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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

market connections

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