2. Types of international banking expansion

The financial crisis and the subsequent distrust of the existing banks have created an opportunity for new competitors to enter the market for financial services. An international bank is able to adopt for its presence in a country various forms. More specifically the Creation of representative office is the simplest form of extension, as it formed for an initial investigation of the foreigner banking market. The bank's branches of this form do not handle any funds neither they execute financier transactions, while the bank that they represent, is not considered present in the foreigner country, either legally or for tax reasons. The basic advantages of the representative office are:

1) cheap way of work search and investigation of the banking market with a small operation cost;

2) the office does not have problems with the correspondents banks as it does not have any financial flows;

3) it is not involved with the legal and tax regime of the country of installation and a direct control of all the work of the branch exists from the 'mother' bank. On the other hand, the most essential disadvantage of the representative office is the limited field of action.

Today, the most common form of direct extension constitutes the company's branch. Even if it maintains, for internal reasons, its own accountant books, however, from a legal side its sizes are added and included in those of the 'mother' bank. A branch carries out all the banking works, and the control of 'mother' bank is direct. The branch presents in his operation some disadvantages, as: the height of investment, both in constant equipment and in personnel, is very high. Particularly if it wants to extend his work in retail banking, depending on the legislation of the country where it is located, the entire bank-mother can be considered responsible. This is also the main reason that a lot of banking groups they create subsidiary companies and no branches.

The subsidiary company has legal and accountant independence and follows the laws and the rules of the banking system of the country where it is located. It constitutes the unique solution for extension, when the legal frame of the country prohibits the foundation of branches. Among the advantages of a subsidiary company is the autonomous legal and accountant presence that exempts the maternal bank from potential entanglements and responsibilities and bigger independence in the decision-making. The disadvantage is the loss of the complete control of the 'mother' bank in the decisions of the subsidiary company.

Another form of international banking is the agency. The agency constitutes an intermediate form of extension, between representative office and branch. It does not accept deposits from residents of the country where it is located, however, it develops a big activity in the sector the commercial and industrial credits and in the financing of international transactions.

Another form of presence is the indirect installation. The bank selects no its natural presence in the foreign country, but its collaboration with local institutions. The forms that this collaboration could take are:

- Connected bank. The foreigner bank decides its attendance in the participial capital of the bank in the other country. This attendance is subsidiary. The local bank maintains its name and the control in its administration.

- Joint venture – Consortium Bank. The C.B. is common company (joint venture) with shareholders from two or more banks of different nationalities. The C.B. is an autonomous legal entity and it functions n a permanent base. In international joint ventures between a foreign multinational and a domestic firm, the MNC usually provides the superior technology, management knowhow, capital, access to finance, etc., while the domestic firm provides a knowledge of local conditions, access to distribution channels.

- Off Shore banking activities (Off Shore). The bank is installed in a foreigner country, in order to provide services not in residents of this country. The state of installation places as a condition that the activities are “Off Shore”, which means that they concern transactions in exchange between residents who are not physical or legal

agents, from whom one is the foreigner bank or the responsible permitted native bank, that functions in the off shore market.

- Cross-border banking transactions. Contrary to the off shore banking activities, in the cross-border banking transactions, the involved financier institutions include itself organically in the financier system of the country where it is located. With the globalisation of the financial industry the ability to provide cross-border financial services has become increasingly significant and the need for a physical presence in target markets has been reduced.