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Foreign Banks Set to Invade Wall Street

By Dan Weil   |  

The woes suffered by major U.S. financial services companies have created an opportunity for foreign competitors to encroach on their turf.

Powerhouse foreign banks — from Switzerland, Germany, the U.K. and Japan — are moving in to financial service areas once dominated by U.S. firms.

That includes everything from underwriting stocks and bonds to trading to lending to advisory work in mergers and acquisitions.

Some experts worry that foreigners could take over Wall Street.

“There is evidence of traction in market share, and you can see that these banks have leapfrogged,” Fiona Swaffield, an analyst at brokerage firm Execution Ltd., tells The New York Times.

“The issue is, how long can this last, and can anyone re-emerge?”

Former Comptroller of the Currency Eugene Ludwig tells The Times that foreign banks have an advantage in that they “generally operate under more coherent regulatory structures than U.S. banks do.”

To be sure, foreigners have made big plays in the U.S. banking market before, and these forays haven’t always been successful.

Examples of such failures include Credit Suisse’s 2000 takeover of Donaldson, Lufkin & Jenrette and Deutsche Bank’s 1998 purchase of Bankers Trust.

Another limiting factor is the fact that foreign banks aren’t exactly going great gangbusters themselves.

The European Central Bank predicts euro-zone banks will suffer another $283 billion of write-offs by the end of 2010 and that their total losses will register $649 billion, The Wall Street Journal reports.

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The woes suffered by major U.S. financial services companies have created an opportunity for foreign competitors to encroach on their turf.Powerhouse foreign banks — from Switzerland, Germany, the U.K. and Japan — are moving in to financial service areas once dominated by...
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