In a bid to extend its international reach and add volume to its growing commercial letter-of-credit business, CoreStates Financial Corp. has opened a Miami branch.
The $44 billion asset bank said Monday that it plans to use the office to advise, confirm, negotiate, and refinance letters of credit for correspondent banks, mainly from the Caribbean and Latin America.
CoreStates already has branches in London, Hong Kong, Taipei, Tokyo, and Nassau in the Bahamas. It is planning to open a representative office in Dubai in August.
Few U.S. financial institutions have bigger international networks of correspondent banks than CoreStates. It does business with 1,200 banks in 46 other countries and owns minority stakes in foreign banks in Panama, Germany, South Korea and Austria.
CoreStates is one of a handful of U.S. banks actively involved in international payments and trade finance. The bank ranked seventh at yearend among U.S. banks, with slightly over $1 billion in outstanding commercial letters of credit. It climbed into sixth place with the merger of Chase Manhattan Corp. and Chemical Banking Corp.
The Philadelphia-based bank has for several years been investing heavily in the advanced technology needed to keep up with competitors in what is mainly a low-margin business that requires large volumes in order to be profitable.
"High fixed costs means you need volume to justify the expense," said Carlos Perez, senior vice president at CoreStates Bank.
CoreStates named John Ryan as general manager for the new office. Officials emphasized that the decision to open a branch in Miami shows a strong commitment to developing relations with Caribbean and Latin American banks and financial institutions.
"Miami is a major export market and has strong trade with Latin America and the Caribbean," Mr. Perez said.
"Our absence from the Miami area precluded us from tapping into this market, and the branch will serve as a platform projecting CoreStates into the region."
Mr. Perez added that the ready availability of bilingual staff in South Florida made Miami a natural choice.
Analysts said they expected CoreStates to continue expanding internationally.
"The idea is to continue to be active in international trade finance and become one of the dominant companies in this country financing trade for midsize companies," said Merrill H. Ross, a bank analyst with Wheat First Butcher Singer in Richmond, Va.
"There are still opportunities out there for them, and for the moment Latin America is the market that is most open to them."