Intercommerical bank Ltd

Relating to the question of international financial integration it will be essential to define the term itself. International financial integration is the development process of steady mutual economic relations between the countries aimed on their further involvement in economical lives of the each other, based on the realization between these countries coordinated intergovernmental economics and politics. It could include: single market, economic and monetary union, free trade area, economic and monetary union, preferential trading area, customs union, complete economic integration.

Being located in Caribbean region Intercommerical bank Ltd. is strongly involved in the process of international financial integration in Caribbean Area. The process of globalization in the present day world touched almost every financial infrastructures around the world.

Operating with finances different institutions should include a number of global factors in order to make the institution profitable. Even operating on the local level bank (in our case Intercommercial Bank Ltd) their activity should correspond to the international standards of business development and business ethics as a part of financial relations. In our era of globalization it will be hard to find any area which is does not co-operate within the international financial market assimilating to the international manners of developing and promoting business. As Intercommercial Bank Ltd. is a part of Jamaica Money Market Brokers and three companies provided by Lakshmi N. Mittal, it also causes certain assimilation to the realities of global changed with the help o international financial integration. Intercommercial Bank Ltd. has to accommodate to the certain facilities and change its strategies. But now it should be still considered to be rather a local bank than regional investment. Participating in the process of international financial integration the banks is rapidly moving to significant changes that seriously influence its strategic and structural changes.

Economic Characteristic of Trinidad and Tobago Area in the aspect of financial integration and globalization.

The investigators define exclusive business opportunities for Trinidad and Tobago area: “Already there is much excitement in the air amongst the government and private sector with the two major conferences taking place in 2009 in Trinidad and Tobago, namely the OAS Summit of the Americas and the Commonwealth Heads of Government Meetings. The business opportunities that are created just by hosting those events are limitless. The large influx of business delegations that accompany the major heads of government to such conferences become major networking targets for Trinidad and Tobago’s business community” (Richard Lewis. 2009) It is essential that in such a facilities increasing of financial integration gives positive results for further development of the area and development of integration co-relation and banking development: “Also in 2009 there will be the launch of the International Finance Centre. By media reports, it has already attracted some big names in the global financial circles as prospective anchor tenants. It will be government’s main focus to become the Financial Centre of the Caribbean. The financial and business sectors bring with them high value added ”“ employees and consultants with global experience and reach” (Richard Lewis. 2009). The investigators insist on the fact that during the recent years the Caribbean area and Trinidad and Tobago in particular will attract a number of investments. That will be the influence of globalization and creating of global market will produce a significant effect on the further development of the area. The great influence of globalization is observed within the energy market: “The domestic energy sector’s growth having experienced significant expansion over the past decade slowed to 0.4 percent in 2008 from 1.7 percent in 2007. Given the decline in crude oil and natural gas prices from US$145 and US$13 per mmbtu in July 2008 to US$48 and US$3.96 respectively in March 2009, the Trinidad and Tobago economy will likely show a decline in GDP to between 1 ”“ 2 percent as the recession in the rest of the world and regional economies contract. This economy, however, is expected to successfully withstand the slowdown of the global economy because of the diversified nature of the energy sector, and because of further diversification into plastics and aluminum, investments in oil and gas explorations Other areas of strength in the economy include the robust financial sector, the low level of external debt and the high level of national savings including the Heritage and Stabilization Fund” (Noel A. Lyon, 2009). According to this dynamics of development, indicating the globalization influence (as the key factors for further changes) it provides a significant impact on decision making a n policy of Intercommercial Bank Ltd.

It is essential that customer’s requirement have grown in the era of globalization supposing the quality of products suggested would be on the international level. The hard currency (Euros or US dollars) often denominate the products. The governmental policy of Trinidad and Tobago is based on rather attracting international investment in the area of financial service. The barriers are much stricter for services of good provided by local manufactures, but not for the banking area. It is essential that in the era of globalization governmental policy is aimed on attraction of international investments to the local. The customers are involved in the globalization process able to choose whether use local banking service or the product provided by global industries. It is essential that such governmental policy has significant impact on Intercommerical Bank Ltd. moving their service on the next level. Still the strategy of the bank is still the same to become the national bank in the local area. As a result the quality of local service raised as Intercommercial Bank Ltd. had to correspond to the demands of international banking. It is too early to speak about moving on international level but even providing such a strategy as achieving national bank service, they go to correspond to the international demands, being a competitor on the market of banking service.

International Financial Integration within Decision Making and Inetrcommercial Bank Ltd. Policies

It will be essential to note that globalizations factors or factors of international financial integration had a serious impact on the Intercommercial Bank Ltd. Being created by Jamaica Money Market Brokers (JMMB), the shareholders entered into strategic alliance with three companies promoted by Lakshmi N. Mittal. Now it could be referred to as a Group and had significantly raised its influence in the area. This strategic alliance in the globalization era let the Intercommercial Bank Ltd. to enter significantly new level if financial and economic relation providing its promotion on the national level. Now it will be possible to day that decision making process within Intercommercial Bank Ltd. is not getting decentralized. Even being a partially devided within four corporations the strategic plans of the group corresponds to the needs of the institution quickly reacting on the changes within the international market.

It will not be an easy task to define how Intercommercial Bank Ltd. accommodates to the realities according to their policies. If we look at the annual report provided by bank specialists and analyze statistical data we will note that the bank is becoming more influential on the local levels easily accommodating to the international strategies. Their Business Development Policies did not undergo significant changes but the ne strategies let to enlarge infrastructure on the local level and think about applying the national status. The previous year let them to open an office within the Port of Spain: “Group continues to be challenged with excessive liquidity and a declining credit demand environment, Net Interest Income represented 52 percent of operating income and closed marginally higher than the prior comparative period by 3 percent. Operating expenses continued to be effectively managed within a 9 percent increase arising out of expenditure related to continued infrastructure build out at existing locations as well as at its newest location in the capital city of Port of Spain. At this location we are pleased to offer a full suite of banking services inclusive of Personal Banking and ABM services under one roof” (Hugh Duncan, 2009). Value Creation Policies is rapidly developing towards the idea of international Value Creation. Now the task is to strengthen the position on the local level and accept the status of national. Further strategies will be announced when the already set aims will be reached.

The Effectiveness of Intercommercial Bank Ltd. Response to Increased International Financial Integration.

The increased financial integration produced certain influence on the International Bank Ltd. The effectiveness of the bank operation is signified in financial performance report provided every year. According to the analysis of the bank specialist the fiscal year 2008-2009 was extremely successful despite the scrutinized international effects which touched Trinidad and Tobago area too: “Despite the unprecedented external economic challenges, fiscal 2008 ”“ 2009 proved to be one of success for the IBL Group, continuing on its path of quality asset growth and profitability. Total assets of the Group closed at $968 million, a marginal decline from prior year following the curtailment of specific investing activities whilst Profit before tax (PBT) closed at $9.76 million a 34% increase over the comparative period after adjusting for extraordinary income of $4.1 million. Return of Average Equity closed at 8.60% (6.9% – 2008 adjusted to reflect core profits) and a sustained Return on Average Assets” (Hugh Duncan, 2009). The following graphs illustrate Core profit of the bank before tax and group operating income. Statistical data perfectly illustrates the effectiveness of the Intercommercial Bank Ltd. Group to the increased financial Integration

The risk managerial group operating co-operating with other infrastructures of the bank could improve its positions according to 2007-2008 fiscal year: “The year ended March 2009 was a particularly challenging one for the global economy which was faced with unprecedented challenges. Despite the challenges of excessive liquidity, rising inflation, decline in credit demand and increased Central Bank monetary policy, the IBL Group continued on its path of profitability and quality asset growth. Apart from the financial achievements, the Bank also sought to fulfill its strategic objective towards becoming a national bank with the establishment of a signature branch in the capital city of Port of Spain. The IBL Group is committed to growth both in terms of quality assets and profitability whilst ensuring sound risk management, provision of coaching and development of all team members and full compliance with statutory and regulatory requirements” (Hugh Duncan, 2009)




The graph provides statistical data from the annual report of Intercommercial Bank Ltd. It shows that during the past year the results have significantly changed for the better. Providing successful assimilation to the new facilities and financial globalization Intercommercial Bank Ltd. is improving his positions in the local level and providing successful development. The rapid development and statistical data show that the effectiveness of international financial integration gives positive dynamics for further development. Significant change is seen between 2005 and 2007 core profit, then we could observe recession and now the core profit before tax is increasing again providing perfect facilities for further development.

Co-operating with Jamaica Money Market Brokers it is rapidly moving towards the international participation in the region and becoming an active participator of business life in the region. The establishment counts only ten years but it reached really great success in the region during this time. According to the annual report and statistical data provided by the bank, the most problem are is risk management development. If we look at the graph #1 we see the significance overfall between 2008 and 2009 years in the core profit scale in the graph. It shows that risk management of the bank should undergo certain changes. International financial integration of the bank started since it has become a part of Jamaica Money Market Brokers and still needs certain accommodation as an institution. Profitable work and team of professional will certainly help further promotion. Perfect potential of the area (it is quite popular resort) attract financial investments in the development and it is essential that in such facilities Intercommercial Bank Ltd (as a representative of local banks) should participate on the equal level with international bank. Risk management is traditionally considered to be one of the most weak subdivisions in the institution: “Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group’s operations and are faced by all business entities. The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management with each business unit” (IBL Financial Report, 2009). Risk Management as a most weak subdivision needs more thorough attention and provision of certain A number of requirements were provided during the last Internal Audit. Among the mentioned requirements were: “requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified, risk mitigation, including insurance, in the fields where it is effective” (IBL Financial Report, 2009). The development of high standards infrastructure has a number of positive and negative effects and during certain time the facilities could change. Operating mainly on the local level Intercommercial Bank Ltd. the same time tries to provide international service in the location it is operating. As a matter of fact not all the beginnings end successfully among the recommendations given due to the last Internal Audit is “training and professional development of ethical and business standards” (IBL Financial Report, 2009). This area could be also defined as the one needed significant attention and further development for further promotion on the national and regional levels. Being a part of International Corporations (such as Mittal Steel) Intercommercial Bank Ltd. got to correspond the international standards of business, business ethics and financial operation as it will be very important on the level international relations on the certain area (Caribbean in our case).


In the end I would like to note that Caribbean economical area has perfect perspectives for business and financial development. That is why it the increased financial integration in this area has become a typical factor. It is really significant factor for all financial structures of the area and it would be essential that local and international policy of financial establishments of the area undergo certain changes.

Intercommercial Bank Ltd. is so called young group that is why assimilating to the certain facilities would not be a real problem for the establishment. I even think that these changes would rather have positive effects on the structure and operating of the bank. As we have seen from the previous development under the influence of international financial integration has produces positive role for the development of Intercommercial Bank Ltd. Co-operating with International institutions it will obtain experience that could be used for improving weak areas and rising the strong ones. Globalization and international financial integration will provide a number of perfect chances for further developments and raising to the international level in service operating. The increased financial integration would probably be a good chance for the bank to enter not only Caribbean area as an international market but make it more wide and significant.

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