New York City's status as a major financial center is in danger because of high taxes and other costs as well as heavy regulation, warns the new representative of foreign banks on the New York State Banking Board.

The official, Gonzalo de Las Heras, an executive with Spain's Banco Santander, said big international banks may move out if operating in New York becomes too burdensome.

"Twenty years ago you needed a certain critical mass and a presence in New York, London, and Tokyo," Mr. de Las Heras said in a recent interview. "Today, you can book business anywhere."

Taxes on Swaps Cited

Mr. de Las Heras said a lack of understanding about foreign banks and specific difficulties - such as taxation of derivatives trading profits - have made foreign banks operating in the U.S. increasingly uncomfortable.

Such issues "can make or break New York as a center for certain banking activities," he said.

The banker noted that as communications improve, international banking operations are shifting to lower-cost locations.

In Asia, for example, business is moving from established financial centers like Tokyo to Singapore, Hong Kong, and other cities.

A Lot to Lose

Mr. de Las Heras stressed that the United States has much to lose if foreign banks start migrating to other locations.

"Foreign banks employ 105,000 people in the U.S.," he noted, adding that over 166,000 more people work in businesses dependent on foreign banking.

He also noted that foreign banks play an important role in supplying credit to U.S. corporations.

The Glass-Steagall Act's separation of commercial and investment banking is a major complaint of foreign bankers.

Underwriting Powers

"The U.S. needs a rational banking system that is coherent with banking systems in the rest of the world," he said. "I'm referring to underwriting."

"New York has the potential for becoming a clearing house for capital markets worldwide, but banks still need to be able not only to give loans but to bring corporate bonds, commercial paper, and other securities to market as well," he added.

The New York State Banking Board is the only supervisory unit in the nation that assigns a seat to foreign banks.

Mr. De Las Heras represents foreign bank branches, agencies, and representative offices with New York-based assets of $527.8 billion.

Tight Lobbying Focus

He plans to restrict his lobbying to a local level.

"It's a matter of voicing views and becoming immersed in the day-to-day activities of banking," he aid.

He also expects to focus mainly on technical issues, such as regulations affecting netting of derivatives transactions, a major business of foreign banks.

Eclectic Background

"Given the sheer growth and volume of the market and the absence of any central clearing house, banks wind up owing and being owed huge gross amounts," he said. "We need legislation that would permit netting exposure out."

Born in Madrid, the 53-year-old banker studied history at Cambridge University, law at the University of Madrid, and business administration and economics at the University of Southern California.

After working with Spain's Banco Urquijo in London and Madrid, Mr. de Las Heras joined J.P. Morgan & Co. as a vice president in 1978.

He directed Morgan's Spanish and Portuguese operations until 1984, when he was named senior vice president responsible for Morgan's Latin American division, based in New York.

Mr. de Las Heras joined Santander in 1990.

He joined the banking board for a three-year term in July, replacing Flavian E. Zeugin of Swiss Bank Corp.

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