America for sale

Published: 02 June, 2004

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European banks are rushing to buy American banks, but will they make money? Or will it all end in tears, as it did the last time they tried in the 1980s. Sophie Roell investigates.

From afar, America looks like the land of opportunity – and for no one more so than European banks. With its large population, a banking sector fragmented into thousands upon thousands of institutions, and fee-friendly consumers who think nothing of paying $30 for a new set of cheque books, it seems to offer everything Europe doesn’t: high margins and room for growth. Never mind that its lure has proved fatal in the past. “Historically the US has been a graveyard for foreign bank capital,” says Chris Ellerton, an analyst at UBS. “In the 1980s, the UK banks all bought US banks and generally sold them again at a loss.”