The dollar may be doddering, and her global leadership may be questioned, but America's gravitational effects are still felt throughout the world economy. A telling reminder occurred last month when Deutsche Bank AG unveiled Deutsche Bank North America, a newly reorganized investment banking operation. "America is still the largest, most sophisticated market in the world," says DBNA chief executive John Rolls.
Deutsche Bank AG weighs in asset-wise at $322 billion, but only $26 billion are located in North America. And if it's not strong here, it can't be strong globally--the U.S. dollar market is simply too large. Says Gonzalo de Las Heras, director general of Banco Santander's North American activities, the U.S. is a "market where you have to be a participant if you want to play a role internationally."
There exists, however, an interesting diversity to strategies that various foreign banks are pursuing here. Consider the approaches of three other banks:
National Westminster Bank plc: This large British clearing bank pursues a retail strategy in the States, and wants to participate in the consolidation of the American market. In March and again in July, NatWest paid hefty premiums to acquire banks in New Jersey.
Banco Santander: Spain's fourth largest bank, Santander focuses primarily on various trading markets in the U.S., including foreign exchange and derivatives, and has applied to the Federal Reserve for Section 20 securities powers. It's probably better known for its 24.9% holding in First Fidelity Bancorp, New Jersey's largest bank. Unlike NatWest, Santander is not interested in owning a U.S. retail bank outright, believing it's difficult for outsiders to retain strong local management. So far its investment in First Fidelity has been solid gold: It bought in at $19 a share, and now the stock is in the high 40s.
Societe Generale: The largest bank in France, it pursues a wholesale-only strategy in the U.S., offering a broad array of credit and trading products. It wants to bank not just French companies doing business here--but the 1,000 largest U.S. companies and "emerging leaders" below that category as well. "Our strategy is to be one of the core banks of the targets we choose," explains Jean Huet, chief executive of New York-based Societe Generale USA. While it operates a massive retail branch network in France, Societe shares Santander's reluctance to pursue a retail strategy here. Some years ago Societe was one of several investors in European American Bank, but decided against even a minority investment. The U.S. already provides 15% of the French bank's income--and it wants that total to grow.
One final observation: Santander recently put up a new building in Manhattan, while Societe is moving into larger space as well--sure signs that they're planning to stay.