With U.S. bank bond yields near their historic lows, many analysts have encouraged investors to search for returns in foreign banks. But at Smith Barney, the recommendation to investors is: It is time to come home.

Fixed-income analyst David Hendler at Smith Barney said yesterday that Yankee bank bonds - those issued here by foreign banks - no longer offer the burgeoning yields they once did.

Mr. Hendler pointed out that spreads of a single-A-rated foreign bank once "traded 15 to 20 basis points" cheaper than a high single A-rated U.S. bank. Thanks to high demand for the foreign bonds, that gap has narrowed to between five and 15 basis points, he said.

Mr. Hendler cautioned that when investors do return to the domestic market, they should avoid banks that are credit-card intensive.

"You are just seeing more negative trends in credit card performance, whether you're looking at quarterly results, pool statistics, or credit card securitizations," he said. "It all points negatively."

Smith Barney recommends NationsBank and First Union because they rely less on credit cards, he said.

Mr. Hendler said investors are fearful that credit cards could become a problem for some big U.S. banks like Citicorp. The credit card issue will "sometimes wake them up at night," said Mr. Hendler. "The issue hasn't become a full-fledged nightmare - but we think in time it will."

Mr. Hendler remains in the minority in his view that investors ought to move from foreign banks to U.S. banks.

"In the short-term basis I don't see fair value on U.S. banks," said bank bond analyst Ethan M. Heisler at Salomon Brothers Inc. "But in the longer term the fundamentals seem to be very strong."

Mr. Heisler argued that investors still can find considerable yield in the foreign market. He pointed to Siam Bank whose debt trades at 120 basis points over comparable Treasury securities.

"People are looking for value, and there is no spread in this market," he said. " Why should I accept Chase at 65 basis points. when there is a lot of value in Siam?"

As for investors avoiding credit card-intensive domestic banks, Mr. Heisler disagrees: "The key players in credit cards are well-reserved and well-capitalized and have generally done very well. They will have higher chargeoffs down the road, but that doesn't change the credit opinion of that institutions."

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