International Finance:

Update on U.S. Commercial Banks' Securities Activities in London

NSIAD-90-98: Published: May 7, 1990. Publicly Released: Jun 12, 1990.

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Pursuant to a congressional request, GAO reviewed U.S. commercial banks' securities activities in London during the past year.

GAO found that: (1) several U.S. commercial banks suffered losses on London-based securities and were forced to infuse capital to their subsidiaries to meet capital requirements; (2) some banks earned a small profit in 1988; (3) banks revised their strategies to make London-based securities more profitable and discontinued many activities to cut costs and improve earnings; (4) losses were not severe enough to compromise the security of the parent institutions; (5) two U.S. banks totally eliminated their debt operations; (6) the majority of banks were involved in foreign exchange trading or other activities to further diversify and generate more revenue; and (7) banks made significant improvements in management oversight activities and internal controls governing their operations.

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