Photo: The International Banking Corp. (IBC) was the first American bank with an extensive international branch nextwork. Founded in 1901 in Connecticut, IBC became a major foreign bank in China, and issued part of China's banknotes until 1927. IBC became part of the National City Bank of New York (today's Citigroup) in 1915.
Photo: European American Bank started out as Belgian bank Banque Belge pour l'Etranger's New York branch. This is an old cheque from the bank from 1927.
Two of the banks that became part of Citigroup are of special interest to me. One is the International Banking Corporation (IBC), founded in 1902 in Connecticut as the first American bank permitted, and with the specific mandate, to operate foreign branches. IBC was acquired by Citigroup (then the National City Bank of New York) in 1915.
The other bank of interest is the
European-American Bank (EAB), which started out as the New York branch of a
Belgian bank. It would become a sizeable
retail bank in the state of New York in the 1970s. Citigroup bought EAB in 2001.
International Banking Corporation (IBC)
Before
1914, banks chartered in the New York state or chartered federally were
forbidden to have branches outside of the United States. To provide international money transfer
services, New York banks such as National City Bank could only do so by
developing correspondent payment clearing agreements with foreign banks. In this regard, American banks were very backward
when compared with their British, French, German and Belgian counterparts,
which had by the late 19th century opened offices outside of their
home markets, though mainly in their overseas colonies or territories.
Interestingly,
American trust companies, which were not legally-defined as banks but
nevertheless operated like full-service banks except in names, were free to
open foreign branches. Also, as each
state has its own banking regulations, certain states did permit their
state-chartered banks to operate outside of the United States. In particular, Connecticut was one such state
and in 1901, the International Banking Corporation (IBC) was established in that
state with the specific mandate to engage in overseas banking.
Almost
immediately, the International Banking Corporation opened its first overseas
branches in a market with a very under-developed banking sector and a weak
central government that relied on foreign banks: China. By 1902, IBC had opened branches in Britain,
China, Hong Kong, India, Japan, Philippines and Singapore; and domestically in
San Francisco – America’s gateway to the Orient. From at least as early as 1905 until 1927,
IBC, like a large number of local Chinese, foreign and Sino-foreign
joint-venture banks, issued China’s banknotes.
Asia,
however, was not IBC’s sole focus, for it opened an office in Mexico in 1903;
Panama and the Straits Settlement of Penang (part of today’s Malaysia) in 1904
and Canton (now Guangzhou) in 1906.
Banking
regulations in the U.S. were changed in 1914, finally allowing American banks
to manage direct branches overseas. Very
quickly, IBC probably lost its niche and status as the only meaningful American
overseas bank. In 1915, National City
Bank of New York (now Citigroup) acquired control of IBC. For at least another decade, IBC under
National City’s control continued to expand under its own right, opening an
office in Colombia in 1916; Dominican Republic in 1917; Java (Indonesia) in 1918,
and Burma and France in 1919. In 1921,
National City transferred its Madrid and Barcelona branches to IBC. Eventually, IBC was integrated into Citibank
(then National City Bank of New York).
European American Bank (EAB)
In the 1960's, several European
banks longed to expand into the U.S. market, but found themselves too small to
introduce meaningful and profitable operations in the huge U.S. market. In
1968, Société Générale de Banque (Belgium), AMRO Bank (Netherlands), Deutsche
Bank (Germany) and Midland Bank (Great Britain) became joint shareholders of
Belgian-American Banking Corp. and renamed it European-American Bank &
Trust. In 1971, two more European banks Creditanstalt-Bankverein from Austria,
and France's Société Générale also became shareholders of the New York bank.
In 1974, Euopean-American Bank & Trust bought part of the bankrupt Franklin National Bank, a rural bank in the New York state. By the late 1970s, the bank became one of New York's 10 largest retail banks and was the market leader in the Long Island region. In 1984, the bank’s name was shortened to European American Bank (EAB). As can be expected, the European banking consortium that collectively owned EAB eventually began to disagree on the future of their American subsidiary so that by 1991, ABN AMRO Holding NV became EAB’s sole owner. Subsequently, even ABN AMRO decided to exit the New York retail banking market when it sold EAB (with 97 branches mostly in Long Island) to Citigroup in 2001 for USD $1.6-billion.
In 1974, Euopean-American Bank & Trust bought part of the bankrupt Franklin National Bank, a rural bank in the New York state. By the late 1970s, the bank became one of New York's 10 largest retail banks and was the market leader in the Long Island region. In 1984, the bank’s name was shortened to European American Bank (EAB). As can be expected, the European banking consortium that collectively owned EAB eventually began to disagree on the future of their American subsidiary so that by 1991, ABN AMRO Holding NV became EAB’s sole owner. Subsequently, even ABN AMRO decided to exit the New York retail banking market when it sold EAB (with 97 branches mostly in Long Island) to Citigroup in 2001 for USD $1.6-billion.
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