Foreign Bank Branch Office

 Operates like a local bank.

 Maintain both home country and foreign
country banking regulation.
 Provide much fuller range of service.
 Make easy for entering international firms.
 Compete with host country bank at the local
level.
 Faces difficulties during economic or political
crisis .
 Subsidiaries
 A subsidiary bank is a locally incorporated
bank wholly or partly owned by a foreign
parent.
 Helps the parent company to avoid
unfavorable regulations.
 Operates under the laws and regulations of
the host country.
 Foreign Bank Branches vs. Subsidiaries of Foreign Banks

• Branches operate in countries foreign to the parent

but Subsidiaries are technically a separate legal entity.
• Branches might be left to bail out their own branches
when host country faces any crisis but Subsidiaries
act like local bank and survived.
• Differences in services they can offer.
• A subsidiary bank can underwrite securities, whereas
most bank branches focus on retail services
• Branches are less costly to establish and subsidiaries
are less costly to resolve
 Joint Venture

 A joint venture is a business arrangement in which

two or more parties agree to pool their resources
for the purpose of accomplishing a specific task.
 The firms share ownership at some stage of
production process
 Joint venture has opportunity to gain new
capacity and expertise
 Joint venture takes time and effort to build
relationship and partnership
 International Banking Act

• The International Banking Act was a law passed in

1978 that put foreign bank units operating the U.S.
under the purview of American regulators and the
FDIC.
• Prior to the Act, U.S. branches of foreign banks
were instead subject to a patchwork of state-by-
state regulations.
• With the Act, all banks, domestic or foreign,
operating within U.S. borders became subject to the
same uniform regulatory rules and scrutiny.