15.5 International Banking

15.5 International Banking

5. What roles do U.S. banks play in the international marketplace?

The financial marketplace spans the globe, with money routinely flowing across international borders. U.S. banks play an important role in global business by providing loans to foreign governments and businesses. Multinational corporations need many special banking services, such as foreign-currency exchange and funding for overseas investments. U.S. banks also offer trade-related services, such as global cash management, that help firms manage their cash flows, improve their payment efficiency, and reduce their exposure to operational risks. Sometimes consumers in other nations have a need for banking services that banks in their own countries don’t provide. Therefore, large banks often look beyond their national borders for profitable banking opportunities.

Many U.S. banks have offices across the world. They can have additional services and access to more sources of funding. Citibank, for example, was the first bank to enter the existing Japanese ATM network, providing direct competition to the domestic Japanese banks.

For U.S. banks, expanding internationally can be difficult. Banks in other nations might be subject to fewer regulations than U.S. banks, making it easier for them to undercut American banks on the pricing of loans and services. Some governments also protect their banks against foreign competition. For example, China imposes higher fees and may limit the amount of deposits that foreign banks can accept from customers. Interest rates also vary to place some restrictions on borrowing from foreign banks. ¹⁵

International banks operating within the United States also have a substantial impact on the economy through job creation (they employ over 200,000 U.S. citizens as of 2024), operating and capital expenditures, taxes, and other contributions. According to December 2025 Federal Reserve data, the combined banking and non-banking assets of the U.S. operations of foreign banks total more than $3.3 trillion.¹⁶

The United States has two banks listed in the top 10 world’s biggest banks, as shown in Table 15.7.

Political and economic uncertainty in other countries can make international banking a high-risk venture. European and Asian banks were not immune to the financial crisis of 2007–2009. In fact, several countries, including Greece, Portugal, Spain, and Ireland, have rebounded from the near-collapse of their economic and financial systems they experienced at that time. Financial bailouts spearheaded by the European Union and the International Monetary Fund have helped stabilize the European and global economy. The impact of "Brexit," with the United Kingdom leaving the European Union, affected international banking. Many overseas banks were based in London and utilized the benefits of being part of the EU to have access to the other 27 member countries. With the UK leaving the EU, new authorizations to conduct business in those countries was required. This impacts their businesses today as they try to navigate the additional compliance issues.¹⁷