What is a subsidiary?

The subsidiary is a banking operation that is incorporated into the country where it operates, but is owned by the parent bank that is integrated into another nation. This particular banking model is useful in that the arrangement only requires that a subsidiary operates according to regulations that apply to banking in the host country. Daughters are not bound by banking regulations that apply to the parent bank in a nation or nations where the parent is incorporated.

There are some important differences between the daughter of the bank and the foreign branch. With the latter, the bank is bound by regulations that apply to parents and regulations that apply in a country where the bank actually operates. In addition, the foreign branch can also issue significantly more loans than a subsidiary, because the assets held by the parent affect the amount of loans. On the other hand, the subsidiary has the advantage of subscribing securities, a function that is not necessarily possible at a foreign branch.

For this reason, banking institutions look closely at what they want to achieve in terms of introducing the presence in another country. If the aim is able to offer loans in the host country, the model of a foreign branch will be a logical choice, because this approach allows the bank to offer more in the way of loan and loan options. If the main reason for establishing a bank presence in the host country is related to the purchase and sale of securities, the structuring of a new entity as a subsidiary bank would provide the project. For example, if the parent bank based in the United States wanted to open an operation in the UK for the purpose of offering security transactions to consumers, the best choice would be a subsidiary.

In terms of services offered by a subsidy by bank, they must be in accordance with any regulations that apply to all banking facilities that operate in the hostTelic country. This allows banks to be competitive with domestic financial institutions and other foreign banks that have the presence in the nation. When evaluating the services offered by the Bank, it is important to compare these rates with values ​​available from other institutions and also look at the conditions that apply to customer accounts.