BIS Quarterly Review – Global banks’ local presence: a new lens

Iñaki Aldasoro, John Caparusso and Yingyuan Chen

February 2022


Banks operate internationally through networks of branches and subsidiaries, also known as foreign banking offices (FBOs). Newly collected system- and entity-level data across two dozen host countries confirm stylised facts on these entities’ balance sheets and establish new ones. Subsidiaries, which resemble local banks in their focus on domestic currency and retail business, have reduced their share of FBO assets over the past decade, in favour of branches, which are tailored to flexibly provide international services. This shift may raise financial stability concerns, not least because branches’ asset growth has been more responsive than subsidiaries’ to financial and economic conditions outside host jurisdictions. Judging by the evolution of liquidity and intragroup positions, host supervisors have influenced branches’ operations in advanced economies but less so in emerging market ones.

Link: Global banks’ local presence: a new lens