A rapid growth in international trade over the next several years will push more U.S. banks into international banking, according to a senior economist at BankAmerica Corp.
"The story is that banks have to follow their customers in order to be successful," said Richard H. Courtney, vice president and senior economist at BankAmerica. "Banks can't afford to let their customers outgrow them."
Worldwide merchandise exports will climb from 1996 to 2000 by more than 36%, to $7 trillion, according to a recent forecast by San Francisco-based BankAmerica. Merchandise exports from industrial countries will climb by 25% to $4.6 trillion over the same period. Exports from developing countries will climb 56% to $2.4 trillion.
As a result, industrialized countries' share of worldwide exports will shrink from 68.5% at yearend 1996 to 65% by 2000, while developing countries' share will increase from 31.5% to 35%.
"Global economic integration is being driven by rising flows of foreign direct investment from industrial countries to developing countries," the report said.
Rapid growth in world trade is driving large numbers of small and medium-size U.S. companies to export and increasing pressure on regional banks to expand their own operations, Mr. Courtney said.
"Basically, banks that don't have the ability to provide creative solutions in trade finance, global payments, and fund management are at a competitive disadvantage with those banks that can," the economist said.