Managing Multinational operations
Acme Company like most business organizations engaged in choosing a global business strategy to assist in dealing with current emerging business trends. This is the reason why some companies seek the support from banks to help in managing their working capital. Therefore, selection of a bank that can meet a company’s requirement and perform the financial tasks on behalf of the company is of immense importance, (Varerie& Hargerty 2008). From my research, I established three main international banking institutions and include; the Bank of America, the HSBC and the Citibank, (The world’s biggest banks 2008). According to Acme Company’s list of assumptions, I chose the HSBC bank. The bank is the best placed to meet the company’s requirement.
HSBC
This company established in 1865 although the holding founded in 1991 by Sir Thomas Sutherland. This is a public limited corporation that deals in the banking industry. It deals majorly in finance and insurance, mortgages, asset management, corporate banking among others. By offering these services, I think the bank will take care of Acme’s international working capital management requirements hence help it in achieving its target goals.
Local lending sources
HSBC accepts local lending to banks and individuals for operating cash. This bank offers both commercial banking and retail banking services to businesses and individuals. Acme in choosing the bank guaranteed financial help hence will be capable of getting operating cash to run the company. The bank had a capital base of about $ 2.418 billion as at June 2008 as well as over 3 million commercial and retail customers, (Valerie & Hargerty 2008). Unlike Citibank and the American Banks, this bank registers a massive profit and thus making it possible to serve all customers with financial needs.
Availability of subsidiaries
HSBC bank has several subsidiaries in all continents compared Citibank and the American Bank. For instance, this bank has subsidiaries in Latin America, Asia Pacific, Middle East, North America and Europe, (Ram 2008). Citibank bank has similar subsidiaries though the subsidiaries are not well developed as compared to HSBC. By having subsidiaries in South America and Asia, the bank will make it possible for Acme Company to import materials and parts and later assemble them ready for export.
Centralized cash management
HSBC offers corporate banking, investment banking, payments, and trade services as well as cash management to its customers. International banks such as Citibank and the American Bank have yet to develop some of the services hence leaves HSBC as the only provider of services. Acme Company has no option but to choose HSBC since it will help the company in managing its cash.
Need for short-term investment vehicles for excess cash balances.
The international banking and markets is an investment branch of HSBC offering investment banking as well as financial solutions to corporate banking, (Valerie & Hargerty 2008). The sub-branch can offer short –term venture vehicles hence enabling Acme Company to perform excess cash balances. This is possible since the company earns profits from the vehicle investment thus making it possible to balance the income and manage its finance effectively. This service is not accessible in many global financial institutions.
Need for foreign exchange and forward market services
HSBC as an international bank offers services in foreign exchange and money markets. Consequently, the bank also provides Internet banking compared to other banks. These services enable Acme Company to transact daily operations through Internet and simplify its dealings with foreign exchange. These services cannot be found in Citibank or the American bank since they are still far below HSBC.
Payment of bills in both local and other currencies
HSBC by offering the services of payments through both local and foreign currencies is suitable for Acme Company, (Ram 2008). Even though, Citibank and the American Bank provide similar services, these services are of low quality and unreliable as these banks still yet fully develop these services. Acme will achieve its goals by involving HSBC in their financial services.
References
Ram, V. (2008) “HSBC Gets Back In Touch With Its Roots” Forbes, 03.10.08
“The world’s biggest banks”. (2006) The Economist. Web 18 July 2011.
<http://www.economist.com/markets/indicators/displaystory.cfm?story_id=7141354>.
Valerie, B., Hagerty, J. S. (2008). “Behind Bank of America’s Big Gamble”. The Wall Street
Journal: pp. A1, A5 Web 18 July, 2011.
<http://online.wsj.com/article/SB120005404048583617.html>
