Magazine article American Banker

Opportunities in International Finance

Magazine article American Banker

Opportunities in International Finance

Article excerpt

On Sept. 12 I suggested in this column that community banks have little to fear from their inability to match the services of money-center institutions in international finance.

Small banks' paucity of international services probably hasn't cost them much business. What has is the failure to use the talents and knowledge they do have.

Dan R. Heldridge of Coergon, an international banking software company based in Boulder, Colo., elaborated on that point. Mr. Heldridge, a former international banker with Citibank and National Westminster Bank, wrote:

"I have often pondered the role of small banks in international trade. On the whole, I would have to agree with your bank CEO friend's comments regarding his ability to provide global services.

"The occasional foreign exchange transaction and letters of credit can be accommodated without undue difficulty. But his remark that he has|never' lost a relationship due to insufficient international expertise requires a footnote: You can't lose what you've never had.

"One disturbing issue was his solution that customers pay with a sight draft and finance locally.

"During the 1980s, when U.S. interest rates were in their teens, I recall customers getting very favorable financing from Japanese and other suppliers. Depriving customers of supplier financing, and possible savings, is not always prudent.

"Your friend also stated that he did not want the occasional $50,000 90-day paper that arises from an international trade transaction, and that a large bank won't bother with it. Not true! There are good fees and discounted interest to be had.

"The trick is to get that kind of paper with some kind of volume or regularity, so that it can be quickly sold to banks or investors. (Forfeiting houses can be a good source.) This, of course, requires pursuing customers that an individually or collectively generate those volumes. …

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