world, U.S. banks have embarked on a new round of international expansion. Bankers said the relatively recent participation of some developing and formerly Communist countries in the international financial markets is largely responsible for the shift. Since the start of the year, Bankers Trust New York Corp. has opened a representative office in the Malaysian capital, Kuala Lumpur; an offshore branch in Labuan, Malaysia; a brokerage in Mexico City, and a joint-venture investment bank with Brazil's Banco Itau. Citibank has opened branches in Hanoi, in Beijing, and in Dhaka, Bangladesh; a subsidiary in Bratislava, Czechoslovakia; and a representative office in Bucharest, Romania. Next year, Citi plans to open a representative office in Tel Aviv and branches in Beirut, Lebanon, and St. Petersburg, Russia. Other banks are also expanding overseas. BankAmerica Corp. has opened a subsidiary in Mexico and a branch in Hanoi. State Street Boston Corp. has set up a Southeast Asian regional headquarters in Sydney, Australia, while Bank of New York Co. has opened offices in Djakarta, Indonesia, Moscow, and Mexico City. Chemical Banking Corp. has opened a bank in Mexico and obtained a local banking license in the Philippines, where Bank of Boston Corp. has joined local partners to establish a joint venture bank. Bank of Boston is one of the most ambitious U.S. banks internationally. It has opened an office in Beijing and banking units in Colombia and Mexico. It has acquired 93 branches from a failed bank in Argentina, and has also embarked on a program to add as many as 15 branches in Brazil. Further, the bank is looking to open offices in Monterrey and Guadalajara, Mexico, next year. Even Comerica Inc., a bank that has traditionally shied away from foreign brick and mortar, is opening a representative office in Mexico City. And First Union Corp., another latecomer to the international scene, has set up joint ventures with Indonesia's Lippo Group and with Hong Kong Chinese Bank Ltd. The decision to open offices outside the United States is somewhat surprising, since until the early 1990s banks were still closing branches overseas. But bankers note that trade-related and capital-market transactions have grown by leaps and bounds since Latin America, Eastern Europe, China, and countries that belonged to the Soviet Union have turned to free market economies. As the economies of these countries have opened, opportunities in everything from project finance in Turkmenistan or trade finance out of China have increased. "Mexico has advanced significantly in its economic recovery program," Bank of Boston chairman Charles Gifford said recently. "The expansion into Mexico further enhances Bank of Boston's position as a leader in providing financial services to importers, exporters, manufacturers, and investors through the U.S. and Latin America." "We're doing much more business in Asia than we've done before," noted Paul Leyden, a spokesman for Bank of New York. The bank is concentrating on serving U.S. customers and on operations it specializes in, such as trade finance, funds transfers, and securities custody. "We aren't opening foreign offices to compete with local banks," he added. Banks are also moving into countries like Russia, Mexico, and the Philippines, which previously barred them from establishing or expanding local operations, but have since lifted many restrictions. Mexico, for example, barred foreign banks from engaging in banking until the North American Free Trade Agreement went into effect in 1992. Since then, 11 U.S. banks have opened or applied to open either banking or brokerage subsidiaries. Similarly, Russia, which only recently allowed foreign banks in, has authorized Citicorp and Chase Manhattan Corp. to operate locally licensed banks. Contrary to the big expansion that took place in the 1960s and 1970s, when banks moved overseas in order to participate in large syndications for multinational corporations and tried to develop broad commercial banking operations, today's expansion is far more targeted. Analysts say much of the current strategy makes sense. "In general, these banks are in international business, so it's a logical thing for them to do," remarked Raphael Soifer, a banking analyst with Brown Brothers Harriman. "Banks provided a much larger percentage of developing countries' financing needs in the '70s and '80s than they do today, but banks have not exited that business."
Access to authoritative analysis and perspective and our data-driven report series.
No credit card required. Complete access to articles, breaking news and industry data.
Have an account? Sign In