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Banks and other financial institutions facilitate international trade and investment by providing financial exchange services, insurance against offshore risks and access to capital.
Commercial banks facilitate trade transactions by providing and clearing Letters of Credit, which are one of the principal methods of financing transactions in goods and services. Investment bankers negotiate financing for both new and established ventures, including those in other countries. They market debt and equity securities and supervise the creation of joint ventures and partnerships. Commercial banks engage in these activities through investment bank subsidiaries or affiliates. Growth in these areas as a result of expanding trade has increased the need for investment analysts, credit analysts and other types of business analysts.
The expansion of American companies into new markets has also created the need for more sophisticated risk analysis and credit insurance. Similarly, business has increased for brokers who provide insurance against damage during transit and other risks associated with physically moving goods around the world.
International development banks provide capital for economic and social development in developing countries and emerging markets. These are projects that tend to be too large or too risky for commercial investment banks. Many financial and economic analysts are engaged in assessing projects and their eligibility for various forms of concessionary financing.
Trends
The globalization of business, the internationalization of banking and the growth of world markets have combined with rapid changes in information and communications technologies to drive steady growth of the international financial services sector. These developments have also changed the nature of the skills and aptitudes that are required of people who work in the industry.
On the technological side, the international banking community has embraced new systems for the transmission and processing of financial data. In the future, expansion of the broadband infrastructure and adoption of common international standards is likely to lead to further expansion of international financial services.
Another factor contributing to the development of a global financial market is the adoption of new international agreements to reduce trade barriers. In December 1997, 70 countries representing 95 percent of the global financial services market signed a WTO agreement on financial services.
There have also been significant changes in the operations of international development banks. There was a substantial expansion of development bank activity in the 80s and 90s, partly as a result of the end of the Cold War. Recently, international development banks have begun coordinating their activities to prevent the collapse of the Asian economies, the economies of the former Soviet Union, and the economies of large developing nations like Brazil and Mexico. As a result, a broader range of technical, cultural and language skills is required of their officers.
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Most large corporations that operate in international markets require International Treasurers or comparable financial officers. These professionals deal with differences in international business practices, terminology and expectations. The treasury department of an multinational corporation would be expected to review the business plans of corporate planners and senior executives and advise them of financial flow and currency conversion factors that need to be taken into account.
A related duty for treasury executives is to advise on the flow of funds into international investments. Balancing international cash flows using a variety of currencies is a fairly complex task, and the maintenance of pools of cash in various markets is an essential part of the strategic planning process. Balancing returns in risks in all of these markets is driving a strong demand for analysts who can plan and execute a practical optimization strategy.
Qualifications
People engaged in this field are expected to have strong accounting skills, and/or an MBA with an emphasis on financial analysis.
Skills and Knowledge
Detailed knowledge of the international financial system and the sources and application of funds is essential. In order to place funds, some sector or market-specific knowledge is often required, although people in these positions may employ country or sector specialists to do detailed analysis on their behalf.
International currency manipulations require advanced quantitative skills, and familiarity with computers and other advanced technologies. Strong presentation and negotiation skills are usually necessary because these financial experts are expected to provide authoritative advice to top company officials.
People in this position should be able to apply risk analysis techniques and understand the principles of credit analysis, even though those functions are likely to be provided by junior associates.
Aptitudes
International Treasurers are high profile executives, who must be at ease providing authoritative advice on critical business decisions at the highest levels. These individuals require the ability to see the big picture while overseeing more specialized functions. Individuals within this career track should enjoy working with quantitative data in situations where the standards of accuracy are extremely high.
^ TopCommercial Bank Officer
Financial institutions such as banks serve as depositories for cash and financial instruments and offer loans, investment counseling, consumer credit, trust management, and other financial services at the consumer level.
At the commercial level, where loans to business clients are involved, Commercial Bank Officers are required to monitor the extension of credit, assess the risk of transactions such as large commercial loans, analyze the current state of investments and loans, and develop projections and forecasts of the probable outcome of various investments and loans. Although domestic banking activity in most financial institutions is handled separately from international banking, the growth in international business and the increasing movement of US business into international markets means that even domestic banking transactions may now take on an international dimension, since commercial clients may be seeking credit for international activities or may be affected by activities in World markets. Thus there is a growth in demand for bank officers who have an understanding of international financial issues. While many bank officers in commercial banks do not concentrate on international issues, knowledge of international issues plays a role in decision-making when conducting credit analysis on many domestic clients.
Since credit analysis is the most important activity in commercial banking, knowledge of exchange rates, financial practices in World countries and some familiarity with how to apply risk analysis to credit analysis are important skills, even if they are not used as intensively as in international banking activities.
Qualifications
Traditionally, US commercial banks have been more flexible in their hiring practices than other institutions, and a variety of backgrounds have been acceptable for entry into banking. Moreover, the largest banks in the United States have devoted a great deal of resources to in-house training. In recent years, however, the emphasis has been shifting toward the possession of formal financial training. As with other financial positions, preferred backgrounds include an MBA or Bachelor of Commerce. Some accounting background is necessary but may be acquired on the job or as part of the bank’s in-house training program.
Skills and Aptitudes
Some familiarities with other languages and business cultures is an advantage, although it may not always be necessary for entry level positions. A typical career path involves several years in domestic banking (recent advertisements suggest 6-10 years), followed by a move to the international department of a bank. As with other financial jobs, attention to detail is a requisite, computer literacy is necessary, and the ability to carry out complex quantitative analysis is assumed.
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