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Answer:
An international bank is a financial entity that offers financial
services, such as payment accounts and lending opportunities, to foreign
clients. These foreign clients can be individuals and companies, though every
international bank has its own policies outlining with whom they do business.
An international bank is an organization that matches people and companies
to international banking -- international banks tend to offer their services to
companies and to fairly wealthy individuals that is people with $100,000 and
counting. But plenty of international banks, particularly Swiss banks, open
their doors to customers of any income bracket.
2.
Answer:
Theres a wealth of reasons for individuals and companies to
bank internationally.
Low Marginal Costs:
Managerial and marketing knowledge developed at
home can be used abroad with 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.
Home Nation Information Services: Local firms in a foreign market may be
able to obtain more complete information on trade and financial markets in
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The bank will analyze how risky a customer you would be. Can you or
your company pay back loans?
4.
Answer:
participating in an abusive tax shelter (by U.S. law, at least). The IRS
charges very stiff penalties for participating in abusive shelters. In the
settlement offered by the IRS in the Son of Boss abusive tax shelter,
participants paid penalties of as much as 20 percent of their unpaid tax
on top of their outstanding tax liability.
Be careful with the offshore banks you do business with -- don't be
collateral damage in the wars against tax evasion, money laundering
and terrorism.
Anonymous Banking: In the past, many international banks offered
relative anonymity and secrecy to their customers. Since the terror
attacks of September 11, 2001, however, the United States has worked
with countries around the world to eliminate anonymous banking, the
purpose being to uncover the identities of account-holders suspected
of criminal activity. The completely anonymous, numbered Swiss
account is also a myth. There is always a record of who opened the
account.
5.
Answer:
Trade Financing: Facilitate imports and exports of their clients.
Foreign exchange:
Arrange for foreign exchange such as crossborder transactions and foreign investments.
Hedging: Assist in hedging exchange rate risk.
Product exchanging: Trade foreign exchange products for their
own account.
Borrow & Lend: Borrow and lend in the Eurocurrency market.
International Loan:
Participate in international loan syndicate
lending to MNCs- project financing and to sovereign governments
economic development.
Underwriting:
Participate in underwriting of Eurobonds and foreign
bonds issues.
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6.
Answer:
Banks providing all the above services which are trade financing,
foreign exchange, hedging, product exchanging, borrow & lend, international
loan and underwriting, are commonly known as universal banks or full service
banks.
8.
Answer:
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Subsidiary and Affiliate Bank: A type of foreign bank that is
incorporated in the host country but is considered to be owned by a foreign
parent bank.
And an affiliate bank means a type of inter-company relationship in which one
of the companies owns less than a majority of the other company's stock, or
a type of inter-company relationship in which at least two different
companies are subsidiaries of a larger company.
In the banking industry, affiliate and subsidiary banks are the most
popular setups for foreign market entry.
A subsidiary bank is a locally incorporated bank that is either wholly
owned or owned in major part by a foreign parents.
An affiliate bank is one that is only partially owned, but not controlled
by its foreign parent.
Both subsidiary and affiliate banks operate under the banking laws of
the country in which they are incorporated.
They are allowed to underwrite securities.
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avoidance, it simply means whilst your assets are held offshore they will
benefit from very favorable tax advantages.
Asset Protection: There are many methods in which to protect your
assets using an offshore structure, in the form of an investment
product, an IBC (International Business Company) or an offshore trust,
or even a simple offshore bank account.
These will protect your assets from:
Protection from invasive bureaucracy
Protection against lawsuits
Protect your assets from seizure
Regulatory Advantages:
The regulations in force within most
high tax countries, are there to protect investors, and rightly so.
However, due to the very strict nature of these regulations, fund
managers feel as if they are wearing a financial straight Jacket. It is
difficult for them to compete with the returns of their offshore-based
partners who enjoy less restrictive regulation.
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Real savings: Benefiting from higher interest rates on your savings
account, having access to personal and business loans with lower rates or
simply by having access to funds worldwide via a credit card.
Tax Benefits: Lower tax rate or no taxes especially for those who aim
to secure and protect their money and assets.
Early Retirement: You can enjoy the freedom of living in paradise, such
as Belize who has a very low cost of living, while enjoying higher interest rates
on your savings accounts with an offshore / international bank account.
Overall, an offshore bank account can offer you a starting point, a paved road
towards freedom, privacy and new investments. It is all about doing your
research and choosing the right offshore bank that best fits your needs.
Disadvantages:
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were not insured by the country in which they were deposited. Those who
had deposited with the same banks onshore received all of their money back.
11.
Answer:
Banking system came along with the development of money as
an institution. The transaction of commodities across countries required
financial intermediation in the international level and thus international level
and thus international banking business was born. International banking
operations are essentially to facilitate the movement of goods across the
political boundary of countries.
In this way the emergence and the growth of international banking is closely
interwoven with the development international trade and international
capital movement.
Before World War (1) when European banks dominated the world capital
market, during the period 1940-1960, regulatory control of capital flow and
convertibility of the currencies reduced the importance of international
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To cool the growth of the economy, the Fed steadily increased the Fed
Funds target rate at meetings of the Federal Open Market Committee, from
a low of 1.00 percent on June 25, 2003, to 5 percent on June 29, 2006.
In turn, mortgage rates increased. Many subprime borrowers found it
difficult, if not impossible, to make mortgage payments in a cooling
economy, especially when their adjustable-rate mortgages were reset at
higher rates.
When subprime debtors began defaulting on their mortgages,
commercial paper investors were unwilling to finance SIVs. Liquidity
worldwide essentially dried up.
The spread between the three-month Eurodollar rate and three-month
U.S. Treasury-bills (the TED spread), frequently used as a measure of credit
risk, increased from about 30 basis points in March 2007 to 200 basis points
in November 2007, as investors became fearful of placing funds in even the
strongest international banks.
Additionally, many CDOs found themselves stuck with the highest risk
tranches of MBS debt, which they had not yet placed or were unable to
place as subprime foreclosure rates around the country escalated.
Commercial and investment banks have been forced to write down
over $170 billion of subprime debt to date, with as much as $285 billion
expected.
At this point, the story of the credit crunch is still unfolding. Many
lessons should be learned from it.
One lesson is that credit rating agencies need to refine their models for
evaluating esoteric credit risk created in MBS and CDOs and borrowers
must be more wary of putting complete faith in credit ratings.
Another lesson is that bankers seem not to scrutinize credit risk as
closely when they serve only as mortgage originators rather than hold the
paper themselves.
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Answer:
Appreciation (or strengthening) of a currency:
When the currencys spot rate has increased in value in terms of some other
currency.
Depreciation (or weakening) of a currency:
When the currencys spot rate has decreased in value in terms of some other
currency.
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For example, the British pound 6 month forward is less than its spot (2.0417
versus 2.056).
In meeting the needs of their clients and their own trading activities,
these global banks establish the tone of the market.
This is through a market maker function.
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(2) A willingness of the market maker to actually buy and/or sell at the prices
they quote:
Thus the market maker offers firm prices into the market!
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