International Banking Concepts. Analysis of Banking Financial Fitness

Inhaltsverzeichnis

1. Executive Summary

2. Company Profile- Brief Overview
2.1 Consumer banking:

3. Liquidity Risk:
3.1 Measuring Liquidity Risk –SCB
3.2 Measuring Credit Risk Exposure
3.3 Market Rate Risk
3.4 Value at Risk (VaR)

4. CAMEL RATING SYSTEM

1. Executive Summary

International Banking can be defined as banking transactions crossing national boundaries. The activities involves like international lending; claims of domestic bank offices on foreign residents, claims of foreign bank offices on local residents, claims of domestic bank offices on domestic residents in foreign currency are the major activities involved in International Banking. The evolution of banking history dates back to 2000 BC in Assyria and Babylonia; while the modern banking systems originated in Renaissance Italy. The major incentive for the growth of international banking was migration of domestic customers who were MNE’s growing foreign activities and the impacts of regulatory differences. The report is comprised of Liquidity risks, market risks, credit risks of Standard Chartered Bank Plc. The company also demonstrates the firm efficiency of the firm using CAMEL RATING SCALE. The overview of the analysis states that the firm is operating proficiently under the guidelines of BASEL.

Introduction

According to Lewis & Davis (1987, p. 219), international banking is a denotation of cross-border and cross currency facets of banking business. They classify international banking into two main activities; traditional foreign banking and euro currency banking; where traditional banking involves transactions with non-residents in domestic currency to allow trade finance and other international transactions, whilst Euro currency banking involves banks participating in foreign exchange transactions with both residents and non-residents. As discussed earlier banks have the major incentive to go global that is from domestic banks to multi-national banking termed as MNB’s. According to Grubel’s (1977) seminal adaptation of the theory of MNEs, multi-national banking asserted that potential MNB’s must possess or at least perceive themselves to be in a possession of some advantage over their least competitors in foreign markets. According to Grubel’s argument banks would be reluctant to expand abroad in the absence of some competitive advantage. Banks without a competitive advantage may obtain an edge through the acquisition of foreign businesses in sophisticated markets. The general idea of explaining about International Banking is to obtain a basic idea of international banking and its activities.

The further report discusses about Organisational structure, legal status, key activities, liquidity, Credit and Market risk exposures, analysis of banks efficiency using CAMEL rating systems and regulatory compliance of the banks. To do this different activities and analysis Standard Chartered Bank has been selected to carry out evaluation efficiently.

2. Company Profile- Brief Overview

The standard chartered bank was founded by James Wilson in 1853. During 1869 the bank played a major role in the development of trade with lonian Bank’s Cyprus branches and established its presence in Gulf. The bank has capitalised on the expansion of trade between Europe, Asia and Africa. The firm’s strategy is to aspire to be the world’s best international bank leading the way in Asia, Africa and in the Middle East. The firm had undertaken major acquisitions since 2008 as their growth strategy; acquisition of Lehman brother team in Brazil, First Africa holdings limited, Barclays African custody are the major acquisitions carried out by the bank. The firm has employed 89,000 plus other staff around the globe working on to provide high satisfied services to their customers and investors. The firms operating revenue during the year 2012 was US $ 18.258 billion and net income was US $ 4.985 billion during the year 2012. Headquartered in London the firm operates wide around the globe providing major services like consumer banking, corporate banking, investment banking, and mortgage and wealth management. (www.standardcharte red. com/en/about-us )

Organisation Structure Standard Charetered Bank

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Self-Created: Source www.standardcharered.com

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Self-Created: Source www.standardcharered.com

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Self-Created: Source www.standardcharered.com

Global Organisational Chart-SCB

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( http://www.standardchartered.com.tw/download/english/2011y_financial.pdf )

The banks organisational is known to be divisional organisation structure format for global operations, but SCB branches operating in Taiwan, Bangladesh and few Asian countries have matrix form of organisational structure. The firm’s top management is comprised of Shareholders marketing, Board of directors reported by Internal Audit and Assurance department, president and then reported by following departments. Consumer banking is responsible for strategy and business planning, customer experience and distribution development, branch operational activities and sales governance. Origination & client coverage, wholesale banking is responsible for maintenance, promotions, credit analysis, risk management, product development, and sales WB banking activities. Global Markets Department is in charge of treasury management and allocation of NTD and foreign currency transactions. International Banking Department is responsible for management and supervision of foreign exchange business and management of institutional lending activities. Trust department is in supervision of planning, management and operations of trust business and enacting business authorized by competent authorities. Offshore Banking unit is in the charge of management and supervision of offshore banking business, serve as the contact with the local regulators. Securities department is specialised in planning, management and execution of securities business and enacting the business authorized by complaint authorities.

The internal audit and assurance department is in charge of audit of business, support function, asset management, IT and any assignments directed from the board of directors. Human Resource Department is responsible for recruiting and hiring of employees, review and designing policies and procedures in relation to human resources and other major HR activities. Group technology & operations department (GTO), is in charge of consumer banking operations wholesale banking activities and procurements operations. Legal compliance & assurance and company secretariat department is responsible for lawsuits, compliance and assurance financial crimes etc. Corporate affairs department is responsible for planning and execution of internal communication, media relations, government relations and social responsibilities. Risk Management Department is in charge of risk management of the entire bank and lastly branches operating in the bank pursuit to the banking act and approved by competent authorities.

Standard Chartered is one the major British commercial bank. The bank was incorporated in 1853 as Standard Chart Private limited. The bank was incorporated in England with limited liability under company number 966425 and has registered office at 1 Alderman bury Square, London UK ( http://www.standardchartered.com.tw/download/english/2011y_financial.pdf ). The bank branches around the globe have been registered under the subsidiary act of the standard chartered bank PLC. The bank is owned by a sole shareholder Standard chartered bank. The major Key business activities of SCB are discussed further.

2.1 Consumer banking:

The bank serves the needs of personal, private, premium and SME banking customers. The bank offers wide range of operations for its customers; offering a full suite of innovative customer products and services to meet their objective of achieve wealth and transaction needs. The firm has adopted a customer focused approach which has enabled a deeper understanding of customer’s evolving business needs and in providing customized financial products/services.

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