The American Banker's April 23 supplement on foreign banks in the United States made a compelling point: Branches, subsidiaries, and other offices of these institutions are helping to rescue the U.S. economy.
For example, foreign banks, with 1,049 offices in the United States as of mid-1991, accounted for more than $200 billion in commercial and industrial loans. This portfolio rose 5% in the 12 months ended June 30, 1991, while that of domestic banks declined 5.5%.
In the same period, foreign bank branches and agencies also increased their U.S. real estate loans by 35.7%, to $51.8 billion.
Sorely Needed Credit
Obviously, then, foreign banks have been meeting some sorely felt credit needs. But why is it suddenly news that foreign banks are contributing to the U.S. economy, more than a century after they began establishing operations here?
Indeed, shouldn't foreign banks' contributions to business development and job creation be more widely recognized by customers, government officials, and the public - and shouldn't red carpets be rolled out to attract further investment from abroad?
There are two possible explanations for the lack of recognition accorded foreign banks. First, they have been hesitant to call attention to themselves. They are not comfortable with self-promotion, they lack the public relations skills of their U.S. counterparts, and they are fearful that too much (or any) publicity will only fuel anti-foreign sentiments.
Second, anti-foreign sentiments already exist. There are those who blame this country's unemployment and other economic problems on the aggressiveness of non-U.S. firms operating in domestic markets. Such individuals would prefer to see barriers to trade and investment, and would welcome an exodus of foreign businesses.
Those who oppose a strong foreign presence here are more biased than informed, so a "why bother" attitude about communicating with foreigners has developed.
But why not bother? Foreign banks have nothing to lose in communicating to the anti-internationalists, whose negative opinions have jelled and are therefore unlikely to get worse.
By reaching out and telling their stories, foreign banks can educate those with no preconceived views, and perhaps more important, strengthen ties with the thousands of businesses and individuals who are already benefiting from their presence.
The potential gain can come in two forms: new business and good will.
The former is evidenced by the volume of business already being done in the United States by the international community and the positive reactions most Americans have to quality products and services.
Just look at the automobile industry. Each year, U.S. manufacturers and auto workers rail against the Asian and European manufacturers. And each year foreign automakers sell more cars.
As for good will, the lessons of history have shown that it can translate into support on legislative and regulatory issues, and produce a climate that is receptive to the marketing of products and services.
What should foreign banks do to improve their prospects for new business and good will?
First, they should become proactive in dealing with the media. The business press would welcome learning more about the U.S. presence of foreign banks, their contributions to economic growth, and the innovations they bring to the delivery of financial services.
Second, foreign banks should take their message directly to the communities they serve.
Giving speeches to local organizations, playing a more visible role in efforts to improve the quality of life, and advertising their importance to the community are just three ways of getting the news out. Others will surface as communications between foreign bankers and community leaders increase.
Foreign banks are clearly becoming more responsive to Community Reinvestment Act challenges, and their corporate citizenship is being felt in many economically disadvantaged neighborhoods. Why not let people know this?
Third, internal communications efforts should be increased so that the 100,000 or so people who work for foreign banks in the United States can become better informed about their organization's contributions to the economy.