What is a foreign branch?

Foreign branch concerns the type of bank that is open in the country as a branch of a bank that already exists in another country. A foreign branch is usually a product of effectiveness, because it is mainly due to the need for the head bank or parent bank to take advantage of certain characteristics associated with this type of banking. The main distinguishing factor between a foreign branch and other banks is that the capital base is greater than other similar banks that are a subsidiary of the parent or main branch.

When a foreign branch is open in another country in another country, such a bank will have to be bound by laws in the mother country and laws in the new country. This means that the banking laws and regulations that control the behavior of banks in a foreign country will be as binding on the activities of the bank as the laws that manage the same in the country of origin of banks. As such, if a bank that dates back to the country and opens a foreign branch in country B, regulations that control the behavior of banks in the country B, will lead the bank of the samethem as regulations that control the behavior of banks in country A.

One of the main reasons for the establishment of a foreign branch is the need for a bank that serves the interest of multinational companies to benefit from this association through the establishment of branches in the country of origin of multinational clients. The possibilities in their number of services in other words can serve as a source of competitive ADVA increased profits for the parent bank. The disadvantage with this type of bank is the fact that the merger of various laws and regulations from maternal and local countries could prove to be too much burden for a foreign branch that could keep up.