Most of what the big commercial banks wanted to achieve in investment banking had already been made possible through reinterpretations of Glass-Steagall. While banks might like to cross-sell insurance products, there is little attraction to buying life assurance businesses. The last point has proved controversial. In a letter to John Mogg, director-general of the internal market and financial services directorate, he went to considerable lengths to allay concerns that foreign banks would be less favourably treated than their domestic counterparts. Mr Meyer insisted the Act merely put into effect the long-established principle of national treatment applying comparable standards of capital and management to foreign and domestic banks.
Some foreign institutions have lower targets for return on investments than domestic companies do.
It is possible but by no means inevitable that foreign institutions could trigger a feeding frenzy of consolidation by offering generous prices for US firms. There have been two recent and conspicuous examples of New York banks being swallowed up. A significant number of banks across the US are owned by foreign companies. Despite a number of failures in the past, quite a few foreign banks have succeeded in building successful retail banking businesses, as well as securities operations. Amid the cross-fertilisation of commercial and investment banking, Citigroup can claim to be ahead of the game.