International Banking

1. International Banking Concepts and examples

2. 1 Bank of Tokyo-Mitsubishi, Japan, 85,372  2 HSBC Holdings, UK, 76,357  3 Lloyds TSB Group, UK, 54,453  4 Citicorp, US, 53,822  5 Sumitomo Bank, Japan, 41,944  6 BankAmerica, US, 41,344  7 Dai-Ichi Kangyo Bank, Japan, 41,131  8 Chase Manhattan, US, 40,363  9 Fuji Bank, Japan, 38,440  10 Sanwa Bank, Japan, 37,990  11 NationsBank,  US 34,625  12 Barclays, UK 32,426  13 Industrial Bank of Japan 30,077  14 Deutsche Bank Germany 29,142  15 Union Bank of Switzerland 25,764  16 Wells Fargo Bank, US 25,579  17 ABN Amro Holding, Netherlands 25,168 18 First Union, US 23,617  19 Hang Seng Bank, Hong Kong 23,088  20 National Westminster Bank, UK 22,430  21 Credit Suisse Group, Switzerland 22,361  22 Abbey National, UK 22,144  23 Sakura Bank ,Japan 21,229  24 National Australia Bank 20,532  25 Norwest, US 20,074 . . . 40 Royal Bank of Canada 13,430  World’s Biggest Banks (assets in billion of dollars:1998)

3. World's financial centers: LondonTokyo New YorkParis, Frankfurt, Zurich, Amsterdam, etc.

4. Foreign Exchange Trading Income of Selected Banks( in millions of US$ ) Company 1977 1987 1997 1998 1999 Bank of New York NA NA 109 126 137 Chase Manhattan 55 385 790 936 807 Citicorp 68 453 1,486 1,628 1,569 Credit Suisse First Boston NA NA 699 97 897 Deutsche Bank NA NA 1,040 636 807 Mellon Financial Corp 6 8 118 165 173 Morgan (J.P.) & Co. 40 251 493 781 777 Republic National Bank 5 39 98 120 141 State Street Bank 2 21 159 177 209

5. Reasons for international banking: • International trade and investment • Low marginal costs • Arbitrage regulations • Defensive strategies • Limited domestic market • Risk reduction

6. 1. Exporter ships the goods 2. Importer pays after receiving the goods A Primer on Import/Export Payments Importer’s preference Importer Exporter

7. 2. Exporter ships the goods after payment 1. Importer pays the goods A Primer on Import/Export Payments Exporter’s preference Importer Exporter

8. 1. Importer obtains bank’s permission to pay on importer’s behalf 2. Bank promises exporter to pay on behalf of importer 4. Bank pays exporter 6. Importer pays bank 5. Bank releases merchandise to importer 3. Exporter ships to the bank The Bank as an Export/Import Intermediary Importer Bank Exporter

9. 2. Exporter agrees to fill order 1. Importer orders goods 6.. Exporter ships goods 7. Exporter presents shipping documents to bank X 3. Importer arranges L/C with bank I 5. Bank X advises exporter of L/C 12. Payment 4. Bank I sends L/C to bank X 11. Payment 8. Bank X presents shipping documents to bank I 9. Bank I accepts documents and promises to pay within 60 days 13. Investor presents documents and gets paid 10. Bank X sells acceptance documents A Typical Trade Transaction Importer Exporter Bank X Bank I Public investor

10. Types of international banking offices: • Correspondent banks • Representative office • Foreign branch • Subsidiaries • Affiliates • Offshore banking centers

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14. Offshore banks: operate outside the jurisdiction of most industrialized countries are subject to very few regulations are located in tax havens

15. Tax havens countries

16. Tax avoidance: Exemplification

17. Tax avoidance: Exemplification

18. Tax avoidance: Benefits Lincoln belge gets a tax deduction Old Abe gets a tax free interest income