CHOICE OF STRATEGIC ALTERNATIVE OF TRANSNATIONAL BANKING CAPITAL EXPANSION: THE MODERN PARADIGM, REALIES AND PROSPECTS

Abstract

The choice of a particular form of bank presence in the foreign market depends, first of all, on two main factors - the regulatory legal system and the chosen strategy of the bank. The last one takes into account the definition of the target customer segments and the total costs and risks that a banking institution may take when entering the market. In addition to this, the laws of the countries may limit the creation and activity of bank presence particular form in some way due to the specificity.The aim of this article is to substantiate the scientific principles of strategic alternatives choice to the expansion of transnational banking capital.The article explores the strategic alternatives to transnational banking capital intervention in the country’s financial system: by opening a representative office, building a branch network, establishing a bank from scratch, acquiring or merging a bank. The main motives of bank merger and acquisition agreements have been identified: diversification and integration for the purpose of quick access to new markets, expansion of the range of services offered, economies of scale, overcoming of insufficient capitalization, tax motives, complementary resources combining, possibility of excess efficiencies activities utilization, the acquisition of the bank for further sale of it in parts for profit.It is proposed to choose the optimal strategic alternative by forecasting the probability of financial resonance of the transnational bank subsidiaries activities on the basis of their financial-investment, marketing, operational and management interaction in the functioning process.It was found that in the future, the strategy of transnational banks should be more flexible and it should focus on participation in capital without a controlling stake, aim at concluding cooperative agreements with a clear target and partial takeovers in order to borrow, primarily, local experience, and not to transfer the know-how of the parent company.