When Banc One Corp. chairman John B. McCoy turned up at an international banking conference in Boca Raton, Fla., last May, he had more than an academic interest in the proceedings.
"We have very positive views on international banking as we take 62 separate banks and move toward a more centralized organization," he said in a speech this year to the Bankers Association for Foreign Trade's annual meeting in Dallas.
Mr. McCoy dropped few hints about his company's plans. But since then, Banc One's ambitions have become more evident.
Unlike money-center banks building global capital markets operations or retail and commercial banking operations in foreign lands, Columbus, Ohio- based Banc One is putting together a network to meet the international needs of more than 15,000 small and midsize companies in its 13-state territory. Its capabilities, executives said, include anything from export financing to cross-border payment services to cash management and foreign exchange.
"Trade is payment, and banks are the financial intermediaries in the payment process," said Darin Narayana, president and chief executive officer of Banc One International Corp., the Dallas-based unit set up last year to spearhead the international effort. "It's that simple."
Deceptively so, because Banc One is a latecomer to the international arena and must play catch-up with other banking companies, including superregional competitors like NationsBank Corp. and Norwest Corp.
"They came late to the realization that many of their small and medium- size companies have international needs and that they needed to build a low-cost network that would centralize the processing and decentralize the distribution," said J. Robert Hudspeth, a Dallas consultant on international banking.
"Many of their small and middle-market customers are much more internationally focused than they had been, so it certainly makes sense to accommodate them, said Joseph C. Duwan, a banking analyst at Keefe, Bruyette & Woods Inc.
Building a business capable of arranging low-risk trade financing and providing fast, reliable payments for thousands of companies is also no easy task.
"It's like being in a department store and trying to sell while the building is being renovated," joked Mr. Narayana, who joined Banc One last year after 26 years in international and corporate banking at Norwest in Minneapolis.
Banc One executives said one reason behind the international thrust is its broader plan to centralize retail and commercial banking operations at the more than 60 banks it has acquired in the past several years. They also wanted to keep up with the fast growth in exports by U.S. companies.
Another plus: The international activities Banc One is targeting are largely fee-based and do not require large amounts of capital, while margins on international payments can be as high as 30%.
"We decided our basic strength was in our U.S. franchise and that we would build on that franchise," Mr. Narayana said.
Banc One picked Dallas as its international launching pad because much of its international business was already being done out of Texas and because of good airline service, a ready supply of bilingual workers, and longstanding business links to Latin America.
Although much of the business the bank is building revolves around payments, the financing side is equally important, especially through international credit guarantee institutions like the U.S. Export-Import Bank that can limit risk. As part of this effort, Banc One last year acquired the assets of Venture Marketing Corp. in Washington, which operates under the name Delphos International and helps corporations find funding for risky overseas projects and exports.
Mr. McCoy and Mr. Narayana are quick to dispel notions that Banc One is about to embark on the kind of cross-border lending that caused near- disasters among major U.S. banks in the 1980s.
"Big New York City banks got into problems because they didn't have focus," Mr. McCoy said. "Our focus is and remains the retail and middle market."
Nor is Banc One out to build a global empire.
"We will not be opening offices overseas," Mr. McCoy emphasized.
The company will prefer to use contractual arrangements or alliances with U.S. and foreign banks in markets where it has no physical presence.
An example was a recent deal with Norwest to facilitate Asian trade finance from Hong Kong. Banc One opened a Hong Kong subsidiary, BOIC Asia Ltd., which is being run by Norwest's Hong Kong branch and will issue and process letters of credit to Hong Kong beneficiaries in Banc One's name.
Similar arrangements are in the works, Mr. Narayana said.
"The message is that Banc One is ready to do business globally and is going to do it through correspondent banking partnerships," he said.
Banc One's decision to centralize and expand international operations comes amid a steady surge in U.S. exports. According to the Commerce Department, exports rose 10.6% in June from a year earlier, to $78.4 billion, and the 1996 export total of $849 billion is likely to be exceeded.
"Fifteen years ago U.S. companies' sales were about 90% domestic and 10% foreign, but today it's more like 70-30," Mr. Narayana said. "There is so much business out there already that I don't even have to take business away from other banks."
Although Banc One expects its international unit to be fully up and running by the second quarter of 1998, some uncertainties remain. One concerns technological effectiveness as Banc One switches from decentralization to centralization.
"Any time you put new technology in consolidated functions, you run the risk that some things will fall off the table," said Mr. Hudspeth. "You don't have to know how to repair a car in order to sell one, but if you want customers to come back you will need a good sales and service department."
Another problem has been finding people.
"Between 1982 and 1990 anyone in international banking at a U.S. bank was shot on sight," Mr. Narayana said. "The ones who survived did so by hiding under their desks."
To overcome the shortage, Banc One hired 120 people for its international unit. It also did not scruple to poach key executives from other institutions.
Among them: Hector Retta, hired from NationsBank for structured and project finance; Michael J. McKenzie, from Wells Fargo & Co., senior vice president for global trade and treasury; George O. Fowler 3d, from CoreStates Financial Corp., for global marketing and financial institutions; Gilbert Jimenez, from First Interstate Bancorp, for international credit administration; Len K. Thakkar, from Norwest, for emerging markets, global marketing, and financial institutions; Peter Loeffler, from Comerica Inc., for Asia; and Madeleine Champion, from CoreStates, for Latin America.
Also joining the team is Timothy Baker, global treasury manager and one of the few executives who was already with Banc One. Lower-level employees have also been recruited from graduate schools, and the staff-building effort is far from over.
"You can have the greatest system in the world, but if you don't have anyone to market it and U.S. companies don't know you have it, it's useless," said Mr. McKenzie.
Even if Banc One brings in all the people it needs, he added, it still won't be where it wants to be. "The problem is, it takes two years to bring people up to speed, and we need people now."
Mr. Narayana is undaunted by the challenges. Flanked by his lieutenants around a large oval conference table in Banc One International's downtown Dallas office building, he looked and sounded much as Gen. Eisenhower must have while plotting the Normandy invasion.
"The key to this business is having customers, and we have them," Mr. Narayana said. "We may be one of the last entrants to the business, but we have a golden franchise, and we are going to do it right."
