Module Title: International Banking
Elective Module—All Routes
International banking is a key component of the global economy. This module is concerned with understanding the structure, trends and strategies of international banks, together with the most important markets in which they operate. The module covers the evolution, structure and strategic drivers of international banking; international banking markets; the kinds and functions of international banks (including international commercial, investment, retail and private banking); offshore financial centres, products and services of international banks, risk management (including asset and liability management); regulation and emerging trends.
Aims & Objectives
On completing this module students will:
- Understand how and why international banking is a key component of the global economy;
- Explain the structure, trends and strategic drivers of international banks and the most important markets in which they operate;
- Understand the strategy options and strategy formulation in the key segments of international banking, commercial, investment, retail and private banking;
- Explain the nature, importance and strategic drivers of offshore financial centres;
- Use finance and other relevant techniques to analyse the risks, risk management and risk regulatory systems of international banks.
Introduction to Banking—B Casu, C Giradone & P Molyneux
Means of Assessment:
This module is assessed by means of a single mini-project of 5,000 words in length.
Unit 1 – Introduction to International Banking
Unit 1 provides an introduction to international banking business and aims to cover briefly some basic
concepts, namely the role of banks, their main activities and the products and services that banks offer.
It briefly describes the history of international banking and the main theories underlying the rationale for
international banking. There is a section which focuses on the international banking markets and activities, with particular emphasis on the Euromarkets, offshore banking and the recent trend towards conglomeration.
The final section offers an overview of the main risks faced by banking institutions and focuses in detail on the typical risks of international banking and their management. At the end of the unit students should be able to examine the characteristics of international banking and the markets in which they operate and be familiar with the identification of risks and the main risk management techniques.
Unit 2 – International Banking Activities
Unit 2 provides an introduction to the different types of international banking activities. The core products and services offered by international banks include retail and other commercial banking business similar to the domestic retail operations (such as loans, overdrafts, lines of credit, etc.). However, very often international banking services are provided to large firms (multinational companies) and thus involve large volumes. Two important markets for international banks are the syndicated loans market and the asset securitisation market. The final section of this Unit highlights the impact of the recent 2007 – 2009 global financial crisis on international banking activities and markets. On completion of the Unit, students should be familiar with the main international banking activities. Furthermore, they should understand the causes, consequences and policy lessons of the recent financial crisis and well as current developments in the international banking system.
Unit 3 – Bank Failure and Financial Crises
This unit investigates the reason why banks fail using both a qualitative approach and a quantitative analysis. Since bank failures often lead to financial crises, the unit also looks at their causes undertaking a detailed examination of the recent (2007-2009) financial crisis. After defining bank failure and financial crises in theory, the unit presents a number of case studies examining the costs and consequences of bank failure in practice. On completion of the unit students should have consolidated their knowledge an understanding of banking failure and financial crises and be up to date with contemporary issues. Unit 3 discusses the role and purposes of international financial regulation and the role of organisations such as the role of the World Bank and the International Monetary Fund. The rules agreed upon by global organisations have become the drivers for domestic regulation; for example the Basel agreement was initially set up in 1988 for international banks operating in OECD countries. The new Basel accord (Basel III) is now expected to become the benchmark for global banking supervision. At the end of the unit, students should have gained a thorough understanding of global banking regulation and should have become familiar with banking structure and regulation in selected countries. Further, students should have gained a good working knowledge of the aims and purposes of the Basel accords on capital adequacy.