The new chairman of the Institute of International Bankers, JeanClaude Gruffat, disagrees with the Federal Reserve Bank of New York about how big a chunk of U.S. commercial lending is controlled by foreign banks.
A recent New York Fed study attributes 45% of the U.S. market share to banks based in other countries. But Mr. Gruffat said this figure is misleading because it includes purchases of commercial loans originated by American counterparts.
"We buy money-center bank loans," explained Mr. Gruffat, general manager in North America for France's Banque Indosuez. "I question how much of that 45% are really loans syndicated by U.S. banks who got all the up-front fees and then sold them off to other banks."
And foreign banks purchase so many U.S. commercial loans, Mr. Gruffat added, because their U.S. counterparts need to keep clearing their books.
The market share of foreign banks is not the only misconception that Mr. Gruffat is determined to correct.
Contrary to broadly held beliefs, foreign banks are not creaming off millions of dollars in profits from their U.S. operations, he said,
"It's not all that rosy," he noted. "Foreign banks have high operating costs, low spreads - and doing business in this country is incredibly expensive."
Although foreign banks are serving many U.S. borrowers, he added, they still don't have critical corporate relationships U.S. banks have.
Broad-Based Membership Priority
The New York-based institute represents 214 foreign banks with offices in the United States. Mr. Gruffat's most immediate goal as chairman is to get other eligible banks to join.
"We don't want to be the representative of only the big Canadian, European, and Japanese banks," he said. "We want to be able to speak on behalf of all foreign banks - and that includes Taiwanese, [South] Korean, and Latin American banks."
Mr. Gruffat, 47, was born in Lyon, France, and graduated from the University of Lyon with a doctorate in law and a master's degree in political science.
Global Perspective
From 1970 to 1973, he taught at the University of Abidjan in the Ivory Coast, before joining Banque de l'Indochine, which later merged with Banque de Suez to become Indosuez.
He subsequently served as head of treasury and administration in Bangkok, 1974-1978; agency manager in Al Khoba, Saudi Arabia, 1978-1981; regional manager in Djeddah, Saudi Arabia, 1981-1983; and regional manager in Hong Kong for Hong Kong, China, and Macau, 1983-1987.
Mr. Gruffat took over his present position in 1987 and currently resides in Manhattan with his wife and two children.
After the sands of Saudi Arabia and the frenetic business pace of Hong Kong, the French banker finds New York a welcome change.
"There's still a lot of work, but I find I have time for my family and for other interests like opera and the theater," he said.
