2. • What is a Global bank?
– A bank with active operations in
multiple countries.
– a bank that is active in the international
markets and has a presence in several
continents
3. • History of Global Banking
– Shortly after World War II, the management of
international companies was restructured to meet the
needs of international operations. During the 1960s, a
global company evolved.
– Its foreign operations were integrated into a single
organizational structure. This is now the transitional
corporation (TNC) or multinational corporation (MNC).
It is a corporation which maintains its headquarters in
one country but performs production, marketing,
finance, and personal functions within many other
countries.
5. • Transnational Banks
– Transnational banks are international
finance institutions which do their business in
many countries of the world. These are
special types of transnational corporations
whose field of specialization is global banking
or international finance.
– Their customer are primarily the transnational
corporations, governments (mostly developing
countries and rich individuals.
•
6. – Since England is the cradle of the Industrial
Revolution, it started the factory system of
production. This made England the leader in
International Trade.
– Other countries followed the footsteps of
England. French Financial institutions began
overseas operations in the 1870s. German
banks likewise participated in international
banking in 1886 with the establishment of an
overseas bank in South America.
7. • Top 10 Biggest Banks of 2011
– 1. BNP Paribas (France)
– 2. Deutsche Bank (Germany)
– 3. HSBC Holdings (United Kingdom)
– 4. Barclays (United Kingdom)
– 5. The Royal Bank of Scotland Group (United Kingdom)
– 6. Bank of America (United States)
– 7. Crédit Agricole (France)
– 8. JPMorgan Chase(United States)
– 9. Industrial & Commercial Bank of China (China)
– 10. Citigroup (United States)
8. • Expansion of Global Banking
– One major factor in the rapid expansion of
transnational banks is the growth of
transnational corporation. These transnational
banks support global manufacturing and trade
of the transnational corporations. Hence,
there is a symbiotic relationship among
international industries, trade, and finance.
Each depends on one another for their own
development and growth.
•
9. - Another Factor is the supply or growth of the
Eurodollar market. Such particular type of
currency market was organized in the 1950s
when British banks started accepting US
dollar deposits and lend them. A few years
later, other banks including US banks joined
in such business. This practice of accepting
US dollars for deposits and lending them to
borrowers outside the United States is called
Eurodollar market.
•
10. The Eurodollar market has greatly expanded.
The growth of such Eurocurrency market has
been mainly due to:
– Increasing profits of the transnational
corporation
– Expansion of US bank activity in Europe
– Rise of petrodollars of the oil-producing
countries in the Middle East
– Outflow of dollars from the United States
•
11. • Global Banking in the Philippines
– The Philippines is a part of the global banking
system. The transnational banks constitute a major
part of the Philippine financial system. These global
financial institutions consider out country a good
market for lending and even participate actively in the
affairs of the Philippines financial system. They have
their branches, offshore banking units and shares in
domestic financial institutions. Because of their huge
credit facilities, they can dominate the Philippines
financial system, and even the whole economy under
the leadership of IMF, WB, and ADB.
•
13. • Penetrations of TNBs into the Philippine Financial
System
– In compliance with the recommendations of a joint IMFCB
survey in 1971,major monetary reforms were undertaken. Banks
were required to increase their capital to a minimum of 100
million pesos. To comply with such provision, some banks had to
merge with each other. Other banks had to accept foreign bank
capital or enter into partnership with foreign banks.
– In 1979, a joint WB-IMF mission in the Philippines introduced
monetary reforms that took effect in 1980. these reforms include
the formation of universal banking or expanded commercial
banking which requires a minimum capital of 500 million pesos.
This new concept of banking aims to increase the mobilizations
of savings, and channel the financial resources into long term
lending which the economy urgently needs.
14. • Participation of TNBs
– Branches
– The four branches for transnational banks in
the Philippines were established to support
and facilitate British and American business
interests. The Bank of America put up its
Manila branch in 1947 primarily to finance
trade between the United States and the
Philippines.
15. – It extended loans for development of
agricultural exports like sugar mills and
plantations, tobacco, coconut, and abaca mills
and plantations, logging and saw mill
companies. most of them are owned by
Americans.
– It has been observed that foreign banks are
operating in the Philippines with very little of
their own capital. Transnational banks do not
operate on their capital alone but on the
wealth and savings of their depositors.
16. Representative Offices
– A representative office is composed of one
foreign executive who represents his
transnational bank in the Philippines. He is
assisted by his secretary and perhaps by one
or two Filipino employees who are very
knowledgeable about the Philippine national
system, and have good contacts.
17. – A representative office is not allowed to
accept any deposits nor to lend dollars. Its
main function is to generate business for its
head office by identifying prospective loan
applicants in the country.
– It serves as a bridge between a potential
borrower and the transnational bank.
18. Offshore banking
• This means doing business with non-residents that is,
the clients are not based in the Philippines. However, our
Government allows the offshore banking units (OBUs) to
do business with Philippine-based clients. Known as
onshore banking, the government aims to make Manila
the regional finance center in Asia.
• It hopes to compete with the highly developed finance
centers of Hong Kong and Singapore. To attract the
offshore banking units, the government has extended tax
incentives on their earnings.
19. The basic operations of the OBUs are to accept dollar and to lend
these to their transnational banks for which they earn a fee.
Offshore banking units are not supposed to extend peso loans
but they do it through an arrangement with the Central Bank and
with foreign currency deposits units (FCDUs) of local banks.
Moreover, OBUs are allowed to confirm letters of credit for
Philippine-based borrowing clients:
– Bangko Sentral
– Government corporations
– Domestic banks
– And private corporations
– Ex. Philippine Long Distance Telephone, San Miguel Corp. , etc.
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