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DO BANKS FOLLOW THEIR CUSTOMERS ABROAD?
by
Daniel E. Nolle and Rama Seth
Federal Reserve Bank of New York
Research Paper No. 9620
August 1996
This paper is being circulated for purposes of discussion and comment only.
The contents should be regarded as preliminary and not for citation or quotation without
permission of the author. The views expressed are those of the author and do not necessarily
reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.
Single copies are available on request to:
Public Information Department
Federal Reserve Bank of New York
New York, NY 10045
Do Banks Follow Their Customers Abroad?
by
Daniel E. Nolle* and Rama Seth**
August 1996'
Abstract: The market share of U.S. business loans made by foreign-owned banks has increased
dramatically since 1980. At the same time, foreign direct investment in the U.S. rose, so that
much of the increase in foreign-owned U.S. -based bank lending to businesses in the U.S. could
conceivably be accounted for by an increase in loans to the U.S. affiliates of firms headquartered
abroad, an expectation in line with the conventional wisdom that banks "follow their customers"
abroad. Our study investigates the lending patterns of U.S.-based banks from Japan, Canada,
France, Germany, the Netherlands, and the U.K., countries which account for the vast majority
of foreign-owned bank activity in the U.S. Simultaneously, we look at the borrowing patterns of
U.S. nonbank affiliates of firms from those countries. We find that banks from four of the six
countries (Japan, Canada, the Netherlands, and the U.K.) allocated a majority of their loans to
non-home country borrowers, for some or all of the 1981-1992 period. That result suggests that
the "follow the customer" hypothesis may have a more limited applicability than previously
supposed.
*Senior Financial Economist, Bank Research, Office of the Comptroller of the Currency,
Washington, DC 20219, (202) 874-5250; **Senior Economist, Federal Reserve Bank of New
York (212) 720-2807.
The views expressed in this paper are those of the authors alone, and do not necessarily reflect
those of the Comptroller of the Currency, the Department of the Treasury, the Federal Reserve
Bank of New York, or the Federal Reserve System. The authors are grateful to the Bureau of
Economic Analysis, particularly Arnold Gilbert, for providing unpublished data on the external
financing of U.S. affiliates of foreign-owned firms. In addition, we would like to thank Robert
Hostler for excellent research assistance.
Introduction
International bank lending soared during the 1980s, part of the explosion of
international capital flows that characterized the decade. In tandem with the increase in crossborder lending, many banks also increased the degree to which they operated as
multinationals, starting up and/or augmenting foreign-based subsidiaries and branches of the
home country office. Given the increasingly sophisticated nature of banking and the growing
globalization of both goods and capital markets, the issue of why many banks have chosen to
increase their international lending via this kind of direct investment route is one of more than
academic interest. Particularly in the U.S., where U.S. -based operations of foreign-owned
banks grew substantially during the 1980s and early 1990s, questions about both the motives
of, and strategies employed by foreign-owned banks have received a good deal of attention in
the business press and in public policy-making circles. 1
This paper investigates the widely held view that banks rely on a strategy of "following
their customers" abroad. On public policy grounds alone, the issue of whether banks follow
their customers is far from trivial. If foreign-owned banks are perceived in the host country to
be "capturing" market share from host country banks, rather than servicing subsidiaries of
home country firms, concerns about foreign banks "out-competing" host country banks could
'For example, see "International Competitiveness of U.S. Financial Institutions," Hearings before the
Subcommittee on Financial Institutions Supervision, Regulation and Insurance, (1990); and LaFalce, "Report of
the Task Force on the International Competitiveness of U.S. Financial Institutions," (1990). Business press
reports on market share gains by foreign banks in the U.S. include Fred R. Bleakley, "U.S. Banks Lose
Corporate Clients To Lenders Abroad," The Wall Street Journal (Sept. 29, 1992); James R. Kraus, "Foreign
Banks Control 45% of Corporate Loans in U.S.," American Banker (June 15, 1992); and James R. Kraus,
"Estimate of Foreign Bank Lending in U.S. Raised," The Washington Post (June 16, 1992).
1
be heightened. 2 As well, bankers, rating agencies, and regulators are concerned about motives
for, and performance subsequent to, cross-border expansion by multinational banks. 3
Our basic approach is to compare the lending patterns of foreign-owned banks in the
U.S. with financing patterns of foreign-owned nonbank firms in the U.S. Using bank call
report data and unpublished Commerce Department data, we arrive at a straightforward
estimate of the maximum extent to which foreign-owned banks in the U.S. could have been
servicing the bank borrowing needs of U.S. affiliates of their home country firms (i.e., the
extent to which they "followed their customers"), and therefore the minimum amount of
lending in which those banks must have been engaged with respect to other firms in the U.S.
We find that banks from Japan, Canada, the Netherlands, and the U.K. allocated a majority of
their loans to non-home country borrowers, for some or all of the 1981-1992 period. That
result suggests that the "follow the customer" hypothesis may have a more limited applicability
to the theory of banks as multinational firms than previously supposed.
The paper is organized as follows. Part I briefly reviews the literature on banks as
multinationals. Section II describes our data. Part III presents the results of our analysis on
lending patterns of foreign-owned banks in the U.S., as well as the borrowing patterns of U.S.
affiliates of foreign firms. Section IV summarizes those findings and discusses possible
2
For example, in early 1994 concerns that foreign banks were "out-competing" U.S. banks in the U.S. market
influenced the debate on the treatment of foreign banks under the then-pending Riegle-Neal Imerstate Banking and
Branching Efficiency Act of 1994 (which was subsequently enacted in September of 1994). For a discussion of
this aspect of the debate see "Week of Decision Awaits Interstate Banking Bill," and "OCC Study Adds MuchNeeded Leverage to Interstate Battle," International Banking Regulator, June 27,1994; and "Study Shows While
Foreign Banks Lend Widely in U.S., They're Behind in Profit," The Wall Street Journal, June 13, 1994.
See, for example, "The End of An Awful Story," Financial Times, December 20, 1995.
3
2
extensions of this research.
I. Banks as Multinationals
Over the past decade or so empirical studies of the determinants of direct investment by
banks in overseas operations have focused on the lead-lag relationship between foreign direct
investment by nonbank firms from the home country (henceforth referred to as "firms"), and
entry or growth by overseas affiliates of banks from the home country (henceforth referred to
as "banks"). The central thesis is that banks have "followed" client firms from their home
countries into overseas markets as those firms engaged in a growing volume of international
trade and direct investment. Fieleke (1977) concluded from his study of U.S. banks' overseas
expansion that the major determinant was to respond to the financial needs of U.S. firms
abroad, a result corroborated by Nigh, Cho, and Krishnan (1986) and, for U.S. bank
expansion into the U.K., by Goldberg and Saunders (1980). Goldberg and Saunders (1981)
modeled the growth of foreign banks in the U.S. market for the 1972-1979 period, and found
from a multiple regression analysis of their model that direct investment by foreign firms into
the U.S. market was a significant positive determinant of the growth of foreign banks' market
share in the United States. Hultman and McGee (1989), Grosse and Goldberg (1991), and
Budzeika ( 1991) also provide evidence that foreign banks entered the U.S. market to service
the international trade and direct investment needs of their home-country clients. A host of
other studies focusing on issues related to the growth of international banking emphasize the
"follow the customers" factor as one of the principal motives for multinational expansion by
3
banks. 4 Indeed, a recent U.S. General Accounting Office study on foreign banks in the United
States reports "that most foreign banks serve customers of their home countries. An industry
representative told us that only a few banks are large enough to penetrate through home
country loyalties to attract other customers. " 5
In contrast to this literature, Terrell (1993, p. 913) notes that, once in the U.S., "many
foreign banks have expanded their customer base by actively soliciting business from U.S.
companies." Studies by Seth and Quijano (1991, 1993) add credence to Terrell's claim. They
point out that the "follow the customer" claim has been made in reference to Japanese-owned
banks in the United States. 6 Juxtaposing data on liabilities of U.S. affiliates of Japanese firms
and data on the lending patterns of U.S. branches and agencies of Japanese banks, they infer
the share of Japanese bank lending to Japanese-owned affiliates over the 1984-1989 period.
Making the extreme assumption that all bank borrowing by U.S. -based Japanese companies
was provided by the U.S. branches and agencies of Japanese banks, they conclude that "about
three-fifths of the lending by th~ branches and agencies was to debtors other than US affiliates
of Japanese multinationals," a result at odds the follow-the-customer expectation. 7 However,
no study has yet investigated whether banks from other countries show similar behavior. In
view of the mixed evidence, the question of the motives for direct investment by banks in
4For
example, see Key and Welsh (1988), Damanpour (1991), Aguilar (1995), and Graham and Krugman
(1995).
'U.S. General Accounting Office ( 1996).
'See the references in Seth and Quijano (1993) to Zimmerman (1989) and Terrell (1990).
'Seth and Quijano (1993, pp. 366-367)
4
banking operations abroad remains an open one.
Part of the answer to this question may be found in earlier, mostly theoretical, work on
banks as multinational corporations. Grubel (1977), Gray and Gray (1981), Rugman and
Karnath (1987), and Casson (1990) hypothesize that the possession of firm-specific advantages
allow banks to operate successfully abroad. Under this view "following the customers" is, at
best, incidental to the decision by a bank to engage in activities outside the borders of the
home country. Using this hypothesis to interpret the Seth and Quijano results, we should look
for a particular advantage (or set of advantages) embodied in Japanese banks relative to other
banks to help explain the growing presence and lending pattern of Japanese banks in the U.S.
In light of the mixed evidence on motives for foreign direct investment in banking,
further investigation is warranted. Our tact in this paper is to review a unique data set in a .
fundamental and straightforward manner. In particular, we match up information on lending
patterns of foreign-owned banks in the U.S. with bank borrowing patterns of U.S. -based
companies from the same home country.
II. Foreign Firms and Foreign Banks in the U.S.
II.A. Foreign Firms in the U.S.
The U.S. Commerce Department compiles annual statistics on the external financial
position of U.S. affiliates of foreign firms as part of its survey of foreign direct investment
into the United States. 8 A U.S.-based firm in which a foreign investor has a 10 percent or
more controlling interest is designated by the Commerce Department as an "affiliate". The
'The latest information available to us (including unpublished data for non-benchmark years) is for 1992.
Hence, our analysis of borrowing patters extends from 1981 through 1992.
5
data is published in "benchmark years" (approximately every 5 years) in aggregate form for all
U.S. affiliates of foreign firms, and for all affiliates of firms from selected countries with a
large foreign direct investment presence in the U.S. 9 We used benchmark data for 1987 and_
1992, and unpublished annual data for all others years in the 1981-1992 period which our
study covers. In addition to aggregated data for all foreign-owned firms in the U.S., we
investigated external financing patterns for firms from Japan, Canada, France, Germany, the
United Kingdom, and the Netherlands. 10 Our study focuses in particular on affiliates'
borrowing from U.S. banks and on affiliates' liabilities owed to U.S. nonbanks. U.S.-based
affiliates' liabilities owed to U.S.-based banks and nonbanks account for the vast majority of
credit extended to these firms: in 1992, for example, over 82 percent of total bank borrowing
by U.S. affiliates of foreign firms was from U.S.-based banks, and over 75 percent of their
liabilities to nonbanks were to U.S. nonbank creditors." Though creditors can include U.S.based foreign-owned banks, the Commerce Department data does not identify the ownership of
the banks and nonbanks providing credit.
The relative importance of foreign direct investment from each of the six countries in
our study is apparent in Table 1. Together, firms from the six countries accounted in 1992 for
more than four-fifths of the year-end book value of foreign companies' equity and retained
'Those countries include Canada, France, Germany, the Netherlands, the United Kingdom, Switzerland,
Japan, and beginning in 1987, Australia.
1"Because the Commerce Department suppresses information which, even when aggregated over all firms from
a particular country could be used to ascertain the identity of a particular company, we had to exclude Switzerland
because of missing values for key variables. In addition, Australian-owned firms were not included in our study
because Commerce Department coverage did not extend for the entire period.
11 The
remainder of U.S. affiliates' debt is owed to foreign parents and other foreign entities, including
foreign-based banks.
6
earnings in, and net loans outstanding to, their U.S. affiliate firms (the "direct investment
position"), and more than three-fourths of the total assets of U.S.-based nonbank affiliates.
U.S.-based nonbank affiliates from the major 6 countries also accounted for the vast majority.
of bank debt owed to U.S.-based banks. By any of those measures Japanese firms ranked (or
tied for) first, but firms from the other countries, especially the U .K., played important roles
as well.
ll.B. Foreign Banks in the U.S.
Foreign banks can operate in the U.S. as fully capitalized, national- or state-chartered
subsidiaries ("subs") of the home-country parent, or as federal- or state-licensed branches and
agencies of the parent bank. 12 Subs can engage in the same range of banking services as any
other U.S.-chartered bank; generally, branches have banking powers similar to subs, but face
some restrictions on retail deposit taking, while agencies basically are prohibited from taking
deposits. Data for foreign-owned banks in the U.S. came from the call reports collected by
the Federal Financial Institutions Examination Council (FFIEC). 13 The data is broken down
by type of borrower: commercial and industrial (C&I), real estate, nonbank financial
12We included as "subs" banks in which there was 50 percent or greater foreign ownership, as defined in the
Federal Reserve System's NIC database. Foreign banks can also operate Edge Act corporations, Agreement
corporations, investment companies, and representative offices, all of which entail significant restrictions on
banking activities, and which together account for only a small portion of foreign bank presence in the U.S. See
Key and Welsh (1988), Houpt (1988), Lund (1993), Jackson (1993), Aguilar (1995), and U.S. General
Accounting Office ( 1996) for descriptions of the types and amounts of foreign banking activities in the U.S.
Detailed descriptions of foreign banking in the U.S. prior to 1980 are contained in Longbrake, Quinn, and Walter
(1980), Goldberg and Saunders (1981), and Houpt (1983).
''Specifically, subs file the FFIEC 031, 032, 033, or 034. Call report data for branches and agencies are from
the FFIEC 002. We used fourth quarter data. Note that U.S.-based branches and agencies of foreign banks book
some of their activity at offshore offices. Call report data on the activities of these "Caribbean branches" of
U .S.-based branches and agencies of foreign banks did not become available until 1993, and hence is not included
in our analysis. See Terrell (1993) and Nolle (1995) for descriptions of the namre and amount of this activity.
7
institutions, foreign governments, and purchasers of securities; C&l Joans are decomposed into
those to U.S.-based firms ("U.S. Addressees") and to firms based outside the United States
("Non-U.S. Addressees"). However, the data do not reveal the identity of the specific
borrower. Hence, for example, a business loan made by a Canadian-owned branch in the
United States to a U.S. affiliate of a Canadian firm is lumped into the category "commercial
and industrial loans to U.S. addressees".
The relative importance of U .S.-based banks from each of the six countries covered in
our study is illustrated in Table 2. In 1992, U.S.-based banks from Japan, Canada, France,
the U .K., Germany, and the Netherlands collectively accounted for 73 percent of foreign bank
assets in the United States. Banks from these six countries also extended three-fourths of all
loans to nonbank borrowers generated by foreign banks in the U.S., and 80 percent of all
foreign bank commercial and industrial Joans. Japanese-owned banks dominated, accounting
for 45 percent of U.S.-based foreign bank assets, and more than 50 percent of Joans made by
foreign banks. The other five countries accounted for roughly equal shares of foreign banking
activities in the United States.
III. External Financing of Foreign Firms in the U.S. and Lending by Foreign Banks in
the U.S.
Following the procedure Seth and Quijano (1993) used to investigate Japanese-owned
branches and agencies in the U.S., we juxtapose the Commerce Department data on the
external financing of foreign-owned firms in the U.S. with call report data on lending by
foreign-owned banks in the U.S. Specifically, using the extreme assumption that all foreignowned affiliate bank borrowing came from U .S.-based offices of banks from a given country,
8
we calculate the share of bank lending that would have to have been devoted to "following
customers" from the home country. Any additional lending beyond meeting 100 percent of the
bank borrowing of home-country clients in the U.S. must have been allocated to pursuing
other, non-home country firms. The share of total lending by foreign-owned banks in the
U.S. that it would have taken to meet all of the actual bank borrowing needs of foreign-owned
firms in the U.S. thus reflects the maximum possible extent to which foreign banks followed
their home country clients. In addition, the difference between total lending by foreign-owned ·
banks in the U.S. and bank borrowing by foreign-owned firms in the U.S. constitutes the
minimum degree to which foreign-owned banks did not follow their traditional customers.
Ill.A. Aggregate Results
Based on the results of empirical studies discussed in the first section of this paper, our
expectations might be that a large percentage of lending by foreign-owned banks in the U.S. is
devoted to U.S. affiliates of home-country companies -- i.e., that banks follow their customers
abroad. Figure 1, which compares total (nonbank) lending by all foreign-owned banks in the
U.S. with total (U.S.-based bank) borrowing by U.S. affiliates of foreign firms, presents a
somewhat different picture, however. During the early to mid-1980s slightly less than half of
U.S.-based foreign bank loans went to U.S.-based foreign firms. Hence the majority of
foreign bank lending went to U.S.-owned borrowers, a result that can be interpreted as
evidence that foreign banks did not primarily focus on following their customers into the U.S.
market during that time period.
That pattern seems to have changed in the late 1980s and early 1990s, however. If we
use the extreme assumption that foreign banks in the U.S. first met all of the bank borrowing
9
needs of U.S. affiliates of foreign firms, and then allocated the remainder of their lending to
U.S.-owned borrowers, row "D" in the table below Figure 1 indicates that by 1992 threequarters of foreign bank lending was aimed at "following" their home-country customers. Of
course, the data do not necessarily bear this interpretation. It is possible, for example, that
U.S.-based foreign banks, having devoted half or more of their lending to U.S. borrowers
during the early 1980s, chose to ignore all or part of the increased loan demands of foreignowned affiliates. In that case, U.S.-owned banks would have accounted for the increased bank
borrowing by U.S. affiliates of foreign firms. In an absolute sense this must be true to some
extent because between 1987-1992 bank borrowing by foreign affiliates increased by $156.5
billion, while lending by foreign banks increased by less than this ($131.1 billion). The most
we can say is that after not focusing predominantly on "following" their traditional customers
to the U.S. market in the early 1980s, foreign banks may have switched tactics.
lll.B. Decomposition by Type of Lending
Two major aspects of these trends bear closer scrutiny: the composition of foreign bank
lending, and a country-by-country breakdown. Figure 2 decomposes the borrowing and
lending patterns of U.S.-based foreign firms and banks into the major categories "C&I"
(commercial and industrial) and real estate. Trends for two distinct time periods emerge:
1981-1986/87, and 1986/87-1992. However, the trends across these time periods, and the
inferences we can draw, for C&I affiliates and for real estate affiliates are very different. 14
14
We also examined bank debt trends for nonbank financial firms. The basic result was that borrowing by
nonbank financial affiliates of foreign firms accounted for 100 percent or more of foreign bank lending to nonbank
financial firms over the entire 1981-1992 period. Until recently, foreign-owned U.S.-based banks generally
allocated only a small proportion of their loan portfolio to this type of lending, and even 100 percent of it was not
enough to cover the borrowing needs of home-country affiliates. However, we cannot say for sure whether they
10
C&I firms account for a clear majority of bank borrowing, as described in Table 3,
which presents figures on the bank debt of C&I, real estate, and nonbank financial affiliates of
foreign firms. Under the assumption that U.S.-based foreign banks lent first to U.S.-based
foreign firms, Figure 2 shows that borrowing by C&I affiliates of home-country firms
accounted for 90 percent or more of foreign banks' C&I lending over 1981-1984. That is, in
the early 1980s foreign banks appear to have followed their C&I customers to the U.S.
market. However, in 1985 the maximum percent of the C&I lending by foreign banks in the
U.S. accounted for by U.S. affiliates of foreign firms dropped substantially, to 65 percent.
This decline continued through 1987, by which time at least 43 percent of foreign banks' C&I
loans must have been going to U.S.-owned firms. From 1987 forward the maximum possible
share of foreign-owned bank lending that (possibly) went to U.S. affiliates of C&I borrowers
turned upward, though it did not return to the pre-1985 level.
Though foreign affiliate real estate firms accounted for a much lower share of total
bank borrowing than did C&I affiliates, the pattern of foreign bank lending to them was
basically the opposite of that for C&I firms. In the early 1980s foreign-owned banks in the
U.S. pursued non-home country real estate borrowers, but might have switched-to "following"
home-country owned real estate borrowers in the mid-1980s as their (maximum possible) share
of bank debt owed to U.S.-based foreign banks increased. However, even if foreign-owned
banks met foreign-owned real estate affiliates' borrowing needs fully, it is clear from Figure 2
that after 1986 foreign banks in the U.S. pursued U.S. real estate customers. By 1992 the
followed their nonbank financial firm customers abroad.
11
minimum share of real estate lending by foreign banks in the U.S. that must have gone to U.S.
customers was 69 percent. In summary, foreign banks probably focused on following
commercial and industrial affiliates during the early 1980s, and after clearly turning attention
to U.S.-based C&I borrowers in the mid-1980s, they may have returned to following their
home-country customers in the late 1980s and early 1990s; we can say with certainty that they
pursued non-home country real estate borrowers, particularly from the mid-1980s onward.
Ill. C. Country-Specific Results
With the exception of the research on Japanese banks and multinationals in the U.S. by
Seth and Quijano (1991, 1993), no country-specific analysis matching bank call report and
Commerce Department data has appeared prior to the current investigation. Figure 3
illustrates the results of juxtaposing the banking data with the external financing data for six
major countries with substantial direct investment in the U.S. The trends vary substantially
from country to country.
One significant point illustrated in Figure 3 is that over the entire period Japanese
banks committed fewer loans to Japanese-owned borrowers than to non-Japanese borrowers.
Relative to banks from other countries, Japanese banks did not rely on a "follow-thecustomers-abroad" strategy. The highest possible percentage commitment there could have
been to Japanese multinational borrowing in the U.S. was 49 percent of Japanese banks' loan
portfolio, in 1992; hence, even in that year, a majority of Japanese bank lending was to nonJapanese firms.
Despite this basic conclusion, pre-1987 and post-1987 patterns are discernible for
Japanese banks. From 1981 to 1987 the maximum share of their lending that went to U.S.
12
affiliates of Japanese multinationals decreased somewhat, from 31 percent to 27 percent. After
1987, however, the maximum share of Japanese bank lending that (possibly) went to U.S.
affiliates of Japanese firms increased dramatically, to 49 percent in 1992. Hence, either
Japanese banks began to "catch up" with the borrowing requirements of Japanese-owned firms
in the U.S. or, if Japanese-owned banks did not actually increase the proportion of their loan
portfolios committed to Japanese multinational affiliates, then those needs were met by nonJapanese banks in the U.S.
In the early 1980s U.S.-based banks from four of the five other countries also pursued
non-home country customers, but the pattern for each country is different. The only group of
banks for which we can say it is possible that they exclusively followed home-country
customers are the Germans: in every year bank borrowing by U.S. affiliates of German
multinationals exceeded total lending by U.S. affiliates of German banks. In contrast, in 1981
at least SO percent ofU.K. bank lending was not to home country affiliates in the U.S., an
allocation that put them ahead of Japanese banks in this respect. However, throughout the
remainder of the time period, the minimum amount of lending that U .K. banks (possibly could
have) committed to U .K. banks rose sharply, so that by 1988 it would have been possible for
U .K. banks to have loaned exclusively to U.K. multinational affiliates.
Canadian and French banks behaved similarly for most of the period, diverging only in
the last two years. Banks from both countries allocated between 10 percent and 40 percent (at
least) of their loans to non-home country borrowers over the 1981 to 1987 period. However,
the minimum lending each country's banks (possibly could have) allocated to home country
firms rose between 1981 and 1988. By 1988 the total bank borrowing of home country firms
13
from both countries exceeded the amount of Joans made by U.S.-based Canadian and French
banks. Subsequently, borrowing by French multinational affiliates exceeded all Joans by
French-owned banks in the U.S., but Canadian banks allocated an increasingly large portion of
their Joan portfolios to non-Canadian firms in the U.S. By 1992 more than 50 percent of Joans
made by Canadian banks in the U.S. went to non-Canadian borrowers, a proportion which
rivaled that of Japanese banks.
Dutch banks made a massive shift in their home country versus non-home country
lending patterns over the period. Until 1988, bank borrowing by U.S. affiliates of Dutch
multinationals exceeded all lending by U.S.-based Dutch banks, suggesting that those banks
might have been concentrating on servicing home-country affiliates. However, beginning in
1988, Dutch banks in the U.S. Jent more than Dutch affiliates borrowed. We can say with
certainty that, no later than 1991, Dutch banks in the U.S. made the majority of their loans to
non-Dutch borrowers.
Country-by-country lending patterns to affiliate C&I firms were roughly similar to
trends for aggregate patterns, as Figure 4 illustrates. Notable exceptions to that generalization
are as follows. Though by the mid-1980s Japanese banks made the majority of their C&I
Joans to non-Japanese firms, in the early 1980s they may have committed less to pursuing nonJapanese borrowers. As with the aggregate data in Figure 3, Figure 4 shows that in the early
1980s U.K. banks made the majority of their C&I Joans to non-U.K. firms; however, the level
of that commitment was below that for all types of loans in the aggregate. Finally, unlike in
the case of all loans aggregated, French-owned banks in the U.S. might not have pursued nonFrench C&I borrowers in the early 1980s: for the entire time period, bank borrowing by
14
French-owned C&l firms exceeded all French-owned bank C&I lending.
Trends for real estate lending differed considerably from those for all loans, and C&I
lending. 15 As Figure 5 shows, throughout the entire period 1981-1992, U.S.-based banks
from Japan, the U.K., and France lent far more to non-home country real estate borrowers
than to home country real estate affiliates. Banks from those countries were joined by Dutch
banks late in the period.
Ill. D. Changes in Lending and Borrowing Patterns
The substantial evidence that banks from a number of countries did not employ a
"follow the customer" strategy in the U.S. market is muddied somewhat by a trend since 1987
which, generally speaking, indicates that foreign banks might have increased the proportion of
their loan portfolios devoted to home country firms. This post-1986 trend warrants further
scrutiny from two viewpoints: changes in lending patterns by foreign-owned banks, and
changes in bank borrowing patterns by U.S. affiliates of foreign multinationals.
In a proximate sense, the share of foreign banks' lending that is (possibly) accounted
for by bank debt incurred by foreign affiliates could increase if lending (the denominator in the
ratio) declined, and/or if bank borrowing (the numerator) increased. Figures 6a and 6b
examine the evidence on trends in foreign bank lending. Very roughly speaking, Figure 6a
groups together, by country of parent, the banks which decreased their lending, post-1987,
""Real estate loans' are loans collateralized by either commercial or residential real estate. These two types
of real estate have different characteristics (it can be argued, for example, that commercial real estate loans are,
in fact, "business" loans). Unfortunately, because branches and agencies (unlike subs) are not required to
decompose, by type, their real estate loans on the call report they file, it is not possible to segregate types of real
estate loans in our analysis.
15
while Figure 6b shows the banks, by country, which increased lending since 1987. 16 For some
groups there seems to be evidence that the (apparent) post-1987 trend toward following home
country customers in fact can be explained in part by a decrease in lending. Japanese and
U.K. banks both decreased the growth rate of loans in the U.S., with U.K. banks actually
shrinking loans in 1991 and 1992, while Japanese banks posted negative loan growth in 1992.
Those patterns are consistent with the upturn in bank debt of foreign-owned affiliates as a
share of foreign bank loans. Of course, those trends are also consistent with a scenario in
which, as Japanese and U.K. banks retrenched in the U.S. market, they shed non-home
country customers in a greater proportion than they did home country customers. 17 We might
call this the "home country first" strategy of multinational bank operations.
Another way in which the ratio of bank borrowing by affiliates to home country bank
lending can rise is if bank borrowing increased at a greater rate than did bank lending. As
previously mentioned, this certainly occurred in the post-1987 period. Beyond this, we
investigated whether there was a shift in the composition of external financing by nonbank
affiliates. Figure 7 summarizes our findings on the proportion of bank financing relative to all
debt incurred by U.S. affiliates of foreign multinationals. Grouping countries with similar
patterns together gives us three groups: Japanese firms, Canadian firms, and all other firms
("non-Japanese, non-Canadian").
16
See appendix Table A.4 for the percentage data underlying Figures 6a and 6b, as well as for the dollar
amounts of nonbank loans, by country, for 1981-1992.
17 For a discussion of the retrenchment by Japanese banks in U.S. see Zimmerman (1993), Nolle (1993), Kim
and Moreno (1994), and Huh and Kim (1994). To our knowledge there is no research on a retrenchment by U .K.
banks in the U.S., but credit quality problems of U .K. banks, particularly due to problems in the U .K. real estate
sector, have been documented. For example, see "U.K. Banks: Asset Quality Angst," BankWatch (1992).
16
Significantly, two distinct time periods, 1981-1986/87, and 1986/87 to 1992 emerge for
all three groups. During the first half of 1980s the non-Japanese, non-Canadian firms slightly
decreased their reliance on bank debt, while Japanese firms made a massive shift away from
bank debt. Of the six major countries for which we have data, only Canadian firms increased
their reliance on bank debt during the first half of the 1980s. After 1986/87 though, those
trends completely reversed. Japanese firms substantially increased their reliance on bank debt
as a percent of all debt, as did non-Japanese, non-Canadian firms. However, Canadian firms
markedly decreased their reliance on bank debt after 1986.
An investigation of the causes of those trends in reliance on bank debt versus other debt
is beyond the scope of this paper, but would appear to be a crucial element in a model
explaining multinational activities of banks. We note at this point that the changes in
affiliates' reliance on bank debt is, with one exception, consistent with the patterns we
observed in the ratio of affiliate bank debt to foreign bank lending (see Figure 3, in particular).
That is, the upward trend in that ratio for Japanese, U.K., and French banks seems to be in
line with the shift to more bank debt reliance by Japanese and non-Japanese, non-Canadian
affiliates since 1986/87. Furthermore, the downward trend in the ratio of affiliate bank debt to
·foreign bank lending we saw for Canadian banks is caused in part by the reduced reliance on
bank debt for Canadian-owned firms in the U.S. since 1986. The only exception to the pattern
of foreign banks responding to shifts in the bank-borrowing-to-total-borrowing ratio of foreign
affiliates is for Dutch banks. Though U.S. affiliates of Dutch multinationals increased their
reliance on bank debt relative to other debt since 1986/87, we already saw that, since 1990,
Dutch banks have increasingly emphasized servicing non-Dutch borrowers.
17
IV. Conclusions and Extensions
The aggregate data suggest that foreign banks did not always rely heavily on a "follow
the customer" strategy to support their multinational expansion in the U.S. In the early part of
the time period that result was largely a consequence of strategies followed by Japanese and
U.K. banks. More recently, though U.K. banks might have shifted from their earlier strategy,
Dutch and Canadian banks have allocated a growing proportion of their loans to non-home
country firms.
To the extent banks from some countries pursue non-home country customers, we need
to consider other explanatory factors in addition to what Graham and Krugman call the
"industrial-organization explanation" (i.e., following the customers). 18 Part of that research
can be informed by earlier literature on banks as multinationals, which focuses on firmspecific and country-specific advantages which banks seek to exploit as they cross borders.
For example, a possible source of firm-specific advantage is the form of corporate
organization chosen by a bank .. Hoshi, Kashyap, and Scharfstein (1991), Kim (1992), and
Flath (1993) examine the possibility that Japan's keiretsu system allows banks to more
accurately and cheaply monitor much of their loan portfolio. Frankel and Montgomery (1991)
make a related argument for German banks, which as universal banks can own shares in, and
have representation on the boards of, companies to which they lend. Other "microeconomic"
factors should also be explored. Key determinants of multinationalism by banks could be
differences in home country relative to host country regulatory and supervisory frameworks
18 Graham
and Krugman (1995, p. 55).
18
and practices. Taxation differences could also play a role.
Macroeconomic factors also are likely to be significant. For example, Graham and
Krugman (1995) suggest that Japanese banks may have expanded abroad, particularly into the
U.S., in order to help intermediate Japan's large current account surpluses. Exchange rate
fluctuations and international differences in interest rates could also be significant. Bilateral
and multilateral trade and investment agreements might also play a significant role in
explaining multinational expansion by banks. Pursuing that kind of analysis is beyond the
scope of this study, which nevertheless can serve as a useful platform to launch such an
investigation.
19
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22
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23
Table 1. Foreign-Based Firms in the U.S., 1992:
Direct Investment and Bank Borrowing
Direct Investment
Position in U.S.
U.S.
Affiliates
from:
All Countries
Billions
of
D.ollars
Total Assets of
Nonbank U.S. Affiliates
Percent
of
AH Foreign
Billions
of
D.ollars
Bank Borrowing
from U.S.-Based Banks
Percent
of
AH Foreign
Billions
of
D.ollars
Percent
of
AH Foreign
419.53
100
1,809.95
100
275.47
100
Japan
96.74
23
458.519
25
94.38
34
Canada
39.00
9
212.208
12
15.97
6
France
23.81
6
174.208
10
24.26
9
U.K.
94.72
23
294.783
16
35.90
13
Germany
29.21
7
127.778
7
21.19
8
Netherlands
61.34
15
104.672
6
6.82
2
344.81
82
1372.17
76
198.51
72
Major 6
Note: The Major 6 are Japan, Canada, France, U.K., Germany, and the Netherlands.
Sources: "Foreign Direct Investment in the United States: Detail for Historical-Cost Position and
Balance of Payments Flows, 1992," U.S. Commerce Department, Survey of Current Business, Vol. 73,
No. 7, July 1993, pp. 59-87; Zeile, William J., "Foreign Direct Investment in the United States:
1992 Benchmark Survey Results," U.S. Commerce Department, Survey of Current Business, Vol. 74,
No. 7, July 1994, pp. 154-186.
Table 2. Characteristics of Foreign-Owned Banks in the U.S., 1992
Assets
U.S.-Based
Banks
from:
Loans to Nonbauks
C&I Loans
Number of:
Billions
of
Percent
of
Billions
of
Percent
of
Billions
of
lll!llars
All Eoreieo
Percent
of
lll!llars
All Eoreien
lll!llars
AU foreign
Separately
Capitalized
Branches
and
Subsidiaries Aii:ncies
All Countries
901.39
100
374.10
100
189.81
100
119
558
Japan
408.88
45
193.52
52
99.91
53
23
123
Canada
59.18
7
31.27
8
17.59
9
21
20
France
78.90
9
17.97
5
11.07
6
2
31
U.K.
44.45
5
17.95
5
9.39
5
4
24
Germany
30.83
3
6.61
2
2.42
0
22
Netherlands
36.28
4
17.83
5
11.92
6
9
12
658.53
73
285.15
76
152.30
80
59
232
Major 6
Notes: C&l loans are those to U.S. addressees. Subsidiaries are those with 50 percent or greater foreign ownership. Major 6 countries
are Japan, Canada, France, U .K., Gennany, and the Netherlands.
Source: Federal Financial Institutions Examination Council, Reports of Condition.
Figure 1. Lending by U.S.-Based Foreign Banks:
Lending to Affiliates of Home-Country Cos. and to All Other Borrowers
400
- - - - ------------
1
□
Maximum Possible Lending to U.S. Affiliates of Foreign Cos.
■
Minimum Possible Lending to All Other Customers
100
81
82
83
85
84
86
87
88e
89e
90e
91e
92
Lending Patterns of Foreign-Owned Banks, and Borrowing Patterns of
Foreign-Owned Companies in the U.S.
(billions of dollars unless otherwise indicated)
l.!!BJ.
A.
B.
C.
D.
Notes: e
1282
1283
12&1
1285
llBJi
l2ll'Z
1288e
Nonbank Loans by U.S.-Based Foreign-Owned Banks (billions of dollars)
124.4
140.4
150.2
170.4
190.0
211.9
243.3
279.2
ll!82e
lJ!:2ile
l2l!l.e
122.2
314.6
333.8
375.7
374.1
Bank Borrowing by U.S. Affiliates of Foreign Companies =
Maximum Possible Lending to U.S. Affiliates of Foreign Cos. (billions of dollars)
57.1
66.6
71.8
81.6
97.8
109.9
119.0
203.1
165.5
225.2
261.0
275.5
Minimum Possible Lending to AU Other Customers (A • B) (bllllons of dollars)
67.3
73.7
78.4
88.7
92.2
102.0
124.3
113.7
108.6
114.7
98.6
Bank Borrowing of U.S. Affiliates of Foreign Cos. as a Share of Loans by U.S.-Based Foreign Banks (percent)
~
a
u
u
51
il
•
9
e
~
M
N
= estimate.
111.4
Bank borrowing by U.S. affiliates of foreign companies excludes borrowing from banks outside the U.S.
Sources: U.S. Depanment of Commerce; Federal Financial Institutions Examination Council, Reports of Condition;
Office of the Comptroller of the Currency (OCC) and Federal Reserve Banlc of New York (FRBNY) staff estimates.
I Figure
2---:---·ean1c Debt offf_K.-AffilillteS Of Foreign Companies as a Share of Loans
by Foreign-Owned Banks and Branches and Agencies in the U.S.
120 1"
'=' All Industries
•
• C&I Loans
A
Real Estate Loans
•
•
Bank Debt of U.S. Affiliates of Foreign Companies as a Share of Loans by Foreign-Owned Banks and Branches and Agencies
in the U.S., by Type of Industry (percent)
l2fil
ll8.1.
1283
12&1
lffl
l2llli
l2ll7
1l>ll8e
12Bl!e
l220e
l22le
1222
All Industries
45.9
47.5
47.8
47.9
51.5
51.9
48.9
59.3
64.6
67.5
69.5
73.6
C&I Industries
94.8
92.6
90.9
100.0
65.5
62.0
57.1
68.5
75.2
83.1
85.3
84.7
Real Estate
44.2
54.8
62.0
68.8
71.6
72.5
63.3
50.7
42.4
38.0
32.7
31.4
Notes: e
= estimate.
Loans by foreign-owned subsidiaries and branches and agencies exclude loans to other banks.
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
OCC and FRBNY staff estimates.
Table 3. U.S. Affiliates of Foreign Companies: Current Liabilities and Long~Term Debt to U.S.~Based Banks (bil. $)
12.81
l2B2
l2lll
12&1
128S
l2l!.6
1281
l2llB,
1282<
l220e
l2lli
1.9.22
All Industries
57.1
66.6
71.8
81.6
97.8
109.9
119.0
165.5
203.1
225.2
261.0
275.5
C&I Industries
44.9
49.4
49.5
50.5
53.9
62.3
69.5
99.1
122.0
140.9
158.9
160.7'
Real Estate
7.9
11.0
13.0
15.6
18.2
19.7
23.7
25.6
27.7
31.3
31.9
29.2
Nonbank Financial Institutions
4.3
6.3
9.2
15.5
25.7
28.0
25.8
40.8
53.4
52.9
70.2
85.6
Notes: e = estimate. Loans by foreign-owned subsidiaries and branches and agencies exclude loans to other banks.
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
OCC and FRBNY staff estimates.
-- ----
-
- -
Figure 3. Bank Debt of U.S. Affiliates of Foreign Companies as a Percent of
Loans by Foreign-Owned Banks and Branches and Agencies in the U.S.
90 ~80
f-
70
!-
l
60 L-
1
50 ~40 '--
IO '--
!
0
~~
_
81
■
_ L_
82
__o_ __ L_
83
Japan
84
__c_ __L__
"
86
91,
'"" '°"
87
6 United Kingdom
• Canada
_l__ __L_J
_J__ __ L _ _ ~_ __!__
92
o Netherlands
x France
Bank Debt of U.S. Affiliates of Foreign Companies as a Percent of
Loans by Foreign-Owned Banks and Branches and Agencies in the U.S., by Country of Parent
lil!2e
l220e
122le
1222
33.7
34.6
34.5
42.8
48.8
81.0
113.8
136.6
134.5
78.6
51.1
70.1
77.0
116.8
129.5
150.9
172.9
135.0
215.4
146.9
192.3
212.0
328.0
379.2
363.3
320.5
150.4
142.8
140.6
108.1
86.5
92.4
56.5
45.2
38.2
27.2
30.6
47.5
63.6
100.3
116.8
124.0
157.4
200.0
1281
1282
Im
12M
1285
"86
l9ll'Z lilll!e
Japan
30.7
27.7
28.4
26.2
28.1
29.7
27.2
Canada
67.9
78.6
84.8
75.4
71.9
88.2
France
66.6
60.5
66.9
77.6
72.7
Germany
174.7
193.5
176.3
193.6
The Netherlands
270.8
237.4
193.8
United Kingdom
19.9
23.4
24.8
Notes: e = estimate. Loans by foreign-owned subsidiaries and branches and agencies exclude loans to other banks.
For scaling purposes, values above 100 percent are not included in the figure (i.e., whenever bank borrowing by nonbank affiliates
exceeded total lending by foreign-owned banks).
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
Office of the Comptroller of the Currency (OCC) and Federal Reserve Bank of New York (FRBNY) staff estimates.
- - - - ----·- - - - - - - - - - - - - - - - - - - --·---------- -· --------··--- -----
- - - · - - - - - - ·-----------
Figure 4. Bank Debt of U.S. c&1 Affiliates of Foreign Coffipanies-~s a p~f1:ent of
C&I Loans by Foreign-Owned Banlcs and Branches and Agencies in the U.S.
----r-1 -----90
//
~
I
3o
L
20
I-
I
81
82
83
■
84
Japan
8S
86
87
"' '"' '°' "'
92
6 United Kingdom o Netherlands
• Canada
Bank Debt of U.S. C&I Afflllates of Foreign Companies as a Percent of C&I Loans by
Foreign-Owned Banks and Branches and Agencies in the U.S., by Country of Parent
lllfil
198.2
128J
1284
l28S
1286
Japan
82.32
70.58
68.93
73.13
50.57
38.01
31.85
Canada
60.12
66.93
72.o?
69.82
46.76
74.35
1287 128&,
1282e
l2l!lle
l221e
1m
31.28
33.10
43.80
48.89
59.96 112.92 156.72 154.63
83.04
44.70
35.48
France
113.66 104.09 119.15 118.37 113.11 109.92 121.70 181.33 188.47 213.72 191.94 125.39
Germany
279.83 335.05 363.59 417.34 477.04 233.27 317.57 259.89 182.01 236.72 336.28 284.28
The Netherlands
411.95 383.94 352.61 244.30 128.91 165.70 112.13 107.15 123.57
United Kingdom
43.63
47.18
47.73 223.05
45.75
62.53
78.88
51.20
45.82
85.73 125.50 174.08 203.04 273.49 337.91
Notes: e = estimate. C&l loans by foreign-owned subsidiaries and branches and agencies are those to U.S. addressees.
For scaling purposes, values above 100 percent are not included in the figure (i.e., whenever bank borrowing by
nonbank affiliates
exceeded total lending by foreign-owned banks).
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports
of Condition;
OCC and FRBNY staff estimates.
I
1
JOO
Figure 5. Bank Debt of U.S. Real Estate Affiliates of Foreign Companies as a Percent of
Real Estate Loans by Foreign-Owned Banks and Branches and Agencies in the U.S.
c-
'
90 c-
80 L
'
I
70
-
60
!.• '
50 ~
40 ,..
30
•
•
20
lOc-~
0
L _ L __
8l
■
_j__ _L __
82
83
Japan
_j__----'---'-------'---'------'---'-------'--.c_J
84
85
86
87
91,
92
'" '°'
"'
4 United Kingdom
• Canada
~
France
◊
Netherlands
Bank Debt or U.S. Real Estate All1llates or Foreign Companies as a Percent or Real Estate Loans
by Foreign-Owned Banks and Branches and Agencies in the U.S.
1m
20.9
20.3
21.3
210.1
179.8
110.0
96.0
7.8
11.4
10.6
7.8
5.7
549.6
227.3
322.7
310.9
294.8
111.4
lllll2
1283
12&4
1285
"86
1287 l288e
10.8
12.4
18.8
17.8
23.2
29.5
28.7
21.7
24.3
Canada
104.3
113.8
126.4
153.1
167.4
163.5
169.0
191.3
France
14.2
18.2
32.6
72.2
35.3
18.2
6.4
4963.2 7855.7 8321.4 7570.8 5794.7 3166.1
Japan
Germany
-
li2ll,
12111
lllll!e
The Netherlands
333.9
444.7
402.8
530.7
446.7
401.9
289.8
104.0
95.3
49.5
53.1
36.0
United Kingdom
8.4
9.6
12.9
16.6
22.5
43.8
36.4
50.6
36.5
32.8
34.2
47.6
Notes: e=estimate.
For scaling purposes, values above 100 percent are not included in the figure (i.e., whenever bank borrowing by nonbank affiliates
exceeded total lending by foreign-owned banks).
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
OCC and FRBNY staff estimates.
[Figure- 6a. Fofelgn-Owned Banlcs in the
I
Percentage Change in Loans
u:s::·
00.,------------'==========-:~.~----~
40 -
•
* All Countries
l
©
Japan
■
Canada
• U.K.
82
84
83
85
86
87
88
89
Figure 6b. Foreign-Owned anks in the U.S.:
Percentage Change in Loans
100
,.
~
·I,t
t>
0
80 ~
* AU Countries
00
©
■
France
Gennany
• Netherlands
40
•
l
~
i
0
-20
82
83
84
85
87
88
89
90
91
92
Note: Loans by foreign-owned subsidiaries and branches and agencies exclude loans to other banks. See appendix: Table A.4
for underlying data.
Source: Federal Financial Institutions Examination Council (FFIEC). Reports of Condition.
Figure 7. Banlc Share of U.S. Liabilities of U.S. Affiliates of Foreign Finns (Percent)
70~-------
,------··--------·---·
----~
5 Japanese Finns
i •
I
Canadian Firms
* Non-Japanese, Non-Canadian Finns
I
81
82
83
84
85
86
87
Bae
888
908
91e
92
Bank Share of U.S. Liabilities of U.S. Affiliates of Foreign Firms (percent)
HBJI..
1!!82
ll!8J
1l!M
12.85
1286
12B7 12ll8e
Japanese AffUiates
58.9
58.6
61.1
50.1
47.3
38.3
19.6
22.2
24.5
26.9
29.2
31.6
Canadian Affiliates
28.5
30.4
32.9
35.9
34.1
37.5
34.1
31.8
29.6
27.3
25.0
22.7
Non-Japanese, Non~Canadian
22.5
22.2
20.9
21.4
19.5
19.1
24.2
25.8
27.3
29.0
30.5
31.6
Notes: e
= estimate.
1920<
1221e
Im
1lllll
Loans by foreign-owned subsidiaries and branches and agencies exclude loans to other banlcs.
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
OCC and FRBNY staff estimates.
Table A.1
U.S. Affiliates of Foreign Companies: Current Liabilities and Long-Term Debt
to U.S.-Based Banks, by Country of Parent (bil. $)
•
1281
1m
1283
12ll4
l28S
l28li
l28'Z l2l!.8<,
11.6
11.8
13.2
13.9
17.1
24.4
29.1
Canada
9.8
11.7
12.5
14.5
15.4
19.9
France
4.7
4.5
4.6
5.0
5.0
Germany
5.6
6.7
6.3
6.9
The Netherlands
5.1
4.9
4.1
United Kingdom
5.5
7.2
8.1
Japan
Notes: e
l282ll
l22llo
122k
1m
47.7
58.5
67.6
85.0
94.4
18.1
23.6
26.9
26.6
23.9
16.0
5.2
5.7
9.3
10.2
14.2
21.9
24.3
7.4
5.8
7.1
8.9
12.8
15.4
18.9
21.2
3.4
3.6
4.2
4.0
4.6
5.2
5.8
6.6
6.8
9.3
10.5
11.2
16.6
22.9
28.6
29.7
33.8
35.9
= estimate. Loans by foreign-owned subsidiaries and branches and agencies exclude-loans to other banks.
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
OCC and FRBNY staff estimates.
Table A.2 C & I Affiliates of Foreign Companies: Current Liabilities and Long-Term Debt to U .S.-Based Banks,
by Country of Parent (billion $)
1281
1282
l28J
12M
l28S
l2Bli
1281 l2ll8e
l.282<,
10.5
10.6
11.1
11.9
13.8
15.6
18.3
27.8
Canada
4.8
4.9
5.2
5.8
5.7
9.9
7.4
France
4.1
3.8
3.8
4.0
4.1
4.3
Germany
5.1
6.1
5.4
6.0
6.1
The Netherlands
4.3
3.7
3.0
1.8
United Kingdom
4.1
5.3
5.4
6.2
Japan
ll!2lle
l!!2lJ:
122.2
30.3
35.9
44.5
48.8
13.8
16.5
15.1
14.1
7.9
4.9
7.8
8.1
9.5
15.1
13.9
4.3
5.1
5.4
4.4
5.4
6.5
6.9
2.0
2.9
2.7
3.5
4.0
4.3
5.1
5.5
6.8
7.6
11.6
16.7
22.9
25.7
29.4
31.7
Notes: e = estimate. C&I loans by foreign-owned subsidiaries and branches and agencies are those to U.S. addressees.
Sources: U.S. Department of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
OCC and FRBNY staff estimates.
Table A.3
Real Estate Affiliates of Foreign Companies: Current Liabilities and Long-Term Debt to U.S.-Based Banks
($ billions)
.1281
1282
l28J
illA
l9.8S
1286
1m l28l!e
Japan
0.29
0.31
0.49
0.66
0.98
2.09
3.89
Canada
4.04
5.51
6.18
7.40
8.40
8.67
France
0.08
0.11
0.18
0.21
0.15
Germany
0.32
0.54
0.64
0.70
The Netherlands
0.58
0.77
0.80
United Kingdom
0.66
0.78
1.09
l.2B2l:
l22lh,
l22JJ,
12.22
5.45
8.61
11.13
11.75
11.73
9.48
9.07
9.28
9.93
8.41
6.84
0.10
0.05
O.Q7
0.10
0.14
0.13
0.11
0.67
0.71
0.64
0.62
0.69
0.81
0.76
0.97
1.03
1.13
1.14
0.89
0.98
1.00
1.18
1.14
0.92
1.45
2.02
2.10
2.19
2.33
2.09
2.07
2.11
1.96
Notes: e=estimate.
Sources: U.S. Depanment of Commerce; Federal Financial Institutions Examination Council (FFIEC), Reports of Condition;
OCC and FRBNY staff estimates.
Table A.4. Nonbank Loans by Foreign-Owned Banks in the U.S.
1281
1282
1283
12M
ms
l2l!.6
128'.Z
l2l!8
128.2
lJ!2ll
1221
l22Z
All Countries (bil. $)
% change over prev. yr.
124.4
140.4
12.9
150.2
7.0
170.4
13.5
190.0
11.5
211.9
11.6
243.3
14.8
279.2
14.7
314.6
12.7
333.8
6.1
375.7
12.5
374.1
-0.4
Japan
% change over prev. yr.
37.8
42.5
12.6
46.4
9.0
53.1
14.6
61.0
14.9
82.3
34.8
106.8
29.8
141.5
32.5
169.0
19.4
196.2
16.1
198.4
I.I
193.5
-2.5
Canada
% change over prev. yr.
14.5
14.8
2.4
14.7
-0.7
19.2
30.3
21.5
11.9
22.5
4.9
22.4
-0.7
20.7
-7.2
19.7
-5.0
19.8
0.4
30.4
53.6
31.3
2.9
France
% change over prev. yr.
7.1
7.5
6.0
6.9
-8.3
6.4
-6.6
6.9
7.9
7.4
7.8
7.4
-0.5
8.0
8.1
7.9
-1.9
9.4
19.5
12.7
35.3
18.0
41.6
Germany
% change over prev. yr.
3.2
3.5
9.2
3.6
2.6
3.6
-0.1
3.5
-2.9
3.9
13.7
3.7
-5.6
4.2
13.1
3.9
-7.0
4.1
4.0
5.2
28.5
6.6
26.8
Netherlands
% change over prev. yr.
1.9
2.0
7.8
2.1
2.7
2.2
6.6
2.5
12.3
3.0
19.3
3.7
22.7
5.3
43.6
5.6
6.1
10.2
81.7
14.6
43.8
17.8
21.7
United Kingdom
% change over prev. yr.
27.4
31.0
13.1
32.6
5.0
34.1
4.6
34.5
I.I
23.6
-31.5
26.0
JO.I
22.9
-12.l
24.5
6.9
24.0
-2.0
21.5
-10.4
17.9
-16.4
Note: Loans by foreign-owned subsidiaries and branches and agencies exclude loans to other banks.
Source: Federal Financial Institutions Examination Council (FFIEC), Reports of Condition.
@FedFRASER