Germany's Westdeutsche Landesbank Girozentrale plans a major push into the U.S. securities business next year.
H. Juergen Schlichting, WestLB's managing director and its chief executive for North America, said in an interview that the aim was to increase trading, distribution, and underwriting in the United States.
The New York-based executive said the U.S. plan was part of a worldwide expansion and diversification for WestLB to help it meet increased competition from U.S. banks.
Transformation Under Way
Over the past few years, WestLB has moved to transform itself from a German regional bank into a worldwide participant in wholesale banking markets.
"The competitive environment in the U.S. will strengthen as the banking industry consolidates and U.S. banks become better capitalized," Mr. Schlichting said.
WestLB joins other highly rated European institutions that have expanded their securities operations in the United States.
Trying to Keep Ahead
These include Switzerland's three big banks - Swiss Bank Corp., Union Bank of Switzerland, and Credit Suisse - as well as some German and French banks.
Deutsche Bank, Germany's biggest, beefed up its investment banking activities here earlier this year.
"We're not trying to emulate others, and we don't expect to outrun and outgun everyone else," Mr. Schlichting said. "But we will try to stay a little bit ahead of the pack."
With $149 billion in assets, Dusseldorf-based WestLB ranked 34th among the world's banks at yearend.
The bank has more than tripled its onshore and offshore U.S. assets. over the last five years, to more than S, 10 billion.
Mr. Schlichting said the securities buildup in the United States would help the bank avoid the cyclical ups and downs of earnings from lending.
Infusion of Capital
The activities will be conducted through RWS Securities Inc., the bank's U.S. securities company.
As part of the buildup, WestLB plans to pump additional capital into RWS, which in January will be given a new name identifying it more closely with WestLB.
Securities-related activities will also be used to cross-sell commercial banking services.
"We intend to make our balance sheet available for more than one purpose, and we don't think our clients are averse to that," Mr. Schlichting said.
"In fact, we think most of them probably appreciate getting comprehensive service from one source and not having to run back and forth between Wall Street and Park Avenue."
Other German bankers said they were not surprised by WestLB's plans, noting that the bank had been steadily increasing its industrial investments and securities dealings in Europe.
Last week WestLB, together with Sudwestdeutsche Landesbank, acquired the remaining 50% they did not already own in the London-based merchant bank Chartered WestLB Ltd.
But observers questioned whether WestLB's ambitions might not be outstripping its resources.
"You have to ask yourself how thoroughly they've analyzed the difficulties they might run into and whether or not they have enough backup for their growth," said one German banker.