FDI and the internationalization : evidence from U.S. subsidiaries of foreign banks

Nine foreign banks own the ten largest U.S. affiliates or subsidiaries of foreign banks. These account for 86% of the assets in affiliates and subsidiaries. Their histories suggest that most now represent an attempt by the parents to grow outside the confines of home markets. Original motives for their establishment have included ethnic banking and operational stability stemming from geographical dispersion. There is one major instance of acquiring capabilities, but it does not involve retail banking. The dispersal of national origins suggests that bank-specific capabilities are the primary source of the parents' competitive advantage. Being from English speaking countries also appears to help. Lastly, the growth of the affiliates and subsidiaries has not come from incremental growth but rather from a rearrangement of assets among banks.