Why Subsidiaries/Branches?


The main reasons for international banks to establish offshore subsidiaries/branches are:

  • Promote international presence and image of the bank
  • Enhance international banking capabilities by providing a full array of services including letters of credit, creation of bankers’ acceptances and financing of international import and export loan transactions
  • Diversify and develop new sources of funding, primarily through the development of offshore
    deposits and issuance of tax-free commercial paper
  • No deposit insurance premium or reserve requirements, which serve to lower the cost of
    raising foreign deposits
  • The ability to take advantage of interest rate differentials, which occur from time to time,
    between domestic and Eurodollar deposit rates
  • Offshore Fiduciary opportunities to underlying clients.


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