Fee-Earning and Other Activities

While a number of the earliest Euro-banks were established in the mid-1960s largely to participate in the medium-term lending function of the Euro-currency market, several factors have led to an increasing focus on investment or merchant banking and related activities. American and Japanese commercial banks saw in the establishment of overseas subsidiaries a means of engaging in investment banking activities prohibited in their domestic markets. Other banks already carrying on such activities followed their clients into the international capital markets through their Euro-bank affiliates. An all-pervasive influence, however, has been the increasing awareness of most Euro-banks that income derived independently of a capital base was one of the few means by which a Euro-bank beset by rapidly rising costs of operation, limited ending spreads and a presumed leverage ceiling could produce a reasonably attractive return on stockholder funds.