Foreign Bank Trade Group: Lunch Club Becomes a Power
Shoultz, Donald, American Banker
NEW YORK -- Foreign banks bought their way into the U.S. market by underpricing their loans.
That observation, said J. Hans Brinckmann, though "crudely expressed," does contain an element of truth. But he declared, "That's history.
"It's no longer possible for foreign banks to do so, even if they wished. They don't have cheap sources of funds left," Mr. Brinckmann said during a recent interview. Mr. Brinckmann, executive vice president of the Institute of Foreign Bankers, or IFB, and he's not about to apologize for the past, present, or future activities of foreign banks in the United States.
"Foreign banks have performed an important service to corporate America by making available funds at lower rates," he said. They entered the U.S. in abundance in the 1960s and 1970s and used their ability to raise cheap funds abroad to make low-cost loans to U.S. companies. This market is beginning to contract, particularly among the largest corporations, he noted, though foreign banks should still be able to continue to price aggressively for middle market and municipal business for some time.
Over the last two decades, the number and influence of foreign banks has increased dramatically, and their trade group, the Institute of Foreign Bankers, has necessarily changed and grown since its founding in 1966.
"It was originally a luncheon club," recalled Flavian Zeugin, first vice president at the Swiss Bank Corp.'s New York branch. Mr. Zeugin arrived here from his native Switzerland morethan 30 years ago and witnessed the institute's 10-fold growth in membership. Today, it has 240 member banks representing 55 countries, which accounts for about 80% of the all the foreign banks active in New York. But, in addition to the increase in sheer numbers, the organization has evolved from a social club into a working trade association.
"It was a matter of us being pushed into becoming a working organization," Mr. Zeugin said. The push came when Congress began considering legislation that was to become the International Banking Act of 1978.
At that point, the institure created a regulatory and legislative committee. According to Mr. Zeugin, this committee continues to be the backbone of the institute, even though it now works through additional committees.
Overseeing the committee work is a 21-member board of officers and trustees. Mr. Zeugin served as a trustee for the maximum three years allowed under the institute's bylaws. He continues to be active within the organization and represents the foreign banking community on several outside panels. …