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International banking is the process in which financial

institutions allow foreign clients---both companies and individuals---to use their services Perhaps the most talked-about international banks are located in Switzerland. However, many other countries have fully developed international banking infrastructures. Many individuals and companies participate in international banking to minimize (or evade) their tax liability. In addition, several international organizations have made recent efforts to curb the use of international banks as tax havens.

International Banking Hubs

These countries generally have similar characteristics. They

are usually smaller wealthy countries. Often times, they are small island countries, which is where the term "offshore" banking comes from. These countries generally offer low and in some cases zero taxes to international clients. They usually keep their clients' information secret from tax authorities from other countries. They often have little transparency and have no residency requirements for their clients

Specific Countries
According to the U.S. National Bureau of Economic

Research, about 15 percent of the world's countries operate as tax havens. These countries include, among others, Aruba, Belize, Bermuda, Cayman Islands, Cyprus, Hong Kong (China), Isle of Man, Macau (China), Panama, Samoa, San Marino, Switzerland and the U.S. Virgin Islands..


In general, mostly wealthy individuals and companies use

international banks. While there are many benefits to international banking: Tax evasion, foreign direct investment, protection from lawsuits, the fostering of international trade protection against fluctuating domestic interest rates International banking also makes sense for companies that operate internationally


Despite the benefits of international banking, several

disadvantages exist: First, if the country in which one banks becomes economically or politically unstable, he could absorb dire financial risks---like nationalization of his assets. Second, while offshore banking certainly falls into a gray area of U.S. law, if one is determined to be illegally sheltering money, the Internal Revenue Service imposes stiff penalties for such abuse. Currency exchange rates can fluctuate, thus potentially devaluing one's assets.

Efforts to Curb Tax Evasion

G20 world leaders, at their April 2, 2009, summit, created a

tax haven blacklist of countries. They created a four-tier system to rate countries and to what extent they comply with international tax standards. The Organization for Economic Cooperation and Development (OECD) club of rich nations issued a report in 2000 listing a number of countries as tax havens. The European Union recently pushed several international banking centres to sign the European Union Withholding Tax and Exchange Information Directive, which forces those banks to deduct 15 percent tax or fully disclose information on its clients to their home countries.


Low Marginal Costs: Managerial and marketing knowledge developed at home can be used abroad with low marginal costs.

Knowledge Advantage: The foreign bank subsidiary can draw on the parent banks knowledge of personal contacts and credit investigations for use in that foreign market
Home Nation Information Services:

Local firms in a foreign market may be able to obtain more complete information on trade and financial markets in the multinational banks home nation than is obtainable from foreign domestic banks
Prestige: Very large multinational banks have high perceived prestige, which can be

attractive to new clients

Regulatory Advantage: Multinational banks are often not subject to the same regulations as domestic banks

Wholesale Defensive Strategy:

Banks follow their multinational customers abroad to avoid losing their business at home and abroad.
Retail Defensive Strategy:

Multinational banks also compete for retail services such as travelers checks, tourist and foreign business market.
Transactions Costs

Multinational banks may be able to circumvent government currency controls. Growth Foreign markets may offer opportunities to growth not found domestically
Risk Reduction

Greater stability of earnings due to diversification

Efforts to Curb Tax Evasion

G20 world leaders, at their April 2, 2009, summit,

created a tax haven blacklist of countries. They created a four-tier system to rate countries and to what extent they comply with international tax standards. The Organization for Economic Cooperation and Development (OECD) club of rich nations issued a report in 2000 listing a number of countries as tax havens.

The first banks were the merchants of the ancient world

that made loans to farmers and traders that arrived goods between cities. The first records of such activity dates back to around 2000 BC in Assyria and Babylonia. Later in ancient Greece and during the Roman Empire lenders based in temples would make loans but also added two important innovations: accepted deposits and changing money. During this period there is similar evidence of the independent development of lending of money in ancient China and separately in ancient India.

The development of banking spread through Europe and a

number of important innovations took place in Amsterdam during the Dutch Republic in the 16th century and in London in the 17th century. During the 20th century developments in telecommunications and computing resulting in major changes to way banks operated and allowing them dramatically increase in size and geographic spread. The Late-2000s financial crisis saw significant number of bank failures, including some of the world's largest banks, and much debate about bank regulation


By the end of the 16th century and during the 17th .By the end of the 17th century In the 19th century During the 20th century After the panic of 1929 During the 1930s The first decade of the 20th century In 1933 In 1944 The first decade of the 21st century The Late-2000




The Citi never sleeps


The worlds local bank

Bank of America:

Higher standards


Deutsche Bank:

A Passion to Perform
Central Bank of India

Customized banking innovations


Look Beyond
ICICI bank


EXAMPLE (The Hongkong and Shanghai Bank)

prominent bank established and based in Hong

Kong since 1865 HSBC is one of the oldest banking groups in the modern world. The bank is known locally simply as "The Bank", "Hongkong Bank" and "Lion Bank".

They established the Hongkong and Shanghai

Banking Corporation in Hong Kong (March 1865) and Shanghai (one month later). The founder, a Scotsman named Thomas Sutherland wanted a bank operating on sound Scottish banking principles.

Hong Kong banking

maintains a network of around

220 branches For some time in the late 1980s and early 1990s, the bank was known by the name HongkongBank in its native city, although it now trades as HSBC. , it also adopted the idiosyncratic practice of calling its ATMs Electronic Teller Card (ETC) machines

headquarters are at 1 Queen's Road Central in

the Central area on Hong Kong Island. The HSBC Hong Kong headquarters building was also home to HSBC Holdings plc's headquarters until the latter firm's move to 8 Canada Square

Hong Kong Dollar Bank Notes

banknotes for Hong Kong
- Bank of China (Hong Kong) and Standard Chartered

Bank (Hong Kong). Hong Kong is unusual in that it is one of the few countries or territories

In 1959 HSBC acquired The Mercantile Bank of India,

London and China, established in October 1853 in Bombay (now Mumbai). HSBC is now one of the fastest growing foreign banks in India, both in domestic banking and support operations for worldwide operation.


Having sponsored the Jaguar Racing Formula

One team since the days of Stewart Grand Prix HSBC World Match Play Championship, HSBC Women's World Match Play Championship HSBC Champions andHSBC Women's Champions.

Since 2001, HSBC has sponsored the Celebration of

Light, an annual musical fireworks competition in Vancouver, British Columbia, Canada.

HSBC sponsored the 2009 British and Irish Lions tour

to South Africa


Management by James A.F. Stoner, R. Edward Freeman, Daniel R. Gilbert, JR. 6th Edition Websites:

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