Foreign banks directly and indirectly. employed over 300,000 people and spent almost $20 billion dollars a year in the United States last year, according to a survey released by the Institute of International Bankers, a New York-based association that represents foreign banks.
The survey, which highlights the beneficial role of foreign banks in the U.S. economy, said non-U.S. banks serve as key sources of business lending and play an increasingly important role in assuring liquidity in the U.S. financial system.
Equally important, foreign banks are major contributors to the growth and importance of U.S. financial centers in states such as New York, California, Illinois, Florida, Georgia, and Texas, the report said.
Among the key areas of foreign bank involvement the report cited were loan participations and syndications; government securities and other markets; export finance, and letters of credit.
The report also found that foreign banks in the United States pay substantial taxes and are major contributors to local real estate markets.
"The purpose of the study was to quantify the job creation, aggregate financial support, and other economic benefits to the United States from the activities of international banks in this country," said Lawrence R. Uhlick, executive director and general counsel of the institute.
The report, titled "Banking in a Global Economy: Economic Benefits to the United States from the Activities of International Banks," is prepared by the institute every five years.
Its release comes as foreign banks are finding it more difficult to enter the United States and cope with increased scrutiny by U.S. regulators in the wake of two major international banking scandals, involving Bank of Credit and Commerce International and Banca Nazionale del Lavoro.
With the increased supervision and regulation of foreign banks under the 1991 Foreign Bank Supervision Enhancement Act, the institute found that foreign banks are fundamentally subject to the same requirements as U.S. banks and that there is no need to impose additional regulation.
"The policy of national treatment has benefited the U.S. financial system and economy and should continue to be the touchstone of regulation of international banks," the institute noted.
However, the institute did call on U.S. legislators to modernize banking law and remove restrictions on interstate banking and on securities, insurance, and other financial affiliations.
The institute represents more than 200 banking organizations from 50 countries out of some 300 foreign banks with U.S. operations.
As of yearend, foreign banks maintained 602 branch and agency offices, 90 U.S. bank-subsidiaries, 20 other U.S. banking affiliates, and 243 representative offices.
They held over $862 billion of assets, or approximately 22% of total U.S. banking assets, and their commercial and industrial loans amounted to $207.7 billion, or around 35% of all business loans to U.S. borrowers.
Despite the sizable presence of foreign banks, the institute report noted that nonresident banks hold equal or larger shares of the banking market in other Countries.
In Britain, for example, foreign banks accounted for 58% of all loans booked while in Germany, nondomestic banks held almost 18% of all loans and accounted for around 24% of all securities holdings and 16% of interest rate and currency swaps.
The report also noted that U.S. banks have a sizable overseas presence.
According to the institute's findings, U.S. banks held $500 billion of foreign assets at yearend, or 9% of the total assets of U.S. banks. Over 100 U.S. banks had more than 730 branches outside the country, or more than the combined total of all foreign bank branches and agencies in the United States.