The International Financial Markets The Global Banking ...

[Pages:24]Giddy

Global Banking: Review I/1

Global Banking &

Capital Markets REVIEW I

Prof. Ian Giddy

Stern School of Business,

New York University

What is Global Banking and Capital Markets?

The International Financial Markets

uMoney and foreign exchange;

derivatives; international bonds &

equities; loan trading

l The Global Banking Business

uLending; trading and transactions;

underwriting; M&A; project financing;

asset management; advisory

services; etc

Copyright ?1999 Ian H. Giddy

International Financial Markets 2

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Global Banking: Review I/2

What are the Global Financial Markets?

l The Foreign Exchange Market l Domestic and International Money Markets l Domestic and International Capital Markets l The Derivatives l International Equity and M&A l Using the Global Capital Markets: Global

Banking Strategy and Implementation

Copyright ?1999 Ian H. Giddy

International Financial Markets 3

Where the Eurocurrency Market Fits In

US Domestic Market

EUR0CURRENCY MARKET

Eurodollar Market

Euro-Deutsche Mark Market

Foreign Exchange

Market Euro-Yen Market

German Domestic Market

Japanese Domestic Market

Euro-Commercial Paper Market

Copyright ?1999 Ian H. Giddy

Euro-Floating Rate

Straight

Note Market

Eurobond Market

International Financial Markets 4

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Global Banking: Review I/3

Interest Rate Linkages in the International Money Market

Two stories to tell: l Domestic vs. Euro l Eurocurrency A vs. Eurocurrency B

Domestic Market A

The Euromarkets

Domestic Market B

Treasury Bill

Bank Deposit

Euro Deposit Market

Euro Deposit Market

Bank Deposit

Treasury Bill

Treasury Bond

Corporate Bond

Euro Bond Market

Euro Bond Market

Corporate Bond

Treasury Bond

Copyright ?1999 Ian H. Giddy

International Financial Markets 5

Global Banking: Products and Customers

Prof Ian Giddy Stern School of Business

New York University

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Global Banking: Review I/4

Products or Customers?

Sales

Corporate Finance

Customer-Driven Innovation

Copyright ?1999 Ian H. Giddy

Capital Markets

International Financial Markets 7

Client-Arena-Product Matrix

Products offered

Copyright ?1999 Ian H. Giddy

Clients served

Markets covered

International Financial Markets 8

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Global Banking: Review I/5

Products

l Credit products l Trading and positioning

l Risk management products

l Financial engineering and structured finance

l Underwriting and distribution

l Asset management

l Retail and private client services l Transactions services

Copyright ?1999 Ian H. Giddy

International Financial Markets 9

Client-Arena-Product Matrix

Build versus buy?

Products offered

Copyright ?1999 Ian H. Giddy

Clients served

Markets covered

International Financial Markets 10

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Global Banking: Review I/6

Client-Arena-Product Matrix

Example: SBC and US bank equity

Products offered

Copyright ?1999 Ian H. Giddy

Clients served

Markets covered

International Financial Markets 11

Client-Arena-Product Matrix

Sell? (NatWest)

Products offered

Copyright ?1999 Ian H. Giddy

Clients served

Markets covered

International Financial Markets 12

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Global Banking: Review I/7

NatWest Bank?

NatWest Bank

Products Securities custody Asset Management Private Equity Insurance Lending Deposits Securitization/Structured and Project Finance Equity underwriting Bond underwriting Mergers and Acquisitions Credit cards Trading - Money market - FX and derivatives - Interest rate derivatives - Bonds - Securitized products - Futures Mortgages Stock brokerage Corporate Advisory Private Banking

Clients Corporations Government Institutions

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x x

High net worth Retail

x

x

x

x

x

x

x

x

x x

x

Copyright ?1999 Ian H. Giddy

International Financial Markets 13

To Succeed, Analyse the Industry Structure

SUBSTITUTES

SUPPLIERS

COMPETITIVE ADVANTAGE

CUSTOMERS

Copyright ?1999 Ian H. Giddy

BARRIERS TO ENTRY

International Financial Markets 14

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Global Banking: Review I/8

Product Profitability Cycle

Excess returns

Copyright ?1999 Ian H. Giddy

Time

International Financial Markets 15

New Financial Products: Economics of Financial Innovation

l Certain kinds of market imperfections allow hybrids to flourish

l But innovation are readily copied; so only certain kinds of firms can profit from innovations.

l There is a product cycle and profitability cycle of innovations.

Copyright ?1999 Ian H. Giddy

International Financial Markets 16

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