With a financial office established in Sao Paulo, Brazil, SA Bank has acquired our first multinational customer. ABC Corporation has asked for pertinent information in regards to opening a production plant in Latin America. Within this document we will provide a summary of SA Bank in Part One and then in Part Two address the questions asked by ABC such as choice of countries in the region and foreign exchange aspects having a direct effect on the financing of ABC plant. We will offer recommendations for appropriate foreign exchange instruments, explain the need to hedge foreign exchange, the risks involved with foreign currency, and government regulations in the region that would or could affect earnings and cash flow.
Summary of SA Bank
SA Bank, seeking to better serve an expanding multinational customer base, has established a branch in the financial district of São Paulo, Brazil. Extensive research of developing countries in the global environment led us to Brazil due to the steady economic recovery from the 2008 global financial crisis and substantial efforts of the Brazilian government to slow the inflationary progress while creating a welcoming arena for direct foreign investment by multinational organizations. Additional benefits to this location include a wealth of natural resources, interest rate, exchange rate and economic stability, the vast array of multinational companies establishing holdings in the area through direct foreign investments, the welcoming and beneficial political and legal atmosphere, and the expediential growth of viable markets, all of which is conducive for sustainable long term growth for our stakeholders and organization.
Meeting the challenges of cultural differences between the collective society of Latin America and the independent nature of our own culture presented an interesting learning curve however, we have solved those particular issues with our two fold approach to...