International Banking Activities

International Banking Activities- Basel III is a collection of international banking regulations produced by the Bank for International Settlements to improve security in the international financial system. The Basel III regulations are created to reduce loss to the economy by banks that take on excess risk. The objectives of examining international activities are largely the same as those of examining domestic activities. However, the specialized nature of international banking may require modification of some examination activities due to different accounting procedures, documentation requirements, or laws and regulations. 

International banks can be characterized by the types of services they provide that distinguish them from domestic banks.

• International banks facilitate the imports and exports of their clients by arranging trade financing.
• They arrange for foreign exchange necessary for their clients to conduct cross-border transactions and make foreign investments. Banks assist in hedging exchange rate risk in foreign currency receivables and payables through forward and options contracts.
• Two major features that distinguish international banks from domestic banks are the types of deposits they accept and the loans and investments they make. Large international banks both borrow and lend in the Eurocurrency market.
• International banks provide consulting and advice to their clients in the areas of foreign exchange hedging strategies, interest rate and currency swap financing, and international cash management services.
• While direct lending is the major activity of commercial banks, their activities cover investment banking, banker’s acceptance, commercial paper, medium-term notes, and direct lending.

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