Single Global Strategy Impossible despite Internationalization of Financial Markets: 'Each Country Imposes Different Restrictions,' Says Merrill Lynch Exec

By Perelman, Ellen S. | American Banker, May 24, 1985 | Go to article overview

Single Global Strategy Impossible despite Internationalization of Financial Markets: 'Each Country Imposes Different Restrictions,' Says Merrill Lynch Exec


Perelman, Ellen S., American Banker


No one disputes that an internationalization of financial markets has occurred. But even as they pursue foreign business, U.S. financial companies generally do not have consistent, integrated strategies worldwide. Each national market is different, and the companies try to adjust accordingly.

Merrill Lynch & Co., which has served an international clientele since 1953, denies that it has a true global strategy. After a major expansion in recent years, the brokerage firm maintains 37 offices outside of North America and 23 in Canada.

William F. Waters, senior vice president and director, international retail sales and marketing, said, "It's impossible for us to have a global strategy. All money is not green. If the truth be known, we cannot look upon our business in terms of a global market. Each country in which we operate imposes different restrictions upon us."

Other global players cite this same problem. In fact, a Treasury Department study in 1978 identified a myriad of inconsistent laws and regulations governing U.S. bank and financial service operations in other countries.

A service provider can approach the question of a global strategy in a number of ways. Regulations, not economics, often dictate the business strategies adopted.

Branches are by far the most important form of U.S. presence abroad because they "enhance control and operational efficiency," said the Treasury study, which was mandated by the International Banking Act of 1978 to help formulate U.S. regulatory policy in an age of financial-market globalization.

However, in countries which restrict branch entry, banks enter by forming banking subsidiaries. They are an alternative way of gaining access to a country's domestic deposit base while conforming to restrictive tax laws.

U.S. banks also have established a significant number of nonbank subsidiaries to engage in related activities such as leasing, consumer finance, and factoring.

On occasion, U.S. banks will acquire minority interests in foreign banks because no other means of entry is available. They do so to gain experience in a new environment or to pool their expertise and resources with those of others on a joint venture basis.

U.S. bankers and financial service company executives have learned, however, that, to serve an international clientele, they must not only develop new products and services, but they must devise new ways of marketing those products and services.

For example, Merrill Lynch enjoyed unqualified success in marketing its Cash Management Account in the familiar United States, where it has opened one million CMAs. But Merrill had to adapt the CMA package before it would be attractive -- and legal -- in other countries.

The brokerage firm, which introduced its International CMA in 1983, had to cope with the fact that most European banking laws prohibit a link between the CMA and money market funds. The U.S. version allows the customer three money-fund options -- a conventional fund, a tax-exempt fund, and a government securities fund.

International CMA customers can have their funds swept daily into an account at Merrill Lynch International Bank in London. Typically, rates earned on that account are one and a half points below the Londonb interbank offered rate, a key money market indicator.

The international account differs in two other important respects from the original version. First, ICMA requires a minimum initial investment of $25,000 compared with $20,000 in the U.S.

And ICMA is unique in overseas markets, while the domestic CMA has many competitors. "We found that it is not a homogeneous sale," meaning it can't be sold everywhere in exactly the same way, Mr. Waters said. "We have to position the product differently. We achieved 10,000 accounts without marketing."

Product Tailoring

Paul Tongue, senior vice president of Chase Manhattan Bank, said it is important to "tailor new products and services to a particular market. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Single Global Strategy Impossible despite Internationalization of Financial Markets: 'Each Country Imposes Different Restrictions,' Says Merrill Lynch Exec
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.