|
Information
> Financial Terms
> This page
International Banking Department
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles
J Woelfel
(We recommend this as work of authority.)
The international
banking department of a bank is primarily responsible for financing foreign
customers or domestic clients involved in foreign dealings.
The operations typically handled by a bank's international department
include:
-
Exchange
operations.
-
Opening
of documentary credits of importation, as well as providing notices
and confirmation of export documentary credits.
-
Remittance
to correspondents of documents for collection and handling of collections
received from them.
-
Issuing
bond guaranties on foreign countries or issuing bonds or guaranties
for the account of foreign banks or firms in favor of local firms.
-
Handling
foreign currency assets of the bank.
-
Granting
lines of credit to banks or firms abroad and securing and handling
lines of credit granted to the bank by its correspondents.
-
Maintaining
public relations to assure permanent contact, directly or indirectly,
with customers within the country or abroad.
-
Maintaining
close supervision of relations with correspondent banks worldwide,
which, aside from credit and service aspects, also means permanent
control over reciprocity received or given.
-
Compiling
statistical data to evaluate the evolution of bank operations in the
international sector.
The services
most frequently found in foreign departments of banks include documentary
credit service, collection service, bond guaranty service, and foreign
exchange service. The international
banking department can subdivide its service structure in a variety of
ways. Some banks provide
a service designated as "goods" or "merchandise" regardless
of whether they are covered by documentary credits or are handled as collections.
Others divide services into "import service" and "export
service," each which handles documentary credits and collections
related to goods entering or leaving the country.
Others have created a "documentary credit service" that
handles all transactions covered by this instrument and a "collection
service" that handles all transactions relating to import or export
documents either sent or received for collection.
The foreign
exchange service is responsible for receiving and processing transactions
with which it is entrusted by customers, foreign banks, or the foreign
exchange desk. The principal
function of this service is to determine the buy and sell exchange rates
of different currencies under which the bank operates.
The foreign exchange desk is also responsible for monitoring the
bank's foreign exchange position.
Typical duties of the chief deal or foreign exchange desk include:
-
Execute
and supervise the bank's purchases and sales of foreign currencies.
-
Provide
all agencies and branches with daily buying and selling rates of different
currencies with which the bank normally deals.
-
Provide
current quotes for those same currencies for all operations about
which the dealer or desk has been consulted.
-
Modify
rates previously transmitted as well as suspend any authorization
given to branches and agencies to operate freely up to certain limited
amounts.
-
Maintain
contact with principal bank customers about foreign exchange matters.
-
Participate
with customer service officers and with managers of branches and agencies
in promotion activities.
-
Review
operations daily.
-
Watch
for irregularities.
-
Monitor
the foreign exchange position.
- Keep current
regarding the foreign exchange market.
- Provide
monthly statistics about operations activities and profits earned.
- Supervise
the foreign currency cash assets that the bank holds in its correspondent
banks abroad.
- Carry
out transfers or coverage transactions so that accounts abroad have
the least number of overdrafts, thereby avoiding unnecessary interest
charges.
Source: Seglin, Jeffrey
L., Bank Administration Manual: A
Comprehensive Reference Guide, BAI.
Back to Information
|