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Multi national banking. MNB’sare those that physically operate in more than one country. City bank operates offices in morethan 90 countries around the world. Reasons. Regulatory environment Technological changes Financial innovation Growing diversity Economies of scale.
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MNB’sare those that physically operate in more than one country. • City bank operates offices in morethan 90 countries around the world.
Reasons • Regulatory environment • Technological changes • Financial innovation • Growing diversity • Economies of scale
Organisational structure • Correspondent banking • Resident representative • Bank agencies • Foreign branches • Foreign subsidiaries and affliates • Consortium banks
Correspondent banking • An informal linkage between banks and different countries is set up when bank maintain correspondent account with each other.f • Facilitate international payments and collection for customers • Correspondent-mai l or cable communucation
working Bank of america sbi a/c of sbi a/c of bank of america
Importance • Helping customers having business abroad • No need to maintain any office and man power • Extension of business to customers
Resident representatives • To provide their customers help from their own personnel on the spot in foreign countries. • To provide information about local business practice and conditions-credit worthiness of local customers. • These are small and appearance of an ordinary office rather than a bank.
Bank agencies • An agency is like a full fledge bank in every respect except that it does not accept deposits. • Deals in local money markets, foreign exchange markets ,arrange loans, clear bank drafts/cheques and channel foreign funds in to financial markets. • Arrange long term loans for customers.
Foreign branches • Foreign banks are operating banks like local banks except that the director and owners tend to reside else where. • Local banking rules and rules at home. • Books are incorporated with parent bank. • Fast clearance of cheques.
Foreign subsidiaries and affiliates • A foreign subsidiary is a locally incorporated bank that happen to be either completely or partly by a foreign parent. • Foreign subsidiaries do all type of banking business.
Consortium banks • Consortium banks are joint venture of larger commercial banks. • Primarily concerned with investment, arrangement of loans and underwrite stock and bonds.