DALLAS -- The Texas bankng crisis wasn't bad for everyone.
A new report from the Federal Reserve Bank of Dallas says that Foreign banks' share of commercial and industrial lending jumped from 1% to an incredible 28%, or $6.6 billion in loans, during the eight-year period ending in 1993. That overlapped with the Texas banking crisis.
Susan Tetley, the report's author, said that foreign banks were able to grow because of large loan limits and the very narrow focus of their agency offices here.
It also did not hurt that Texas had eased restrictions of foreign institutions in 1985 as the state's economy plunged into recession. "About the time they liberalized the laws, the domestic banks were having their troubles," Ms. Tetley said.
However, observers say Texas may now illustrate the retrenchment from corporate lending by some foreign banks expected in coming years.
"U.S. banks are getting more competitive after getting through some of their problems," said Cynthia Glassman, a business lending expert with Furash & Co. in Washington, D.C. "And foreign banks have experienced some of the credit-quality problems themselves at home."
Lawrence Uhlick, executive director of the Institute of International Bankers, agreed: "It is clear there has been a lot less liquidity by some [foreign] banks and a diminished role," he said.
At Chemical Banking Corp.'s Texas Commerce Bank unit, corporate banking executives say there will continue to be syndicalions opportunity for well-capitalized players.
"Most of the foreign banks are emphasizing investment-grade companies and higher and that has been a very active business," said Howard Schram, senior vice president and head of syndications at the Houston bank. "We consider the foreign banks our partners."
Indeed, even though many foreign banks contacted said they were largely syndication players, some have cut out specialties that flourished during the late 1980s when the state's banks were crippled by credit-quality problems.
Consider the story of Banque Paribas. With an estimated 50 people and two offices, it has one of the larger and more diversified foreign presences in Texas. The French bank opened here as a letter-of-credit provider in the early 1980s, but significantly expanded as the oil crisis struck domestic banks.
"Our growth rate really started to move then," said Tim Donnon, regional general manager for Banque Paribas.
While the company is a syndication player in Texas, it also has a niche in the structured and leveraged finance area, where it focuses on non-investment grade deals. Observers say the story illustrates the ability of foreign banks to provide niche expertise when most domestics have a cradle-to-grave focus.
"Selectively, we can be quite competitive," he said.
