earnings due to diversification.,Reasons for International Banking,Types of International Banking Offices,Correspondent Bank Representat
15、ive Offices Foreign Branches Subsidiary and Affiliate Banks Edge Act Banks Offshore Banking Centers International Banking Facilities,Correspondent Bank,A correspondent banking relationship exists when two banks maintain deposits with each other. Correspondent banking allows a banks MNC client to con
16、duct business worldwide through his local bank or its correspondents.,Representative Offices,A representative office is a small service facility staffed by parent bank personnel that is designed to assist MNC clients of the parent bank in dealings with the banks correspondents. Representative offices also assist with information about local business customs, and credit evaluation of the MNCs local customers.,Foreign Branches,A foreign branch bank operates like a local bank, but is legally part
