As U. S. banks flounder in the reces sion, foreign penetration of the banking industry is accelerating. At last count, notes economist Gary Schlossberg of Wells Fargo Bank, loans on the books of large U. S. agencies and branches of foreign banks were up $11 billion, or 9% over their year-earlier level. Meanwhile, loans at the domestic offices of U. S. banks were down $14.7 billion.
That's not all. Counting subsidiaries acquired in the 1980s, the foreign-owned share of U. S. banking assets has climbed from 16.5% in 1985 to 21.5% at the end of 1990, including an astonishing 58% of assets in New York and over 33% in California. Foreign-owned banks now account for more than 30% of commercial and industrial loans, and over half of standby letters of credit used to enhance the credit ratings of municipalities, issuers of commercial paper, and others.