The foreign banks are back.
After slumping slightly during the first six months last year, assets of foreign banks in the United States at yearend 1996 climbed nearly 3%, to $1.04 trillion, from the year before, according to an annual survey by International Banking Regulator, a Washington-based affiliate of American Banker.
Although the rise might not appear significant, the weekly newsletter noted that it came after sharp cutbacks in assets among Japanese banks, the single biggest contingent among foreign banks in the United States.
Offshore assets of foreign banks booked in places like the Cayman Islands increased even faster, rising by more than 12% to nearly $373 billion, the publication said.
Banking sources attributed the increase to three factors: a rise in securities-related activities, acquisitions, and an increase in lending.
"The United States is a preeminent financial market and one that has been particularly healthy and robust over the last year," said Lawrence R. Uhlick, executive director of the Institute of International Bankers, a New York-based association representing foreign banks in the United States. "The international banking community continues to have a very strong commitment to the U.S. market."
Foreign banks have significantly increased nonbanking activities and off-balance-sheet activities such as derivatives trading. This, the newsletter estimated, may mean that "the Fed's traditional tools to measure foreign banks' activities-such as the amount of assets-are not relevant anymore and that regulators need to find new measurement tools."
Among the survey's other findings:
The total of foreign banks' offices, mainly branches and agencies, declined to 878 from 922 the year before.
Bank of Tokyo-Mitsubishi Ltd. ranked as the largest foreign bank in the United States at yearend 1996, with $87 billion of assets, followed by Amsterdam-based ABN Amro Bank, with more than $63 billion, and France's Societe Generale, with more than $43 billion.
Despite their falloff, Japanese banks still held the largest share of assets, followed by French, Canadian, German, and Dutch banks. British banks' share of assets fell from third to sixth place.