Foreign banks have built their U.S. operations to meet the needs of existing customers trying to expand business in this country.
Banque Paribas is among those now taking the next step: targeting U.S. companies.
Having spent much of the last decade here building its derivatives and securities business, the Paris-based bank is stepping up efforts to lure some American banks' corporate clients.
"Our goal is to be one of the leaders in securities distribution globally," said David Brunner, the head of Paribas Corp., the New York- based securities subsidiary of Banque Paribas. "You have to have a meaningful presence in other domestic markets to do so."
The company is using its expertise in derivatives to strengthen its securities business, said Michel Peretie, head of its worldwide derivatives operations in London.
Marketing is handled in each of Paribas' local markets. Research, product development, and risk advisory services, on the other hand, are centralized to ensure a coherent global strategy.
The combination brings the bank's expertise in the rest of the world to U.S customers, said Mark Shiels, a member of Paribas' financial institutions marketing group.
"Knowledge and familiarity with the local market's culture and mores is indispensable," he said. And success "requires the banker to have an understanding of the local market and a presence there."
That success is measured in managed underwritings. Over the past 15 months, the bank managed offerings worth nearly $4 billion in seven currencies for 11 North American and Latin American issuers.
Of these, the biggest by far was General Electric Capital Corp. which used Paribas in 13 offerings worth $2.1 billion.
Raising funds for U.S. issuers is a new strategy for the bank.
Over the years, its capital markets group focused on introducing U.S. investors to European issuers. Now it wants to help U.S. companies, including banks, issue debt in Europe.
"The future is in bringing U.S. regional bank names to non-U.S. investors," Mr. Shiels said. "This is really a trend that Paribas is best situated to meet, because of our global and European presence."
Ultimately, though, the bank is following a very basic theme, one that brought it to the United States in the first place: go where the money is.
"If you look at our involvement in global business, it requires attention to international capital flows," said Mr. Brunner. "That adds to the importance of being more than just a domestic presence."
Paribas is not alone in the quest for the American grail. Banks from Japan, Germany, the Netherlands, Great Britain, and Canada have either established or are setting up capital markets shops here in an attempt to grab a share of the U.S. market.
Already this year, Amsterdam-based ABN Amro forged a deal to buy Chicago Corp., a securities firm, to add to its U.S. derivatives business. Meanwhile London-based Deutsche Morgan Grenfell, with backing from Deutsche Bank, has aggressively hired derivatives and investment banking personnel to build its U.S. presence.
It is a strategy that U.S. banks have followed in overseas markets as well. J.P. Morgan & Co., Bankers Trust New York Corp., Chase Manhattan Corp., and Citicorp, among others, have significant presences in London, Tokyo, and elsewhere abroad.
The influx of foreign banks on U.S. shores is due largely to the increasing globalization of business, said Charles Smithson, a managing director in New York with CIBC Wood Gundy. His company, a subsidiary of Toronto-based Canadian Imperial Bank of Commerce, was particularly aggressive in recruiting U.S.-based professionals to quickly gear up its derivatives efforts south of the border.
"A lot of this is naturally just being where your clients are," he said. "Once you're in the market, it is a natural extension of the market to do business with U.S. companies that have Canadian operations."
These days, more banks are linking their derivatives and securities businesses in hope of expanding in the U.S. market. They are coming from what is probably the biggest derivatives market in the world, in London. According to a recent survey conducted by the Bank of International Settlements, the London market had the highest level of derivatives activity of any in the world, with nearly $12 trillion in outstanding notion values.
In the United States, however, most of these foreign banks are finding a higher level of oversight from U.S. banking regulators. Besides the scrutiny stirred up by the debacles of Daiwa Bank last year and Bank of Commerce and Credit International nearly five years ago, they must contend with the separation of commercial banking and investment banking operations.
It is "certainly something we can live with," said Alain Louvel, head of Paribas North America, the company's New York-based commercial bank. "There are specific rules that we have to follow that don't exist in other places. But they are not all that contradictory to our marketing approach."
