1. International Banking Operations and Sturucture
Hwa Jung Kim
International Finance
Prof. Jasper Kim

2. International Banking and Structure
What is the nature of banking system?
What is the International Banking?
Central Banks – BIS (Bank for International Settlements)
International Banking Organization – IMF (International Monetary Fund), the World Bank (IBRD, IDA)
Investment Banking Firms – World-wide banks ( Citi, Lehman Brothers)
<Sources : Frank J. Fabozzi, >

3. What is the nature of banking system?
A bank is a financial institution licensed by a government. Its primary activities include providing financial services to customers while enriching its investors. Many financial activities were allowed over time.
Traditional Banking Activities
Wider Commercial Roles
Economic Functions

4. What is the nature of banking system?
“A central bank is the country’s monetary authority.” – Frank J. Fabozzi
Role of Central Bank
(U.S.) A central bank participates by buying or selling financial assets in the U.S. financial market in order to either stabilize their currency relative to the U.S.

5. What is the nature of banking system?
“Investment Banking Firms are highly leveraged companies, the amount of borrowed funds relative to the amount of equity is high .” – Frank J. Fabozzi
Full Service
Bank-Affiliated Investment Bank
Bank of America, JP Morgan Chase, Citi Group, Credit Suisse, UBS, Wachovia
Independent Bank
Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers,
Bear Stearns, Greenhill &Company, Houlihan Locky Howard&Zukin
Boutique Investment banks

6. What is the international banking?
Financial institutions play in global banking industry
International Banking Act of 1978 (U.S.)
Federal law, enacted by Congress in 1978, placing U.S. Branches and agencies of foreign banks under supervision of U.S. Banking regulations. Foreign banks are eligible for federal deposit insurance, are required to maintain noninterest earning reserve account balances and submit to periodic bank examinations, and are subject to the same branching limitations as domestic banks.

7. What is the international banking?
Financial institutions play in global banking industry
Size of global banking industry
Worldwide assets of the largest 1,000 banks grew 16.3% in 2006/2007 to reach a record $74.2 trillion. This follows a 5.4% increase in the previous year. EU banks held the largest share, 53%, up from 43% a decade earlier. The growth in Europe’s share was mostly at the expense of Japanese banks, whose share more than halved during this period from 21% to 10%. The share of US banks remained relatively stable at around 14%. Most of the remainder was from other Asian and European countries.[8]
The United States has by far the most banks in the world, both in terms of institutions (7,540 at the end of 2005) and branches (75,000). This is an indicator of the geography and regulatory structure of the USA, resulting in a large number of small to medium-sized institutions in its banking system. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branches—more than double the 15,000 branches in the UK.[8]

8. Central Banks –BIS (Bank for International Settlements)
“A central bank is the country’s monetary authority.” – Frank J. Fabozzi
Functions of Central Bank
Implementing Monetary Policy
Determining Interest Rates
Controlling the Nation’s Entire Money Supply
The Government’s Banker and the Banker’s Bank
Managing the Country’s Foreign Exchange and Gold Reserve and the Government’s Stock Register
Regulating and supervising the banking industry
Setting the official interest rate and ensuring that this rate takes effect via a variety of policy mechanisms

9. Central Banks –BIS (Bank for International Settlements)
“The BIS is an international organization which fosters international monetary and financial cooperation and serves as a bank for central banks”
BIS is…
Established on 17 May 1930, the world oldest international financial organization. As its costumers are central banks and international organization, the BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities. The BIS strongly advises caution against fraudulent schemes.

10. Central Banks –BIS (Bank for International Settlements)
The BIS
Aims at promoting monetary and financial stability
Acts as a forum for discussion and cooperation among central banks and the financial community
Acts as a bank to central banks and international organizations
BIS Staff emphasize
Excellence in performance
Highest ethical standards
Professional discretion

11. International Banking Organizations – IMF, the World Bank
The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire to regulate the international monetary and financial order after the conclusion of World War II.
The conference was held from 1 July to 22 July 1944, when the agreements were signed to set up the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund(IMF).

12. International Banking Organizations – IMF, the World Bank
When
In 1994
Members
186 countries
Main goals
International monetary cooperation
Expansion and balanced growth of int’l trade
Exchange stability
A mutual system of payments
Resources available
Vital source of financial and technical assistance to developing countries around the world
Vision for inclusive and sustainable globalization
IBRD – middle income and creditworthy poor countries
IDA – the poorest countries in the world

13. International Banking Organizations – IMF, the World Bank
Surveillance of economies
Low interest loans
Financial assistance
Interest free credits and grants to developing countries
SDRs = international reserve asset
It can supplement the official reserves of member countries
Technical assistance
Investment in education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management

14. International Banking Organizations – IMF, the World Bank
Total quotas: 325billion (as of 3/31/09)
Additional pledged or committed resources: $500 billion
Loan committed (as of 9/1/09): $175.5 billion, of which $124.5billion have to been drawn
Biggest borrowers: Hungary, Mexico, Ukrain
IBRD –
selling AAA rated bonds in the world’s financial markets
the capital reserve from the bank’s 185 country
IDA –
IDA’s funds are replenished every three years by 40 donor countries
Additional funds are regenerated through repayment of loan principal on 35-tp-40 year

15. Investment Banking Firms – World-wide banks ( Citi, Lehman Brothers)
“Investment Banking Firms are highly leveraged companies, the amount of borrowed funds relative to the amount of equity is high .” – Frank J. Fabozzi
Full Service
Bank-Affiliated Investment Bank
Bank of America, JP Morgan Chase, Citi Group, Credit Suisse, UBS, Wachovia
Independent Bank
Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers,
Bear Stearns, Greenhill &Company, Houlihan Locky Howard&Zukin
Boutique Investment banks

16. Investment Banking Firms – World-wide banks ( Citi, Lehman Brothers)
Citi Goup
Global Wealth
Management
Institutional
Clients Group
Consumer
banking
Global Cards
Citi Private Bank, Citi Smith Barney, Citi Investment Research
Credit
Cards
Lending
Group
Consumer
Finance
Retail Banking
The Citi global branch networks, branded Citibank

17. Investment Banking Firms – World-wide banks ( Citi, Lehman Brothers)
Lehman Brothers Holdings Inc.
A global financial-service firm
Participating in business in investment banking, equity and fixed-income sales, research and trading, investment management, private equity, and private banking
It was a primary dealer in the U.S. Treasury securities market.

18. Investment Banking Firms – World-wide banks ( Citi, Lehman Brothers)
Lehman Brothers Holdings Inc.
The Lehman Family
1884, a dry0goods store
Second business: trading in cotton
Became NYSE member: coffee exchange
An evolving partnership
Merger with American Express
Divestment and independence
-client service of “PCS”
-business of Cowen &Co.
-in 2003, re-entered “the asset-management business”
- in2007, the firm had in excess of $275 billion in assets under management

19. International Banking and Structure
the nature of banking system
the International Banking
BIS (Bank for International Settlements)
IMF, the World Bank (IBRD, IDA)
Citi banks, Lehman Brothers

20. Thanks for your attention!
Hwa Jung Kim