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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:

  1. Exchange operations.

  2. Opening of documentary credits of importation, as well as providing notices and confirmation of export documentary credits.

  3. Remittance to correspondents of documents for collection and handling of collections received from them.

  4. Issuing bond guaranties on foreign countries or issuing bonds or guaranties for the account of foreign banks or firms in favor of local firms.

  5. Handling foreign currency assets of the bank.

  6. Granting lines of credit to banks or firms abroad and securing and handling lines of credit granted to the bank by its correspondents.

  7. Maintaining public relations to assure permanent contact, directly or indirectly, with customers within the country or abroad.

  8. 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.

  9. 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:

  1. Execute and supervise the bank's purchases and sales of foreign currencies.

  2. Provide all agencies and branches with daily buying and selling rates of different currencies with which the bank normally deals.

  3. Provide current quotes for those same currencies for all operations about which the dealer or desk has been consulted.

  4. Modify rates previously transmitted as well as suspend any authorization given to branches and agencies to operate freely up to certain limited amounts.

  5. Maintain contact with principal bank customers about foreign exchange matters.

  6. Participate with customer service officers and with managers of branches and agencies in promotion activities.

  7. Review operations daily.

  8. Watch for irregularities.

  9. Monitor the foreign exchange position.

  10. Keep current regarding the foreign exchange market.
  11. Provide monthly statistics about operations activities and profits earned.
  12. Supervise the foreign currency cash assets that the bank holds in its correspondent banks abroad.
  13. 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.

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