1. What were RBC’s supreme objectives in opening a representative office in Thailand?
When RBC opened a representative office in Thailand in the early 1980’s, its supreme goal was to get a full branch license. RBC felt that Thailand had the potential to become a local monetary center, and they definitely wished to have a recognized presence in a country with this sort of chance. RBC likewise had the corporate objective of increasing the quantity of its business generated from non-Canadian sources.
With RBC areas in Asia already accounting for 16% of their overall worldwide earning possessions, opening a brand-new branch in Asia promised to help accomplish the bank’s business objective.
2. How big is the preliminary staff for the workplace and what is the approximated pretax profit?
The initial staff of the office was five individuals; a basic manager that was currently a skilled banker within the RBC network, and the other 4 employee were hired locally. The projected pretax revenue is 0,000.
3. What are RBC’s four major business lines in its Asia Pacific network?
RBC’s 4 significant organisation lines in its Asia Pacific network are: banks and trade, multinational financing, treasury services, and global private banking.
4. What are the restrictions of BIBF licenses?
A BIBG license enables a bank entry into a strictly controlled market with numerous constraints in place. A few of these limitations are: foreign banks are restricted to just one office, banks can not handle regional currency, only particular transactions can be carried out, and banks making loans require to borrow those funds from overseas.
5. What are the benefits of the possible updating of RBC’s operations in Thailand to a branch status?
The benefit of the possible upgrading of RBC’s operations in Thailand to branch status is that a few of the BIBF license’s restrictions are no longer in place. A bank in Thailand that has accomplished branch status can participate in a bigger variety of company, and can deal in the regional currency.
6. What are Thailand’s most essential exports?
Thailand’s most important exports are tourism and manufactured products. Manufactured products such as: clothing, electronic parts and components, furniture, and jewelry account for 81% of the nation’s export volume. With seven million people going to Thailand each year, tourism accounts for 13% of the country’s total export revenue.
7. What is the “current” (1997) situation in Thailand?
After a decade of sustained growth, the current situation in Thailand is one of unprecedented economic turmoil. The countries exports have halted, foreign investors have become hesitant with their money due to the account deficit, the stock market plummeted, and big loans made by banks have caused a large accumulation of debt. Typical causes of an economic crisis, such as: high debt, large current account deficit, deregulation of the banking industry without proper controls in place, and a semi-fixed exchange rate are all at the forefront of the nation’s current economic state.
8. What are the highlights of the IMF’s bailout of Thailand?
The IMF’s bailout of Thailand was an agreement that would give the Thai government $16.7 billion in loans in exchange for the country adopting a tough program of economic and financial reforms. These reforms required the closing of 16 finance firms; these 16 firms would either have to merge with other banks, or submit their own rehabilitation plan. This agreement with the IMF allowed Thailand to resume its path of economic growth that it had been enjoying for the previous decade, and to also implement two significant reforms: the restoration of budgetary control, and the restructuring of the country’s rickety and corrupt financial system.
As a result of this arrangement between Thailand and the IMF, the Thai government was required to report its reserves to them every two weeks. This biweekly report was needed to ensure that the Thai government was keeping the minimum required foreign reserve amount laid out by the IMF. Lastly, this agreement did not allow the Thai government to bailout troubled financial institutions by assisting their creditors.
9. As RBC’s representative in Thailand you need to prepare a detailed recommendation for senior management to either: A. Stay in the country and “weather the storm”, which perhaps means to take losses for an extended period of time B. Cut your losses now and have the bank focus its efforts elsewhere, which means forgetting about getting back in the country in the foreseeable future.
As RBC’s representative in Thailand I would recommend to senior management that we stay in the country and “weather the storm,” despite the fact that this decision will likely result in losses in the immediate future. The country of Thailand has great economic potential and could possibly become a regional financial center one day. Prior to the economic crisis of 1997, the country of Thailand had seen a decade of continued economic growth and was even considered the world’s fastest growing economy between 1984 and 1990.
Courtesy of the IMF’s $16.7 billion bailout of Thailand, the bank of Thailand’s governor declared that the country’s economy was headed for recovery in three years. Leaving the county now is not a good idea because should the economy recover and continue to grow, it would be a difficult and long process to reacquire even BIBF status in the country. In order to reenter Thailand in the future the country would have to invite RBC to apply, and then RBC would need to pass the application process.
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