Douglas Landy, partner in Milbank, Tweed, Hadley & McCloy’s Leveraged Finance Group, provides commentary on the Federal Reserve Board’s new capital rule for foreign-owned banks in a recent American Banker article, “Fed Rule May Prompt Asset Sell-Offs by Foreign Banks.”
“The issue may be most pressing to those institutions that hover near the $50 billion asset threshold, says Douglas Landy, an attorney at Milbank, Tweed, Hadley & McCloy who has represented international banks before the Fed and the Office of the Comptroller of the Currency. Those banks are the most likely to sell assets to slim down. If you are right around $50 billion and you don’t want to grow your business significantly, it makes huge sense to manage it down to $50 billion.”
Landy adds that, “Some foreign-owned banks will find that it's more costly to operate in the U.S. but still worthwhile. Yes, there are additional disincentives to being in the U.S. now, but there is a huge set of overwhelming advantages for why they are here and those haven’t changed,” he says. “They have to do a closer look at the return on equity to determine if you are allocating your funds properly. It’s a discipline everyone is going to go through right now.”
