Talk to the typical community banker about international finance and you are likely to get a response of disinterest or unhappiness.
To most community bank officers, international banking means a foreign exchange department that has to take risks on currency values to accommodate customers. It also means complex letters of credit.
But community bankers should realize that money-center and superregional banks are out there ready to use their international expertise as a way to steal accounts.
"I know that most of the time I don't have a chance of weaning smaller businesses from their local banks," a money-center executive told me. "But if the company ever needs international services, they have to send them to us. Then we can start winning the account, service by service, until we have it all, if it is profitable enough."
Now is a good time for community banks to consider trade finance. There are many foreign exchange and documentation experts out there who have lost jobs due to mergers who feel they can apply their talents and experience at a smaller institution.
To learn more about this issue, I met with Peter Daley, who has been downsized by two major banks. (Mr. Daley, now retired, was with me in Dublin when I spoke at a conference and drove the Japanese interpreter crazy trying to translate "Schmidlap.")
Mr. Daley, who worked in foreign exchange, told me that many of this former customers call him to complain that their banks now viewed them as too small for their business.
His suggestions to community banks:
Hire a downsized international officer. Have him or her start making calls to offer foreign as well as domestic services to his or her old customers who have been dropped by a larger bank.
Turn the domestic leads over to the right credit people.
Offer these clients the same foreign exchange service they had in the past.
Do the same thing on documentation. Shop for the best letter-of-credit and acceptance terms for the new clients too, taking only a small broker's commission.
Mr. Daley added that with so many foreign banks trying to break into the American market, a savvy international banker at a community bank can get terrific terms for the bank's customers.
As an added feature, the community bank's new international officer can help customers who need to buy or sell currency for future delivery.
Smaller customers or those with poor credit have always had to use the organized futures, market with its high costs, margin requirements, and paperwork. Companies with top credit have been able to accomplish the same result by selling or buying a forward in a simple trusting transaction arranged by a major FX dealer.
A community bank can put its credit standing behind the forward transactions of its customers, so they can use this cheaper and easier path themselves. It's nice to make money for selling your credit standing to solid customers who need you just because they are not big enough to do forward transactions on their own.