Development division. International function
Category: Bank Management
International operations
1 Objectives may be different:
To accompany their customers when they invest abroad
To develop a standard banking activity
To participate in the financing of local projects
To get operations from abroad
To offer a larger range of products to customers.
2 Constraints
The international function deals with operations quite similar to those carried out nationally (means of payments, guarantees, credit, money transfers), but there are changes on different points:
Human aspect: Banks need specialised staff to operate because of different local characteristics.
Financial aspect: these operations need specific accounting and telecommunication networks (SWIFT) that make this activity very costly.
3 Technical aspect
The local characteristics of the networks demand a costly adaptation of working applications
4 Juridical and fiscal aspect:
operations do not depend only on the laws of the country of the bank.
5 Commercial aspect:
To sell its range of international services, a bank must have highly specialised staff able to develop new operations.
International presence
A bank will use its correspondent banking network to process its transactions (transfers, letters / credit). The number of vosmo and nosmo accounts is being reduced.
A bank can be implemented abroad through:
A representative office in charge of developing business between the local companies and the Bank’s local clients.
A partnership with a local bank for a chosen activity.
An implementation to develop a local banking activity.
A bank can participate, through the market activities, without a physical presence; to:
Foreign exchange transactions
International financing
Issuing International securities.
The choice of the form of local presence is a matter of management strategy as it depends on the objectives of the bank concerning the range of customers to be served and the types of operations to be done; this has to be decided keeping in mind the costs to be paid.
diagram 2.9
market connections
