International Retail Banking As a Strategy

U.S. banks gain profitability through international retail banking.

Many U.S. banks open foreign branches to service the needs of their own customers and to offer unique products that may not be available in the branch's area. Foreign branches also make greater profitability possible for banks.

Global Customers

International retail business is conducted for expatriate populations and corporations.

U.S. individuals and corporations that reside in foreign countries often must maintain banking relationships in their country of origin to transact personal business and meet financial obligations. U.S. banks often serve the domestic expatriate populations where they are located, and the retail banking needs of U.S. corporations' foreign employees.

New Markets

New markets offer banks the opportunity to expand on a global basis.

Unique U.S. banking products, such as credit lines, may be highly marketable in foreign countries, especially if they are not offered in the host country. U.S. banks expand their base of operations to maintain their level of growth and remain competitive in the international arena.

Profitability

The spread between deposits and loans is often higher in foreign countries.

U.S. banks can operate at reduced costs in many foreign countries, which contributes to higher profitability. U.S. banks' use of sophisticated technology and organization also increases profitability. The spread between interest-paying deposits and interest-earning loans tends to be higher in foreign countries.

References

• University of Southern Mississippi: Soundness and Structure of International Banking
• Sam Sedaei International Banking: Theory and Structure of International Banking
• University of California Berkeley: An International Comparison and Assessment of the Structure of Bank Supervision

Resources

• Bank for International Settlements: International Banking and Financial Market Developments