CoreStates Financial Corp. has obtained Federal Reserve Board approval to open a branch in Japan, the latest step in the Philadelphia-based bank's steady international buildup.
The proposed branch would pursue corporate trade finance deals and yen-denominated correspondent banking services, said Michael P. Heavener, the bank's senior vice president for international operations.
CoreStates, which has four branches and 19 representative offices outside the United States -- which are run through its Philadelphia National Bank subsidiary - has been steadily expanding its international network.
Expansion Under Way
Since the end of last year, the bank has opened a branch in Taiwan and representative offices in Madrid; Santiago, Chile; and Milan, Italy.
Additional overseas offices may be opened next year, Mr. Heavener said.
"We've had a historical commitment to international [banking] for decades," Mr. Heavener said. "Our strategy calls for double-digit [annual] growth in international correspondent banking and international trade services in the 12% to 15% range," he added.
The bank expects to pull in $85 million in revenues from international operations next year, up from $75 million this year.
Returns on risk-adjusted capital are "well above the company's corporatewide targets," Mr. Heavener said, but declined to be more specific.
Few Regionals Involved
CoreStates, together with Bank of Boston Corp. and Norwest Corp, are among the few regional banks that still pursue international business.
At midyear, CoreStates ranked as the 8th largest U.S. bank in terms of outstanding commercial letters of credit. The top seven were: Citibank, Chemical, Chase Manattan Bank, Bank of America, Bank of New York, First National Bank of Chicago, and First National Bank of Boston.
CoreStates' outstanding commercial letters of credit, a commonly used indicator for measuring the extent of a bank's involvement in international trade finance, totaled $758.5 million as of June 30, up from $596 million at yearend, and $422 million a year earlier.
The bank, which is already heavily involved in clearing operations in the United States, focuses mainly on providing corporate customers in the Middle Atlantic with trade finance services.
The bank maintains correspondent banking relationships with some 1,200 other banks and has invested heavily over the last decade in technology to reduce processing costs.
Other bankers give CoreSTates high marks for its efforts.
"They're major league and they're all over the place," said one executive at another large regional bank, who asked not to be named. "They're the largest clearer of export bills in Asia and they're way ahead to most other [regional] banks when it comes to correspondent banking," the banker said.
But some question whether CoreStates can remain successful without becoming more deeply involved in lending overseas.
"They're an outstanding bank in trade finance and cash management but they don't use their balance sheet and it's difficult to build up a business overseas without linking loans and services," said one veteran international banker, who also declined to be identified.
"Everyone's watching to see if they manage to cover their costs and succeed with their strategy."