Most countries permit banks to underwrite, deal in, and broker all kinds of securities and mutual funds without restrictions, according to a survey just released by the Institute of International Bankers.
The survey found that 25 out of 42 countries around the world allow banks unlimited investment banking powers.
Another 16 countries, including the United States, allow banks limited investment banking powers.
Only one of the 42 countries that responded to the survey, Ukraine, does not allow its banks to engage in securities activities at all.
U.S. Banks Active Abroad
"The institute's global survey clearly shows that banking and securities are integrated activities in almost every country," said Lawrence Uhlick, executive director and general counsel at the institute.
"And I would emphasize that American banks are very active in securities activities outside the United States even though greatly constrained in their home market."
The annual survey, entitled Regulatory and Market Developments, reviews the powers banks have to deal in securities, insurance, and real estate in different countries.
In addition to securities powers, the survey examines restrictions imposed on banks investing in industrial firms and investment by industrial firms in banks.
Perhaps the most striking feature of the survey is the wide range of limitations imposed on banks' abilities to underwrite and deal in securities in different countries.
In some countries, such as Pakistan, securities dealings are restricted to government paper.
In others, such as Japan, the restrictions are fairly complex, and allow banks to engage in debt underwriting through subsidiaries but not in underwriting, distributing or dealing in equities.
In the U.S., banks can underwrite debt and equity only through subsidiaries with the approval of the Federal Reserve Board and only to a certain extent.
In contrast, almost all European countries grant their banks unlimited securities powers.
The survey found even larger differences when it comes to allowing banks to underwrite and sell insurance as a principal and agent, and invest in, develop and manage real estate.
Most Western European countries allow banks to underwrite and sell insurance through subsidiaries without restrictions.
However, other countries such as Bahrain, Chile, India, Japan, Pakistan, Peru, and Uruguay do not.
Still others, including the U.S., impose a range of restrictions that effectively limit banks' ability to deal in insurance.
Some Real Estate Bars
An even greater variety of laws governs banks' ability to invest in real estate.
Austria, Cayman Islands, France, Ireland, the Netherlands, New Zealand, Poland, Spain, Switzerland, and the United Kingdom allow banks unlimited powers to invest in real estate.
Others, like the United States, limit banks' powers to invest in real estate to banking premises.
Finally, some countries like Uruguay, Bahrain, and Chile completely ban banks from investing in real estate.
