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The poor performance of foreign bank subsidiaries: were the problems acquired or created?

  • Joe Peek
  • Eric S. Rosengren
  • Faith Kasirye

We examine foreign acquisitions of United States banks around the time of the ownership change to determine whether the observed poor performance of foreign subsidiaries is the result of changes in business strategy or the preexisting characteristics of the target bank. We find that many of the problems were already present at the time of acquisition. However, changes in business strategy by the foreign owners were generally not successful in raising the banks's performance level to that of its domestic peers.

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Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number 98-3.

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Date of creation: 1998
Date of revision:
Handle: RePEc:fip:fedbwp:98-3
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  1. DeYoung, Robert & Nolle, Daniel E, 1996. "Foreign-Owned Banks in the United States: Earning Market Share or Buying It?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 622-36, November.
  2. Yamori, Nobuyoshi, 1998. "A note on the location choice of multinational banks: The case of Japanese financial institutions," Journal of Banking & Finance, Elsevier, vol. 22(1), pages 109-120, January.
  3. Joe Peek & Eric S. Rosengren, 1996. "The international transmission of financial shocks: the case of Japan," Working Papers 96-1, Federal Reserve Bank of Boston.
  4. Poulsen, Annette B, 1986. "Japanese Bank Regulation and the Activities of U.S. Offices of Japanese Banks: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(3), pages 366-73, August.
  5. Grosse, Robert & Goldberg, Lawrence G., 1991. "Foreign bank activity in the United States: An analysis by country of origin," Journal of Banking & Finance, Elsevier, vol. 15(6), pages 1093-1112, December.
  6. Steven A. Zimmer & Robert N. McCauley, 1990. "Bank cost of capital and international competition," Quarterly Review, Federal Reserve Bank of New York, issue Win, pages 33-59.
  7. Henry S. Terrell, 1993. "U.S. branches and agencies of foreign banks: a new look," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Oct, pages 913-925.
  8. Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993. "The efficiency of financial institutions: A review and preview of research past, present and future," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 221-249, April.
  9. Philip Molyneux & Rama Seth, 1996. "Foreign banks, profits and commercial credit extension in the United States," Research Paper 9628, Federal Reserve Bank of New York.
  10. Rama Seth, 1992. "Profitability of foreign banks in the United States," Research Paper 9225, Federal Reserve Bank of New York.
  11. Robert N. McCauley & Rama Seth, 1992. "Foreign bank credit to U.S. corporations: the implications of offshore loans," Quarterly Review, Federal Reserve Bank of New York, issue Spr, pages 52-65.
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