Commercial and investment banking - Essay Example

Comments (0) Cite this document
In the paper “Commercial and investment banking” the author analyzes Challenges of internationalization of banking institutions. There is increasing cost of compliance in the international market placing small banks at higher risk of losing its assets to the host government…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.7% of users find it useful
Commercial and investment banking
Read TextPreview

Extract of sample "Commercial and investment banking"

Commercial and investment banking By Challenges of internationalization of banking s One of the latest trends experienced in the banking industry is the internationalization of banking institutions. As much as it comes with a variety of advantages, it has several disadvantages worth noting. To start with, there is increased competition in the local banking industry thus posing a challenge to locally based banks. Small local customers previously served by local investment banks are now being targeted by huge international banks in search of new clientele in the global market (Crocket 2001, p.1). Moreover, the cost of gathering information is becoming increasingly high coupled with the cost of regulation. Most banks operating on the international arena are facing extremely high operating cost affecting their profitability negatively (the economist 2015, p.1).
It is the duty of the headquarters to monitor the operations of all its subsidiaries and comply with regulation requirement of the host country when setting up subsidiaries. The more subsidiaries a bank have the higher the cost of monitoring and regulation. Further, just like establishing any other business unit initial capital is required and at times may be too high. Different countries have different regulations concerning the initial capital investment required before a new firm can be granted operation permission. As such, international banking institutions are at risk of high initial capital investment especially where a huge amount is required to act as security for the customers’ deposits in case of liquidation. Furthermore, change in laws in a country may adversely affect the operations of international banks in a host country. There is increasing cost of compliance in the international market placing small banks at higher risk of losing its assets to the host government (Elliott 2015, p.1; Trichet 2015, p.1).
Arnold M, april 24, 2014. Working in international banking: top executive defect as image problem and regulations bite. Accessed from:
Bloomberge news, march 25, 2015. China’s influence set to climb as U.S thwarted on new bank. Accessed from:
Crocket A, june 2001. Issues in global financial supervision. Bank for international settlement. Accessed from:
Elliott N, jul 24, 2015. The morning risk report: banking being reshaped by international compliance. Accessed from:
International financing review, 2010. International bank challenges. Accessed from
The economist march 4, 2015. Stormy weather: London biggest financial institutions are struggling. Accessed from:
Trichet J, September 2, 2015. Getting banks culture right. Project syndicate. Accessed from: Read More
Cite this document
  • APA
  • MLA
(“Commercial and investment banking Essay Example | Topics and Well Written Essays - 250 words - 2”, n.d.)
Commercial and investment banking Essay Example | Topics and Well Written Essays - 250 words - 2. Retrieved from
(Commercial and Investment Banking Essay Example | Topics and Well Written Essays - 250 Words - 2)
Commercial and Investment Banking Essay Example | Topics and Well Written Essays - 250 Words - 2.
“Commercial and Investment Banking Essay Example | Topics and Well Written Essays - 250 Words - 2”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Commercial and investment banking

Commercial and Investment Banking

...Commercial and Investment Banking Answer 1 There are various advantages as well as disadvantages of relationship lending. It should also be noted that with alterations in the competitive circumstances surrounding an organization, the lending relationships alter as well. During instances, when an organization has limited number of financing alternatives, relationship lending proves to be very beneficial for the organization. The chief attributes of relationship lending are the thorough inspection of the organization by the bank as well as the contractual agility. Lending relationships, particularly those that are long term associations make it simpler for small sized...
10 Pages(2500 words)Essay

Investment banking & private banking what they are best in but this is not always the case. It's important to note that there are several theories that have been developed to explain economic development as discussed above and many more and the meaning of economic development has continued to be formulated by different scholars. This bring us to conclusion that the topic of economic development can not be exhausted because it's wide and terms are continually developed as new scholars continue to find ways of improving development of developing economies. Issue of private banking Private banking refers to banking, investment and similar financial services given to private individuals by...
15 Pages(3750 words)Essay

Investment Banking

...US and trans-European owners as they had already nurtured substantial regulatory memory in their own sophisticated regulatory jurisdictions. Glass Steagall Act separated investment banking from commercial banking in US. This separation gave sufficient time to investment bankers to reorganize and strengthen their operations and in particular make management function fairly robust. "There is a self-selection and a management process to the American (investment) firmsthat gave the investment banks great management in depth"(Augar, 2001).Partial deregulation of Glass Steagall Act and globalization when...
12 Pages(3000 words)Essay

Differences in Assessing and Managing Credit Risk in Investment Banking and Commercial Banking

...Running Head: Credit risk in Investment Banking and Commercial Banking Differences in Assessing and Managing Credit Risk in Investment Banking and Commercial Banking Differences in Assessing and Managing Credit Risk in Investment Banking and Commercial Banking The two different branches of banking namely commercial banking and investment banking have different purposes and though both involve credit risk which is fundamental in...
7 Pages(1750 words)Essay

Regulation of Commercial Banking

.... Companies used non chartered banks and foreign financial institutions to maintain their day to day business operations despite the political chaos. Thus banks tend to play a regulatory role in all kinds of situations and bring in financial stability to a region helping its commercial organizations and businesses to conduct operations smoothly and effectively. Banking regulations have been effective and have considerable impact on certain factors including total factor productivity (TFP) growth and Tirtiroglu et al (1998) have claimed that the overall impact of TFP growth of regulation has been negative. The TFP growth has been negatively correlated to population growth...
8 Pages(2000 words)Case Study

Investment Banking in 2008

...the investment banks to participate in the depository functions. The supporters of the deregulations believed that modern day clients preferred to do all of their business ranging from life insurance to commercial lending, from mergers and acquisition advisory to retirement planning, under one roof. And only a deregulated market could allow this to happen. Therefore, replacement of Glass-Steagall Act of 1933 (which prevented depository and brokerage functions) by the Gramm-Leach Bliley in 1999 opened a whole lot of opportunities for the bankers. With the approval to the Gramm-Leach-Bliley Financial Services Modernization Act in 1999, investment banks,...
8 Pages(2000 words)Essay

Investment & Private Banking

...investors to benefit from the cost efficiencies as well as economies of scale that were only accessible by institutional investors (Guide to Investing…, 2009). Sold to retail private banking and institutional clients As the structured products provide downside protection with synchronized participation in the upside position, they provide an attractive feature for the investors whether institutional or private (Wignall, 2007a). The structured products are sold to the retail investors by investment banks as well as private clients and institutions such as fund managers, hedge funds and so on which was not possible by using the traditional investment...
16 Pages(4000 words)Essay

Investment & privet banking

...of existing investment practices. More specifically, the last decade the firms operating in the US financial sector have promoted a specific investment tool: the sub-prime loans. These financial products were initially considered as an appropriate solution for a high profit; however, the potentials for repayment of the loans on which these products were based were not taken into consideration. At the same time, a specific framework of banking activities was formulated: the private banking (or wealth management). Private banking has been a secure (alternative) solution for those investors that would like to increase their wealth through innovative...
13 Pages(3250 words)Essay

Investment banking

...INVESTMENT BANKING By of the of the School Question What are the key drivers for accretion/dilution? There are several key drivers for accretion/dilution. The first key driver is purchase price; this is the total amount that an acquirer pays for the acquisition of the target. Secondly, there is an acquirer. This is the company or organization that acquires the target. Acquirers usually target accretive transactions because they create value for shareholders because the market often responds favorably. The third key driver is target projected earnings which are the future expected earnings of a target that are set at the time of the acquisition of the target. They reflect the earnings that the target will...
2 Pages(500 words)Essay

Description of Investment Banking

...Investment bankingInvestment banking differs from the traditional commercial bank in a way that it does not accept deposits in its banking functions. This separation of function between commercial banking and investment banking is spelled in Glass-Steagal Act of 1933 and Gramm-Leach-Biley Act. This separation of function in banking however is unique in US banking because such separation is not present in its G8 counterparts. Investment banking deals mainly in helping individuals,...
4 Pages(1000 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Commercial and investment banking for FREE!

Contact Us