Considerable Increase in Foreign Banking in the United States Since 1972

GGD-79-75: Published: Aug 1, 1979. Publicly Released: Aug 6, 1979.

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International banking has grown rapidly since the 1950's. Initially, U.S. bankers expanded their operations to foreign countries. In the 1960's and 1970's, foreign bankers began expanding their presence in the United States. Foreign banks have become an important competitive factor in the U.S. banking market and have more than doubled their share of total U.S. banking assets since 1972.

Foreign banks, holding companies, and investors enter the U.S. banking market either by establishing new offices or by acquiring interest in existing U.S. banks or savings and loan associations. The two categories of foreign investors in U.S. banking are (1) foreign banks, and (2) foreign individuals and nonbanking organizations. Foreign banks operate offices which control 91 percent of the foreign-controlled bank assets in the United States. Foreign banks in the United States have become increasingly more competitive with domestic banks. This is most apparent in commercial and industrial loans. Foreign banks engaged in 7 percent of the total domestic commercial and industrial lending in 1972 which increased to 13.5 percent in 1979. Foreign banks appear to be most competitive with the nation's largest banks. The International Banking Act of 1978 directed the Secretary of the Treasury to study the extent to which U.S. banks are denied the same competitive opportunity afforded domestic bank operations in foreign countries. The preliminary data collected indicate that U.S. banks face some restrictions in most foreign countries.

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