International Banking

involve cross-border transactions and

Banking and financing of large Corporate.

Financial Services Industry

Wholesale Services

Size of the Banks worldwide are ranked on

two criteria
Based on their capital, and,
Based on their size of Total Assets

Equity markets
Facilitate trading of shares in quoted companies.
Stock Exchanges - ranked on the basis of the
Market Capitalization.

Bond markets

Foreign exchange

Derivatives

Bond Markets: Facilitate trading of

1. Domestic bonds issued by a) Companies & b)
Governments.
2. International bonds issued by a) Companies, b)
Governments and c) Supra-national agencies.

Foreign Exchange Markets: Largest of all

financial markets
Average daily turnover in excess of US $4
trillion.

Bond markets Larger in size and value of trading

than equity markets

Spot rate - rate quoted by a bank for the

exchange of one currency for another
immediately

US has the largest bond market

European markets - predominant in trading in
International bonds

Forward rate - rate: some agreed future date.

Underlying instruments like currencies, interest

rates, equities, commodities and credit risk.
Exchange and OTC
US exchanges (Chicago Mercantile Exchange) global turnover of the exchange-traded
derivatives markets.
Europe dominates - trading in OTC derivatives
markets
Interest rate derivatives market - dominated by
the Euro and the US dollar.
UK - largest share of over-the-counter foreign
exchange derivatives turnover.

Fund management

Pension, Insurance companies and Mutual Funds.

US and Europe dominate the investment funds

market with a combined total of over US$40
trillion of funds under management.
Hedge funds - Fastest growing forms of
institutional asset management

Insurance
Specialize in the management of risk
Worlds insurance market was worth US $3.7
trillion
The largest insurance markets - US, Japan and the
UK. Lloyds of London is the largest insurance
organization in the world.

Investment Banking

Retail Banking

In the UK, the sector has gone through a period of

consolidation. Economies of scale, search for
diversification, cost reduction and competition are all
expected to drive this consolidation further.

Financial Services Industry

retail Services

Pensions
Investment accounts designed to
capture savings during working life &
provide benefits on retirement

Number of banks is expected to decline by more than

two-thirds over the next decade

Investment Services
Investment Banks: - i) Provide advice for companies
who want to float on the stock market, and arrange
finance to HNWI on investments
ii) Raise additional finance by issuing further shares or
bonds, or
iii) Carry out Mergers and Acquisitions.
iv) Treasury and Cash Management for Corporates
and HNWI.
v) Management of Trust, Pension Funds of
Companies / HNWI.

Insurance
Insurance Markets:- Specialise in the
management of risk
Worlds insurance market was worth US $3.7
trillion based on the value of insurance premiums
written.

Financial Planning and Financial Advice

Financial Advisers (FA): Professionals who offer
advice on financial matters to clients
FA - conduct a detailed survey of the clients
financial position, preferences and objectives
known as a fact-find & then advise appropriate
action to meet the client's objectives or,
recommend a suitable financial product to match
the clients needs.
There are now four main classes of adviser:
Tied advisors, who advise on the products of one
financial institution.
Multi-tied advisors, who advise on the products
of more than one financial institution.
Whole of market advisers, who advise on the
products of all companies active in that area and
are paid by way of commission on the products
they sell.
Independent financial advisers, who also advise
on the whole range of products on offer in the
market, but who also offer their clients the option
to pay for advice by fee rather than commission