The Glamorous Side

Visitors who have reason to visit Moen, the largest of the remote and steaming Truk Islands in the Western Pacific, will find the usual grass-skirted young women, betel nut-chewing natives, mangrove swamps -- and a branch of California's Bank of America. Many major U.S. banks, in fact, are expanding into unlikely earners of the globe, and several of them are growing faster abroad than at home. Last week Manhattan's First National City Bank --which already has outposts from Santo Domingo to Dubai, the chief port of the Arabian Trucial States -- opened an other in the Chowringhi section of Calcutta, and this week Manhattan's Mor gan Guaranty Trust Co. will open a branch in Antwerp. In all, the number of foreign branches operated by U.S. banks has risen in the past five years from 124 to 215, and the total grows almost every week.

First-place Citibank--as Manhattan's First National City likes to call itself--this year will lift the number of its foreign branches from 113 to 132, and the Chase Manhattan will open six foreign branches in 1965, bringing its total to 37. Bank of America so far this year has opened in Singapore, Taipei and Nicaragua, plans in the next few months to move into Vienna, Antwerp, Madrid and Barcelona. In recent months, Manhattan's Marine Midland entered Europe for the first time, Manhattan's Chemical Bank went into Asia, and Chicago's Continental Illinois bought interests in banks in five countries from Argentina to Zambia. Says Roger Damon, president of the First National Bank of Boston, which has eleven foreign branches: "International banking has suddenly become the glamorous side of the banking business."

Loans. U.S. bankers have been operating overseas ever since J. P. Morgan opened a Paris affiliate in 1868, but lately they have had one big reason for widening their beachheads: the fast growth of U.S. investments overseas. The quickened pace of world trade and the spread of affluence abroad are also major attractions, and so is the acute capital shortage abroad.

The bankers by no means confine themselves to making loans, collections and money transfers for American enterprise. The Chase Bank helped to bankroll Turkey's largest industrial project, the new Eregli Iron and Steel Works; the Bank of America contributed to auto plants in Brazil and France and to the Mangla Dam between India and Pakistan. To attract the rising consumer classes overseas, many of the U.S. banks also offer loans to small borrowers, who often find it impossible to get credit from more conservative local banks and are willing to pay interest charges of 8% to 10% or even more. This year First National City will export another U.S. banking institution: the Christmas Club.

Liberties. The U.S. hold-down on dollar loans abroad has not badly hurt the U.S. branches because most of them have built up substantial pools of foreign capital, in many countries now make the bulk of their transactions in local currencies. Dealing in foreign money can, of course, be risky: First National City reported last week that it recently lost $8,000,000 through currency dealings in an unnamed country--probably owing to devaluation or runaway inflation. Helping to compensate for such hazards is the fact that commercial banks can do something abroad that they are forbidden to do at home: invest in nonbanking enterprises. The Philadelphia National Bank has stock in or options to buy into industrial firms in a dozen countries, and the Chase Bank's investments reach into developing industries in 17 countries.

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