Question

You are employed to one of the leading banks in Canada and one of your key client has informed you that he would like to expand his business in another country (choose a country of choice. He needs a loan of $1.5M to expand his business. Your client has asked you to recommend specific choices in terms of bank and country. Your project should include but not limited to the following:

An executive summary is required - a summary of the paper  

1. The country’s financial market – policies the government has in place to:

(a) alleviate a financial crisis

(b) regulations in place to protect clients

(c) the risk of the country – political, economic , legal and cultural risk -  

2. From the country of choice identify a bank you would recommend to your client and why, include the following in your research –overview of the bank

1. the strength of the bank,

2. presence of the bank – are there branches throughout the country

3. services offered by the bank

4. determine whether the bank has a correspondence relationship with a Canadian bank?

5. what are the banking restrictions in the foreign country – example to open an account or foreign exchange restrictions -  

3. Identify sources of funding for this move (the best type of loan and why).

1. Recommend the source of funding and identify the interest rate charged.

2. Base on the country’s foreign exchange rate would it be better for him to borrow the money overseas or convert his Canadian dollars to the country’s currency and why? (use current foreign exchange rate). Use examples

3. Outline the foreign exchange implications for example how will the business be affected if the Canadian dollar appreciate or depreciate or the currency of the foreign country appreciate or depreciate -  

4. Advise your client of three ways in which he can mitigate against foreign exchange rate, explain each 

5. Identify and explain any conditions on the repatriation of profit and capital from the destination country  

CHOSEN COUNTRY: UAE

Answer 1

Bank will be Emirates NBD

• Strength

Emirates NBD, the leading banking group in the region, was formed on 19 June 1963, when H.H. Late Sheikh Rashid bin Saeed Al Maktoum signed the Charter of Incorporation of the National Bank of Dubai (NBD) which became the first National Bank established in Dubai and the United Arab Emirates (UAE). With the blessings of H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, NBD merged with Emirates Bank International (EBI) on 06 March 2007, to form Emirates NBD, the largest banking group in the region by assets. On 16 October 2007, the shares of Emirates NBD were officially listed on the Dubai Financial Market (DFM). The merger between EBI and NBD to create Emirates NBD, became a regional consolidation blueprint for the banking and finance sector as it combined the second and fourth largest banks in the UAE to form a banking champion capable of delivering enhanced value across corporate, retail, private, Islamic and investment banking throughout the region.

As at 31st December 2018, total assets were AED 500.3 Billion, (equivalent to approx. USD 136 Billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank was declared the Most Innovative Financial Services Organization of the Year at the 2017 BAI Global Innovation Awards.

• Branches

The bank currently has 230 branches and 1069 ATMs and SDMs in the UAE and overseas and a large social media following, being the only bank in the Middle East ranked among the top 20 in the ‘Power 100 Social Media Rankings’, compiled by The Financial Brand. The Group has operations in the UAE, the Kingdom of Saudi Arabia, Egypt, India, Singapore, the United Kingdom and representative offices in China and Indonesia. On 8 November 2017, it opened operations in Mumbai, India. The Mumbai branch marks Emirates NBD's fifth international branch outside of its UAE network.

The Group is an active participant and supporter of the UAE’s main development and community initiatives, in close alignment with the UAE government’s strategies, including financial literacy and advocacy for inclusion of People with Disabilities under its #TogetherLimitless platform. Emirates NBD Group is an Official Premier Partner of Expo 2020 Dubai.

Currently, more than 9,000 people, representing 70 nationalities, are employed by Emirates NBD, making it one of the largest and most culturally diversified employers in the UAE. As a national banking champion, Emirates NBD is an ambassador of economic and social progress for the entire UAE to the world.

• Services

Trust Service Discretionary trusts

• Charitable trusts
• Reserve power trusts
• Offshore company incorporation and administration

Advisory Services

• Spot FX Contract
• We offer Spot FX (Value Date: T+2) conversions on most major currencies, be it for an account to account transfer or for outward remittance.
• Forward FX Contract
• FX Order Watch
• Options on FX & Commodities
• Dual Currency Investments (DCIs)
• Non Deliverable Forwards ( NDFs)
• Derivative Trading System (DTS) Account - Margin Trading
• Gold Investment Account (XAU) & Gold Systematic Investment Plan (SIP)
• Emirates NBD Gold Certificates
• Gold Loan
• Fixed Gold
• Commodities Funds

Credit Services

D.       Bank have correspondence relationship with Canadians

E.       keeping on top of all the different rules and regulations can be hard work. So Emirates

NBD does what it can to help its customers understand how these changes may potentially impact their business.

         

1. Source of Funding will b ebased on type of requirement if they wants to construst then Bridge loan will be suitable & many other options are available depending on the type of Requirements (i.e Cash Credit, LOU, LOC,PC etc)

2. UAE loan will be good for then as they will borrow from UAE only & will not bear any risk related to conversion or exchange rate which may change at any point of time

3. If they will take loan in UAE curreny then the exchange rate risk will be nailify but if they take loan in Canadian currency then if UAE currency appreciate then the liability will be decrease but in case of viseversa their liability will be increase as UAE currency depreciate because they in that case have to pay more