THE CHANGING ROLE OF SOVIET-OWNED BANKS IN THE WEST

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00591R000200180002-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 33
• Document Creation Date: December 22, 2016
• Document Release Date: February 4, 2011
• Sequence Number: 2
• Publication Date: March 29, 1985
• Content Type: REPORT

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Directorate of
Intelligence
Secret
The Changing Role of
Soviet-Owned Banks
in the West
An Intelligence Assessment
Secret
SOY 85-10063X
March 1985
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Directorate of
Intelligence
in the West
The Changing Role of
Soviet-Owned Banks
This paper was prepared by Office
of Soviet Analysis. Comments and queries are
welcome and may be directed to the Chief,
Economic Performance Division, SOYAF 7
Secret
SOV 85-10063X
March 1985
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The Changing Role of
Soviet-Owned Banks
in the West
Key Judgments The Soviets have maintained a small but important string of banks in the
Information available West since the Russian revolution. Despite Soviet ownership and a high
as ofl March 1985 degree of control, the banks, which are located in major international
was used in this report.
financial centers, operate in the main as independent profit-seeking
Western corporations. The six banks and associated branches currently
have assets somewhat in excess of $10 billion. Their main purpose is to pro-
mote, facilitate, and finance East-West trade.
Although Moscow basically remained aloof from the day-to-day operation
of the banks as long as they fulfilled their primary functions, it did from
time to. time impose restrictions on them for its own benefit and at some in-
convenience (and cost) to the banks. The banks' fundamental role, and their
relationships with each other and with Moscow, began to change in the late
1970s under the guidance of new State Bank Chairman Vladimir Alkhi-
mov and as the Soviet apparatus sustained a series of financial setbacks:
? The repercussions of poor investments-totaling nearly $500 million-by
the foreign-based banks depressed profits and impeded lending.
? The Polish financial crisis forced Moscow to reevaluate its financial
relationships with its East European allies.
? A corresponding skepticism grew in the West over Bloc creditworthiness
in general.
? Moscow's demand for hard currency surged in 1981 and 1982 as the
USSR had to pay for stepped-up purchases of agricultural imports at the
same time that world oil market prices began to soften.
Moscow reacted to these crises by ordering an across-the-board retrench-
ment that has led to a fundamental restructuring of its relationship with its
foreign banks. Although the Soviets have always kept a close eye on their
banks, the Soviet State Bank and the Soviet Bank for Foreign Trade (VTB)
now do a great deal more than just set policy for the overseas banks.
Moscow now sets country lending limits, reserves the right to approve or
disapprove specific deposit operations, and is handling gold sales and
purchases directly. The biggest change, however, probably has been VTB's
repeated and continuing demands to all Soviet overseas banks to raise and
forward cash-in fact, all surplus money-to Moscow, at the expense of
other banking operations. This instruction, and the insistence with which it
was relayed, is impinging on the banks' original charter-to finance East-
West trade
Secret
SOV 85-10063X
March 1985
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Indeed, Moscow's continued micromanagement of the banks could threat-
en their long-term viability. Although still fundamentally sound, all the
banks have experienced some erosion of key financial indicators. Three
years of declining liquidity and profitability leave them today less viable,
and thus more vulnerable to a deterioration of their capital bases, should
Moscow continue to press its demands for cash. In the worst possible case,
if there is no change in current Soviet needs and policies, Moscow might
face the loss of as many as four of the banks-the smaller and newer ones.
In purely financial terms, the USSR could sustain these losses with little
effect on its own activities in world markets. If necessary, Moscow could
support the full range of Soviet trade activities in the West with just the
two largest banks-Moscow Narodny Bank (MNB) and Eurobank-
although with greatly diminished credibility and flexibility. All of the
important markets-gold, diamonds, other precious metals and gems,
Eurocurrencies, bonds and other securities, and commercial paper-are
now truly international in scope and operate around the clock. MNB and
Eurobank could easily be Moscow's eyes and ears in these markets as well.
However, the effects of such losses in nonfinancial terms would be
substantial. The foreign-based Soviet-owned banks provide Moscow with
windows to the West through which knowledge, as well as money, passes-
and in both directions. They inform local business people of Soviet import
needs and products available for export. The banks are in an excellent
position to collect economic and trade intelligence; they participate in local
markets and have widespread contacts among local traders and market
analysts.
It is at least equally noteworthy that through their overseas banking
network the Soviets have readymade entree to cities that offer political
opportunities as well as financial access.
Because the political fallout from a massive bank retrenchment would be so
large, and the cost of keeping the banks afloat is so relatively small,
Moscow would no doubt be reluctant to set any of its banks adrift.
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Contents
Key Judgments
The Soviet Banking Network
The Operating Environment
The Hard Currency Crunch
Marketing Gold
Liquidity
Capital Adequacy
Profitability
Appendixes
A. Moscow Narodny Bank (MNB)
B. Banque Commerciale pour l'Europe du Nord (BCEN)-Eurobank 15
C. Wozchod Handelsbank (WHB)
D. Ost-West Handelsbank (OWHB)
F. East-West United Bank (EWUB)
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The USSR initiated its overseas banking operations
in 1919 with the purchase of Moscow Narodny Bank
(MNB) in London. By 1923 the USSR had three
banks operating abroad, having opened Banque Com-
merciale pour l 'Europe du Nord in Paris (Eurobank
or BCEN) and Bank Russo-Iran in Tehran. In 1926
MNB opened its first branch in Berlin. During the
1920s, the banks' primary purpose was to help Soviet
trading organizations reestablish foreign commercial
ties, which had been disrupted by the revolution.
With the onset of the 1930s and the depression, bank
activity was reduced to a de facto caretaker status.
The MNB Berlin branch was closed in 1935 in
response to the anti-Bolshevik attitude of the German
Government, and Eurobank closed in 1940 when the
Germans invaded Paris.
Postwar Years
Following World War II, several factors worked to
further restrict the banks' activities and effectiveness.
Initially, the USSR was preoccupied with promoting
trade with Eastern Europe and thus was only margin-
ally interested in reestablishing its prewar ties with
the West. The tensions of the then beginning Cold
War period further discouraged dealings with Soviet
banks. This does not mean that the Soviet record was
all negative, however. When left to their own devices,
the Soviet banks managed some clear successes.
Eurobank, for instance, reopened after the war and
was able to expand its presence and become a leading
force in the emerging Eurodollar market. As a result,
by 1960 it and MNB had developed into modern,
diversified commercial banks. During the mid-1960s,
the banks were able to capitalize on their positions as
Soviet commercial outposts in the West and the
blossoming of East-West trade as they became focal
points for Western corporations wishing to do busi-
ness with the USSR or other CEMA countries. They
established solid reputations in this period, which has
facilitated growth since then.
Building on the financial strength and reputation of
the older banks, Moscow doubled the size of its
overseas financial network in the sixties and seven-
ties. The additions of Wozchod Handelsbank and
Ost-West Handelsbank gave the USSR entree to the
Swiss international gold market and to the Frankfurt
international diamond market, respectively. Moscow
Narodny Bank's two new branches in Beirut and
Singapore were able to tap into the growing Arab and
Asian dollar markets and greatly increased Mos-
cow's flexibility in financing trade. After Donaubank
opened in Vienna in 1974, the Soviet overseas bank-
ing network remained fairly stable until the national-
ization of the Russo-Iran Bank in 1980. Most recent-
ly, in August 1984 MNB established a small
financial subsidiary in the Netherlands to facilitate
the issuance of a $50 million Eurobond.
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The Changing Role of
Soviet-Owned Banks
in the West
The Soviet Union currently maintains six banks and
several branches in major international financial cen-
ters. This foreign-based banking network, which for-
mally began with the chartering of Moscow Narodny
Bank (MNB) in London in 1919, has played a major
role in Soviet commercial relations with the West,
both as a conduit of hard currency into the USSR and
as a promoter of East-West trade. In recent years,
however, the financial viability of the Soviet-owned
banks has been strained. Initially-in the 1970s-
poor business decisions damaged the reputations of
the banks and restricted bank financial operations.
More recently, constrained international financial
markets, the downturn in Bloc financial fortunes, and
the generally cooler East-West climate have com-
bined to impinge on bank operations. Moscow's re-
sponse to the growing problems the banks have en-
countered has been to step in and assume a far greater
hand in managing their day-to-day operations.
analysis. (Histories, detailed financial statements, and
current peer group comparisons for each individual
bank are presented in the appendixes to this assess-
ment.)
In the post-World War II period, the growth of the
Soviet overseas banking network generally has paral-
leled Soviet interest in trading with the West. Moscow
Narodny Bank opened a branch in Beirut in 1963 and
another in Singapore in 1971. Four additional Soviet-
owned banks were established in Europe from 1966 to
1974, and Bank Russo-Iran opened a branch in
Isfahan in 1975. Thus, at its peak in the late 1970s,
the USSR's overseas banking system consisted of
seven banks and three associated branches, all located
in major international financial centers. In 1980,
however, the USSR lost its banking operation in Iran
when the government nationalized foreign businesses.
This assessment details Moscow's evolving relation-
ship with its overseas banks
It provides a histori-
cal perspective on each of the banks the Soviets
maintain in the West and the links they maintain with
Moscow. The paper includes an evaluation of past
bank financial performance and examines current
bank viability throw h analysis of the available finan-
cial data It ends with an
assessment of Moscow's future options.
Data for some banks are current through year-
end 1983 but insufficient in detail to allow compre-
hensive analysis prior to 1981. Such gaps in the data
have not, we believe, influenced the outcome of the
The Operating Environment
The Soviet-owned banks in the West vary widely with
respect to size, asset structure, and scope of activity.
(Table I summarizes the Soviet banking network.) All
of the banks are chartered in the countries in which
they are located and operate subject to the laws and
regulations of those countries. Thus, Moscow
Narodny Bank is legally a British bank rather than a
Soviet one. In fact, MNB and Wozchod maintain
business representative offices in Moscow just as any
other Western corporation might.' Moreover, MNB in
' A representative banking office functions as a liaison between the
parent bank and the business and financial community where the
office is located. Thus, although it cannot make loans or accept
deposits, it serves to make and maintain contacts, promote trade,
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Table I
USSR: Soviet-Owned Banks in the West
Beirut (branch) 1963
Singapore (branch) 1971
('Europe du Nord
(BCEN)--Eurobank
Russo-Iran Bank Tehran
Wozchod Handelsbank Zurich 1966
(WHB)
Ost-West Handelsbank Frankfurt 1971
(OWHB)
East-West United Bank Luxembourg 1974
(EWUB)
a Values are for yearend 1983 except for WHB and Donaubank
(1982). Value for MNB represents combined assets.
Assets a
(million US S)
482.1
487.1
London, MNB in Singapore, and Eurobank have all
clashed with local bank employee unions and been
picketed by workers on strike.
Like other Western companies, the Soviet-owned
banks are publicly held corporations with ownership
legally unrestricted and held in the form of stock. In
practice, however, the Soviet-owned banks in the
West remain just that-Soviet owned. Stock owner-
ship is retained solely by various organizations within
the Soviet foreign trade infrastructure
Management
Upper-level bank management, like bank ownership,
is an almost exclusively Soviet domain. All of MNB's
directors and assistant directors are Soviets, as are the
general managers of its branches. Five of Ost-West
Handelsbank's eight directors and the chairman of its
board are Soviet citizens. Through mid-1984 Woz-
chod Handelsbank's president had been Yuriy Kar-
naukh, an actor on the Moscow banking scene for
more than 20 years. His replacement, Mikhail Sam-
sonov, came to Wozchod from a position as deputy
general manager of VTB. Donaubank's general direc-
tor, deputy general director, and almost all section
heads are Soviet citizens. Although Eurobank's presi-
dent and general manager are French-as required by
French law-all of its directors are Soviet. Moscow
hires locals for their expertise in banking and local
commercial practices, but it clearly has no intention
of allowing them to take a major hand in running the
banks
Occasionally in the past-and perhaps more frequent-
ly lately-Soviet and East European banking novices
have been sent to one of the Soviet-owned banks in the
West for training and exposure to the world financial
community. Such overseas training seems to be help-
ful in career advancement after the trainees return to
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the USSR. Current Vneshtorgbank (VTB) Deputy
Chairman Maslov served at MNB in London during
1971-75. The current manager of MNB's Moscow
office also received several years of overseas training
in London
Span of Control
The Soviet-owned banks in the West are closely tied
to Moscow, despite their physical distance from it,
and a complex infrastructure has developed there to
deal with them (see figure). The Banking Supervisory
Council, which reports directly to VTB, is composed
of representatives of Gosbank, VTB, and some of the
larger Foreign Trade Organizations (FTOs); it sets
policy for and supervises the operations of these
banks.
The extent of the direct control that Moscow has
chosen to exercise over its overseas banks has varied
over time. Although Gosbank closely monitored MNB
and Eurobank in their early years, by the end of the
fifties the two banks had proved themselves capable of
self-management. When the USSR began to expand
its foreign-based banking network in the sixties and
seventies, the new banks were thrown into the interna-
tional banking community under inexperienced man-
agement and with only loose control and monitoring
by Moscow. As a result of both mismanagement and
bad luck, several of the banks experienced major
financial setbacks. MNB Singapore was defrauded of
about US $300 million in 1974 by a real estate
speculator, a setback that the branch is still laboring
to overcome. Donaubank invested in a plastics firm
and a local private bank, both of which folded very
soon after opening; the bank lost almost all of its
initial capital-about US $5 million-in its first year
of operation and Moscow had to completely refinance
it. Ost-West Handelsbank, apparently trying to find
an area of specialization like Wozchod's specialization
in gold, invested heavily in the much-heralded, but
short-lived, Frankfurt International Diamond Bourse.
Losses totaled in the hundreds of millions of dollars.
In response to its financial problems, Moscow has
been trying to keep the banks on a much shorter rein
since 1976. The most easily discernible result of this
policy is that all of the banks are now building much
more conservative portfolios and avoiding risky long-
term investments-such as real estate, an area in
which they were twice burned. Moscow, especially
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USSR: Foreign Financial Apparatus,,
CPSU Central Committee State Bank of the USSR
(Gosbank)
Capital Investment Bank of Foreign Trade Bank of the State Savings Bank of the
the USSR (Stroybank) USSR (Vneshtorgbank) USSR (Gostrudsberkassa)
Banque Commerciale pour
I' Europe du Nord SA
EUROBANK
r This figure represents the chain of command for actual banking
operations. Several of the Soviet-owned banks in the West maintain
representative offices in Moscow or elsewhere, or are part or full
owners of other businesses.
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fearful of being hurt by Eastern Europe's debt prob-
lems, further increased its micromanagement follow-
ing the deterioration in its own hard currency position
in 1981. This has sometimes led to a worsening of
working relations between the Soviets on the scene
MNB in Singapore do the same for diamonds;
MNB's new subsidiary in the Netherlands is well
positioned to monitor the world spot oil market in
Rotterdam; and all the banks monitor Eurocurrency
markets.
and their locally hired employees.
Bank Activities
The primary role of the Soviet-owned banks in the
West has been to foster and finance East-West trade.
In addition to carrying on the normal business activi-
ties of all banks-accepting commercial deposits and
making loans, providing financial analysis and ad-
vice-they make special efforts to encourage trade
with the USSR and Eastern Europe. To this end,
Soviet bankers overseas:
? Advise Westerners about Soviet import needs and
export offerings.
? Assist businesses in the intricacies of trade-related
documentation.
? Provide short- and medium-term financing for spe-
cific East-West commodity trade deals.
? Manage and generate broad-based participation in
East-West commercial loan syndications
Some of the banks took on additional, more specific
functions in the late 1970s. As has been noted,
Wozchod has served a specialized function as a
primary marketer of Soviet gold. East-West United
Bank has played a similar role as an early participant
in the Eurodollar loan market, and Eurobank was a
major source of financing for Soviet sugar and grain
imports over the last several years. Most of the Soviet-
owned banks have also traded heavily in Soviet and
East European commercial paper in the Aforfait I
market, relying heavily on this market to encourage
trade with the East.
The banks also fulfill important nonfinancial roles:
? The foreign-based banks are a major source of
economic intelligence. Wozchod and MNB in Lon-
don are especially involved in analyzing the interna-
tional gold markets; Ost-West Handelsbank and
? The Soviet overseas banking network is also a
valuable source of trade intelligence. All the banks
observe and report on import and export needs of
potential trading partners, and analyze conditions in
various local or international commodity markets
(for example, petroleum products or agricultural
machinery).
Before the USSR's international banking network
had recuperated from the financial fiascoes of the
mid-1970s, the international banking scene had
changed drastically. Moscow reacted with an abrupt
' Forfaiting (a forfait, Forfaitierung) is generally used to define the
purchase of financial obligations falling due at some future date,
arising from deliveries of goods and services-mostly export trans-
actions-without recourse to any previous holder of the obligation.
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Soviet Responses to Recent Events
Event
In the mid-1970s Moscow Narodny Bank in Singa-
pore, Ost-West Handelsbank, and Donaubank suffer
losses totaling nearly half a billion dollars as a result
of risky loans.
Response
The USSR begins to oversee portfolio development at
all the overseas banks and reserves the right to veto
anything too risky.
Poland enters a financial crisis, and hints of other
financial problems in Bloc countries emerge.
The USSR experiences a temporary, but severe, hard
currency crunch compounded by Western banks turn-
ing away from Eastern Europe.
The USSR is unable, because of slow and inflexible
gold marketing procedures, to take full advantage of
a strong gold market to meet its hard currency needs.
The confrontational East-West political climate dries
up the Soviet foreign-based banks' usual sources of
funds.
retrenchment. During 1977-81 the relationship be-
tween the Soviet Government and its banks abroad
appears to have shifted from benign and rather aloof
oversight to a tighter control over day-to-day bank
operations. This tightening up followed closely the
appointment of Vladimir Alkhimov as chairman of
Gosbank. Mr. Alkhimov had long been a student of
international finance and seems to be trying to lead
the Soviet-owned banks in the West into the modern
era. Although the crises that initially spawned the
Soviet concern have eased, Moscow appears to be
continuing to maintain tight control over its banks in
the West. Each new retrenchment, compounding the
effects of previous such moves by Moscow, has served
to further restrict the banks' options.
Risky Loans
As the USSR's hard currency trade deficits grew in
the mid-1970s, the overseas banks came under pres-
sure from Moscow to increase their hard currency
earnings. The banks responded by deemphasizing
their traditional and relatively risk-free activities in
Moscow lowers bank lending limits for CEMA coun-
tries.
The Soviets demand transfers of cash from their
Western-based banks.
VTB takes direct control of Soviet gold sales away
from the overseas banks.
financing East-West trade and turned instead to far
riskier-if potentially more lucrative-investments in
real estate and other local lending. One Western
observer noted at the time that the banks "suddenly
began engaging in and tolerating reckless operations.
They made all the mistakes the capitalists made. In
addition, they made mistakes all their own."
Moscow reacted to these setbacks by pulling back and
refocusing the banks on conservative investment port-
folios and trade financing. VTB reserved to itself the
right to approve new investments and began to audit
the banks more frequently to spot early danger signs.
Senior personnel in the errant banks were replaced
with bankers more responsive to Moscow's needs.
These changes left several of the Soviet-owned banks
basically dormant; they finance local trade with the
USSR as needed and stand ready to participate in
Soviet loan syndications-and little else.
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The Hard Currency Crunch
In the summer of 1981 Moscow began to press its
overseas banks to help rebuild the USSR's depleted
asset reserves by supplying the State banks with
excess hard currency holdings. In the first half of the
year, Soviet holdings in the West fell from a comfort-
able level of more than $8 billion to only about $3.5
billion, an amount equal to only a month or two worth
of imports, insufficient to comfortably finance day-to-
day trade.
Marketing Gold
Although Moscow established the Wozchod Handels-
bank in Zurich to attain ready access to the largest
international gold market, Wozchod's preeminence in
this field has been declining because of disagreements
among Soviet financial managers.
New Sources of Funds
Just as the last few years have brought a redirection
in the lending activities of the Soviet-owned banks,
they have also seen a change in their sources of funds.
In the tense economic and political climate of recent
years, Western banks reduced funds on deposit with
the Soviet-owned banks. This dropoff in Western
capital led the Soviet-owned banks to rely more
MNB in London recently issued
$50 million in floating-rate notes. (Floating-rate notes
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are similar in concept to domestic adjustable rate
mortgages. The notes have been on the market for
several years but have only recently come into use by
commercial banks.) Informed that it was illegal for
private banks in the United Kingdom to issue such
notes, MNB-like other British banks before it-
opened a small subsidiary in the Netherlands from
which to make the issue. The relatively small size of
the offering may indicate that MNB is just testing the
water. If successful with this first marketing, MNB
may look to floating-rate notes to replace some of its
more expensive fixed-rate bond offerings
Bank analysts have at their disposal several dozen
indicators of the soundness of a financial institution.
Banks are usually examined according to standard
criteria and in comparison with their financial
"peers"-other banks of similar asset size-in the
same market or industry. Unfortunately, straightfor-
ward ratio analysis of the Soviet-owned banks in the
West is hampered by the dearth of financial data
available on them, especially prior to 1981. We have
performed a bank analysis for the recent period to
study the banks' prospects for the future in a purely
financial context. We believe the gaps in the data
have not substantially biased the financial analysis.
Overall, the Soviet foreign-based banks are undercap-
italized, less liquid than their peers, and not very
profitable (see tables 3 and 4). Deposits in the four
largest Soviet-owned banks in Europe fell in the most
recent period, probably because of East-West ten-
sions, while capital also declined at three of them
because of unprofitable operations. As a group, total
assets of the network have also been declining-from
a peak of $12.2 billion in 1980 to about $10 billion at
yearend 1982.6 At the same time Moscow has closely
monitored its overseas banks; VTB has been careful to
6 Throughout our analysis the assumption is made that each bank
holds all of its assets and liabilities in the currency in which the
accounts are reported-that is, all of BCEN's assets are in French
francs. In fact, we know that bank assets are held in some unknown
mix of currencies. We assume, therefore, that appreciation in any
one currency will be offset by depreciation in another, netting to
Liquidity can be viewed in two related ways: (1) how
well assets cover liabilities-using a ratio of loans
(medium- and long-term assets) to deposits (short-
and medium-term liabilities); and (2) nearness of
assets to cash-using a ratio of quick assets (nearest
to cash; that is, readily salable) to deposits. Each
indicator measures the ability of a financial institu-
tion to pay off its creditors in the event of a financial
crisis.
Capital serves three basic functions-to cushion
against temporary losses, to protect creditors in the
event of liquidation, and as an indicator of how well a
bank's operations can be sustained. Capital adequa-
cy-the ratio of capital to total assets-is constantly
being evaluated by the financial markets. If it be-
comes insufficient in the eyes of the market watchers,
the bank could find it increasingly difficult to attract
new funds.
The ratio of net income to total revenue-a profit-
ability measure-indicates the portion of its revenue
that a bank can add to capital or free reserves or
distribute to its owners as dividends after all ex-
penses are paid. Another criterion of profitability is
change in deposits, which reflects the market's aggre-
gate opinion of the soundness of a bank.
Peer-group analysis consists of comparing the ratios
described above for the subject institutions to the
same ratios for institutions of like asset size and
market. This examination of a bank's standing rela-
tive to its peers helps to account for apparently large
ratio shifts, which are in fact the result of widespread
market conditions. Each Soviet bank was compared
where possible to four such banks of like asset size in
its home country and four banks of like asset size
worldwide. A rank of "1 " in this paper will always
denote the highest standing in a given peer group.
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Table 3
USSR: 1982 Peer Group Analysis Summary a
Liquidity
Capital Adequacy
(Capital/
Profitability
Loans/Deposits
Ratio
Quick Assets/
Deposits Ratio
Assets Ratio)
Net Income/
Revenue Ratio
One-Year Change
in Deposits
Moscow Narodny Bank
(percent)
82.2
22.6
4.3
NA
-10.4
Rank in British peer
group
3
Rank in international
peer group
4
5
4
NA
4
Eurobank (percent)
24.9
74.4
1.9
1.4
-13.2
Rank in French peer
group
1
1
1
2
4
Rank in international
peer group
1
East-West United Bank
(percent)
8.7
Rank in Luxembourg
peer group
1
Ost-West Handelsbank
(percent)
71.4
Rank in German peer
group
1
Wozchod Handelsbank
(percent)
98.8
Rank in Swiss peer
group
5
Donaubank (percent)
58.4
44.0
3.6
0.2
15.9
Rank in Austrian peer
group
2
2
2
4
1
a A full breakdown of the peer group financial data used to generate
this table is available in the appendixes to this paper. Rank refers to
the Soviet-owned bank's rank in a peer group of five where one
always denotes the best standing.
keep sufficient funds on deposit with them to allow the USSR's own financing needs than they are about
the banks to carry out their basic East-West trade whether the overseas banks are well respected by their
charter and service Moscow's other monetary needs.' peers.
The Soviet banks are slowly losing ground in their
various peer groups according to most criteria. Soviet Liquidity
bankers sitting in Moscow are more concerned about Four of the six Soviet-owned banks in Europe seem to
be sound with regard to liquidity, ranking first or
'The funds Moscow deposits with its overseas banks are generally second in their respective peer groups. Eurobank is, in
short term and earn higher-than-market interest rates. The money
it borrows from those same banks is usually long term at lower-
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Table 4
USSR: Soviet-Owned Banks-
Combined Balance Sheet Data a
Cash and notes due from
banks
5,618.6
6,069.4
4,805.8
4,454.4
5,328.6
271.4
268.8
237.1
202.1
157.8
11,439.4
12,171.1
11,140.6
9,882.6
10,162.1
Deposits and notes due to
banks
10,772.8
11,426.0
281.5
326.1
296.8
259.1
253.7
Capital
294.4
319.1
339.5
303.9
319.1
Surplus, profits, and reserves
90.7
99.9
90.1
96.0
97.1
Total
11,439.4
12,171.1
11,140.6
9,882.6
10,162.1
Percent change
6.4
-8.4
-11.2
-2.8
a Because of rounding, components may not add to the totals shown.
Actual yearend bank-reported data except for: Wozchod Handels-
bank-1983 data are through third quarter only; and Donaubank-
1983 data are estimated on the basis of 1980-82 trends.
fact, the most liquid of both its French peer group and
its international peer group. Eurobank, East-West
United, and Ost-West could probably weather almost
any financial crisis they might face in the near future
because-relative to their peer groups and markets-
a sufficient amount of their assets are held as cash or
near cash.
Our liquidity analysis indicates that MNB and Woz-
chod are the most vulnerable to being damaged by a
serious and unexpected cash drain, probably a linger-
ing legacy of the Singapore fiasco. Although MNB
showed a small improvement in liquidity during 1981
and 1982, it nonetheless continues to hold less than a
fourth of its assets as cash or near cash-well below
the average for either of its peer groups. Furthermore,
MNB also has a loan-to-deposit ratio that is well
above average, which suggests that it would have a
hard time liquidating assets quickly enough to cover a
major run on its deposits.
Capital Adequacy
Although our analysis of capital ratios shows that the
Soviet foreign-based banks are about average in the
capital/assets ratio for their markets, it also suggests
that the banks are having difficulty attracting depos-
its. During 1982 bank deposits dropped an average of
11.4 percent, more than three times the average 3.2-
percent drop in country peer group deposits. East-
West United Bank experienced the worst decline-
20.5 percent, more than four times the decline for the
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Luxembourg peer group. That the peer group average
for the period also declined clearly indicates deposits
were hard to come by throughout the European
banking community. The Soviet-owned banks cannot,
however, have their deposits decrease at triple the
annual community average and continue to be com-
petitive.
Profitability
On the whole, the Soviet-owned banks in Europe rank
toward the middle of their respective peer groups with
respect to profitability. Eurobank's profitability in-
creased even though it decreased for both of its peer
groups, and its deposits dropped by over 13 percent.
East-West United Bank, on the other hand, experi-
enced lower profitability despite an increase for its
peer group.
Moscow's continued micromanagement of its banks in
the West could threaten their long-term viability.
Although the banks are currently sound, their finan-
cial status-as well as their stature among other
international banks-has been eroded by three years
of cash drain. For example, East-West United Bank,
which has been left without funds that it used to place
into syndication, has been largely dormant since 1980,
and had a profit of only 0.5 percent in 1982. This
steady downward drift in liquidity and profitability
leaves the Soviet-owned banks in the West vulnerable
to further deterioration of their capital base-and
eventual insolvency.
also being hampered by perceptions among Western
bankers that:
? The banks are not independent financial entities but
rather political extensions of Moscow.
? Soviet managerial personnel sent to the banks in the
West are generally not selected on the basis of
professionalism and quality of training.
Financial institutions assess loan applicants-indi-
viduals, companies, other banks, or governments-
according to commercial or credit risk criteria. These
institutions attempt to determine, on the basis of past
credit behavior and future earning potential, the
likelihood of repayment of the loan. In the case of
individuals, this evaluation of personal commercial
risk is called a credit rating and resides in the data
base of one or more credit bureaus who provide the
information to businesses for a fee. No set formula
exists for assessing a country's credit risk, however.
A basket of indicators-based on foreign debt or debt
service payments as a share of GNP, total exports, or
another baseline indicator-is frequently used, but
incomplete or untimely data-especially from Bloc
countries-make it difficult to perform even this
rudimentary analysis.
tina, or France.
The evaluation is further complicated when the loan
is international in scope, however, because a second
criterion-that of country or political risk-is also
taken into account. This assessment evaluates the
probability that political upheaval external to the
loan recipient itself will affect or prevent the repay-
ment of the loan. To illustrate, if Renault, a French
company, planned to build a new plant in Brazil and
sought financing for the project from a French bank,
the bank would evaluate Renault for commercial risk
and either Brazil or France or both for political risk.
The question of political risk is even more complex in
a multipartner case. If, for example, a Renault
subsidiary unit in Argentina wanted to build a fac-
tory in Brazil, the French bank would have to decide
whether to evaluate the country risk of Brazil, Argen-
The Soviet-owned banks in Western Europe tend to
portray themselves as exempt from country risk
evaluations because of their ties to the Soviet Govern-
ment, which, they contend, is risk free. Western
financial experts take exception to this assertion.
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Moscow will
In purely financial terms, loss of the smaller banks
would not substantially hamper Moscow-they are
nearly dormant already. East-West United Bank and
Ost-West Handelsbank are just barely profitable, and
Wozchod has been phased out as the primary market-
er of Soviet gold. At some point, Moscow could decide
to write them off as financial losses and restructure
the remaining banks to carry on without them. MNB
and Eurobank are much larger than any of the other
Soviet-owned banks in the West and have appropriate
connections and experience in all the major markets-
gold, Eurocurrencies, diamonds, equity securities.
most likely continue to demand as much from its
overseas banks as it can without actually pushing
them under, and at the same time it will keep a close
watch for external threats to the system.
However, a reduced Soviet banking presence in the
West, in addition to decreasing prestige in Western
markets, would severely curtail Soviet flexibility in
financial and trade activities. Although Moscow ob-
tains the bulk of its financing from non-Soviet West-
ern banks, the Soviet-owned banks have always func-
tioned as Moscow's financier of last resort, unable to
turn down a "request" from the stockholders even if it
is financially unattractive or unsound. Without its
foreign financial organs, the USSR would find it
more difficult to line up the most favorable commer-
cial financing. Furthermore, the Soviets would have to
conduct their trade financing through more cumber-
some Western channels. Thus, the USSR could find
that carrying on foreign trade would be both more
costly and more inconvenient.
Finally, the loss of its overseas banks would hamper
Moscow in ways other than that of direct trade
financing and facilitation.
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Appendix A
Moscow Narodny Bank (MNB)
The London-based Moscow Narodny Bank (MNB)-
the flagship of the USSR's overseas banking net-
work-was founded in November 1915 as a branch of
Moscow's Moskovskiy Narodniy Bank. In 1919, fol-
lowing the Russian revolution, MNB was incorporat-
ed as an independent British bank and remained
under the direction of White Guard sympathizers
until 1924, when the new Soviet Government success-
fully wrested control away. MNB flourished under
the new economic policy of the late twenties, and, by
the end of its first decade, it had opened branches in
Paris, New York, and Berlin. Business began to fall
off sharply in the depression, forcing closure of all the
new branches. World War II and the Cold War
tensions in its aftermath kept business activity de-
pressed until the late 1950s.
The expansion of East-West trade during the 1960s
led to a rebound in MNB's asset position, but by the
mid-1970s the Singapore branch's reckless lending
again slowed MNB's overall growth. Toward the end
of that decade, MNB reduced its presence in the
syndicated loan market but continued to be active in
the foreign exchange markets and in sponsoring loans
to Eastern Europe. Since 1981 MNB has also cut
back this activity and now concentrates primarily on
routine operations associated with East-West trade
financing and gold marketing.
MNB in Beirut
In October 1963 MNB opened a branch in Beirut-
the first Communist-owned bank in the then-thriving
financial center-to facilitate trade and financial
operations in the Middle East. Ten years later the
Beirut branch was reported to be the third-largest
bank in Lebanon. In the past two years, the Beirut
office has been dormant. The bank has cut back its
overall operations, reduced levels of cash held in
Lebanese pounds to the minimum needed for daily
business, and sold its high-rise office building. In May
1983 all Soviet dependents were evacuated from
Beirut, and most of the local Lebanese work force was
laid off. These moves were designed to facilitate a
decision to pull out of Lebanon suddenly, should one
be made.
MNB in Singapore
A second MNB branch was opened in Singapore in
1971, primarily to tap the burgeoning Asian dollar
market and to facilitate Soviet trade with Southeast
Asia and, to a lesser extent, with Australia and New
Zealand. Initially, the bank in Singapore grew rapid-
ly-by 1973 the branch reportedly was one of the
three largest foreign-owned banks in the country. The
branch ran into trouble in part when it started
deemphasizing relatively risk-free East-West trade
financing in favor of more profitable but high-risk,
and undersecured, real estate loans. The bank's loose
credit policy led to major loan writeoffs that may have
amounted to as much as US $300 million. In recent
years, the bank has maintained a decidedly more
conservative profile and concentrated on marketing
Soviet gold and diamonds and financing Soviet-Asian
trade.
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Table A-1
Moscow Narodny Bank Balance Sheet-
Combined Branches a
Cash and notes due from banks
830.3
971.9
553.3
571.6
847.8
Loans and advances
2,646.1
2,722.5
2,412.2
2,079.4
2,307.8
Investments
23.2
25.2
20.9
14.7
20.7
Other assets
15.2
17.3
15.0
16.5
10.9
Total
3,514.8
3,736.9
3,001.4
2,682.1
3,187.0
Liabilities and net worth
Deposits and notes due to banks
3,385.5
3,560.6
2,823.8
2,530.6
3,017.7
Other liabilities
3.9
8.2
10.3
6.2
9.5
Capital
100.1
135.9
137.4
116.2
129.7
Surpluses, profits, and reserves
25.3
32.2
29.9
29.1
30.1
Total
3,514.8
3,736.9
3,001.4
2,682.1
3,187.0
a Yearend data; because of rounding, components may not add to
totals shown. Data for 1979-82 are audited according to generally
accepted accounting principles (GAAP); 1983 data are unaudited.
Table A-2
Moscow Narodny Bank Peer Group Comparison, 1982 a
Total Deposits
Total Capital
Liquidity
Capital Adequacy Return on
Return on
(Capital/Assets)
Income
Equity
Million
US $
Rank in
Peer
Group
Million
US $
Rank in
Peer
Group
Quick
Assets/
Deposits
Loans/
Deposits
(Net
Income/
Revenue)
(Net
Income/
Capital)
Moscow Narodny Bank
2,531
1
116.2
1
23
82
4
NA
NA
Banque National de Paris
2,463
2
97
4
43
69
4
NA
NA
Libra Bank
2,194
3
105
2
29
85
4
NA
NA
Johnson Matthey Bankers
468
4
112
3
NA
55
6
NA
NA
Smith St. Aubyn Holdings
73
5
17
5
NA
NA
1
NA
NA
International peer group
Moscow Narodny Bank,
London
2,531
2
116.2
4
23
82
4
NA
NA
Canara Bank, Bangalore
3,152
1
21
5
44
59
1
2
23
Arab-African International 2,082
Bank, Cairo
3
196
2
55
56
8
8
12
Banca della Svizzera-
Italiana, Lugano
2,032
4
173
3
34
59
7
7
9
e Peer groups were generated on the basis of total assets at yearend
1981.
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Appendix B
Banque Commerciale
pour I'Europe du Nord
(BCEN)-Eurobank
History
Eurobank was founded in 1921 by white Russian
emigres opposed to the new Soviet Government and
sold to the Soviet Government in 1925. After a period
of initially rapid growth, operations of the bank
declined sharply during the 1930s, reflecting both the
bank's inability to attract Western deposits and its
difficulty in generating lending opportunities. The
bank closed with the onset of World War II and the
occupation of Paris in 1940.
In 1948 BCEN reopened and grew rapidly, due
largely to its pioneer role in the emerging Eurodollar
market on behalf of Soviet and East European central
Table B-1
Eurobank Balance Sheet a
Cash and notes due from 3,868.1 4,288.3
banks
Total
Liabilities and net worth
Deposits and notes due to 5,132.5 5,628.7
banks
Surpluses, profits, and 20.5
reserves
a Yearend data; because of rounding, components may not add to
the totals shown. Data for 1979-82 are audited according to
generally accepted accounting principles (GAAP); 1983 data are
unaudited.
banks. Because of this aggressive money-market ac-
tivity, it grew more rapidly than MNB and quickly
surpassed it to become the largest of the Soviet-owned
banks in the West and one of the top 10 banks in
Paris. Eurobank is also very likely the most profitable
of the Soviet overseas banks, probably because of its
highly professional management. It maintains exten-
sive correspondent relationships with Western banks,
to which it provides profitable opportunities to engage
in East-West trade financing. Perhaps because of this,
BCEN enjoys the best reputation of the Soviet-owned
banks in the West.
59.5
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Table B-2
Eurobank Income Statement a
a Bank data audited according to generally accepted accounting
principles (GAAP); because of rounding, components may not add
to the totals shown.
Table B-3
Eurobank Peer Group Comparison, 1982 a
Total Deposits
Total Capital
Liquidity
Capital Adequacy Return on
Return on
(Capital/Assets)
Income
Equity
Million
US $
Rank in
Peer
Group
Million
US $
Rank in
Peer
Group
Quick
Assets/
Deposits
Loans/
Deposits
(Net
Income/
Revenue)
(Net
Income/
Capital)
Society Generale
Alsacienne de Banque
4,367
2
59
4
48
58
1
1
8
Banque Worms
3,756
3
88
2
68
52
2
Societe Lyonnaise de
Banque
3,107
4
63
3
57
58
2
Banque de L'Union
Europeenne
2,171
5
55
5
67
128
1
6
NA
Bank fur Arbeit and
Wirtschaft, Vienna
4,843
1
72
5
33
79
1
1
3
Sureiga Bank, Numazu
4,688
2
210
2
19
64
4
3
5
Istituto Bancario Italiano,
Milan
4,009
4
96
3
34
51
2
1
8
Commercial Bank of
Korea, Seoul
3,766
5
243
1
36
101
4
2
6
e Peer groups were generated on the basis of total assets at yearend
1981.
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Appendix C
Wozchod Handelsbank (WHB)
The USSR opened Wozchod Handelsbank in Zurich
in 1966-the first "independent" banking addition in
the postwar period-ostensibly to finance Soviet-
Swiss trade. However, it took on the primary task of
enhancing the efficiency and secrecy of Soviet gold
sales and providing firsthand analysis of the world
gold market when the center of that market relocated
to Zurich in 1968. The bank also operates as an
interbank intermediary in the Eurocurrency markets
much as Eurobank does. Accordingly, only a relative-
ly small proportion-less than one-third-of its re-
sources are devoted to direct financing of East-West
trade. Wozchod's paid-in capital has become large-
to the point that some banking analysts believe the
Table C-1
Wozchod Handelsbank Balance Sheet a
Cash and notes due
from banks
Deposits and notes due
to banks
Surpluses, profits, and
reserves
18.1
18.7
387.7
407.3
47.0
41.9
28.5
25.6
27.5
bank is overcapitalized relative to the volume of its
business. Any detailed examination of Wozchod is
impeded by the bank's near-total silence on its activi-
ties, possibly reflecting the key role the bank plays in
marketing Soviet gold.
In November 1984 we learned that Swiss employees
of the bank-including its chief gold dealer-had
allegedly engaged in large-scale unauthorized gold
speculation. The extent of the losses is still unknown.
40.4
55.4
59.3
560.6
500.2
536.5
37.0
35.2
33.0
36.5
32.0
30.6
a Yearend data; because of rounding, components may not add to
the totals shown. Data for 1979-81 are audited according to
generally accepted accounting principles (GAAP); 1982 and 1983
data are unaudited.
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Table C-2
Wozchod Handelsbank Income Statement a
Foreign exchange and
precious metals income
Total revenue
51.0
65.7
53.9
Interest expense
39.5
53.5
36.8
Commission expense
0.7
1.0
0.7
Payroll expense
2.2
2.4
2.3
Occupancy expense
1.8
1.8
1.5
Depreciation and loan
loss provisions
0.1
0.1
5.9
Total expenses
44.3
58.8
47.2
Operating income
6.7
6.9
6.7
a 1980 and 1981 data are audited according to generally accepted
accounting principles (GAAP); 1982 data are unaudited; because of
rounding, components may not add to the totals shown.
Table C-3
Wozchod Handelsbank Peer Group Comparison, 1982 a
Total Deposits
Total Capital
Liquidity
Capital Adequacy Return on
Return on
(Capital/Assets)
Income
Equity
Million
US $
Rank in
Peer
Group
Million
US $
Rank in
Peer
Group
Quick
Assets/
Deposits
Loans/
Deposits
(Net
Income/
Revenue)
(Net
Income/
Capital)
Wozchod Handelsbank
398
2
32
4
9
99
8
10
16
Arab Bank Overseas
441
1
39
2
52
38
7
7
10
Banque Compafina
387
4
51
1
28
97
11
3
4
Rothschild Bank
297
5
35
3
70
33
9
9
15
Glarner Kantonal
Bank
389
3
17
5
12
92
4
7
10
a Peer groups were generated on the basis of total assets at yearend
1981.
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Appendix D
Ost-West Handelsbank (OWHB)
Ost-West Handelsbank opened in Frankfurt in 1971
with the stated mission of financing West German-
Soviet trade in particular, and East-West trade in
general. There probably were two additional but
undeclared motives for Moscow placing a bank in
Frankfurt. First, it gave the USSR ready access to the
nearby international diamond market. Second, the
Frankfurt locale provided additional access to Euro-
currency markets. The appointment of Andrey
Dubonosov as chairman underscored the unstated
Eurocurrency trading goals of the bank. Dubonosov,
while chairman of MNB from 1959 to 1967, earned a
reputation in Western banking circles as an expert in
Euromarket trading. (His recall from retirement to fill
this post also underscores the relative scarcity of
competent Soviet banking personnel in the 1970s.)
Ost-West grew rapidly throughout the 1970s, in part
because of flourishing West European-Soviet trade.
Table D-1
Ost-West Handelsbank Balance Sheet a
though Ost-West was able to avoid involvement in the
major banking scandals that affected its sister
banks-MNB and Donau-in the mid-1970s, it did
make at least one disastrous venture. In 1975 the
Frankfurt-based bank financed the construction and
operations of a new West German diamond exchange
that went bankrupt in 1976, resulting in considerable
bad press for the bank as well as loan losses. Current-
ly, the bank makes much of its profit from document-
processing fees for services in support of East-West
trade.
Investments 13.2
8.1
1.8
6.3
1.5
0.8
Deposits and notes due to 1,068.4
banks
968.4
Surpluses, profits, and reserves 13.4
12.7
Total 1,119.5
1,014.4
852.1
775.9
a Unaudited yearend data; because of rounding, components may
not add to the totals shown.
1.4
0.7
23.9
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Table D-2
Ost-West Handelsbank Income Statement a
Total revenue
96.7
94.7
59.5
Payroll expense
3.5
3.2
3.1
Commission expense
0.1
0.1
0.1
Other expenses
1.9
1.8
1.7
Total expenses
88.4
85.9
50.5
Operating income
8.3
8.8
9.0
Taxes and extraordinary items
7.5
8.0
8.2
Net income
0.8
0.8
0.7
? Unaudited data as reported by the bank; because of rounding,
components may not add to the totals shown.
Table D-3
Ost-West Handelsbank Peer Group Comparison, 1982 a
Total Deposits
Total Capital
Liquidity
Capital Adequacy Return on
Return on
(Capital/Assets)
Income
Equity
Million
US $
Rank in
Peer
Group
Million
US $
Rank in
Peer
Group
Quick
Assets/
Deposits
Loans/
Deposits
(Net
Income/
Revenue)
(Net
Income/
Capital)
Ost-West Handelsbank
737
3
27
1
33
71
4
1
3
Karl Schmidt
Bankgesellschaft
767
1
34
1
20
83
4
NA
NA
Stadt-Sparkasse Solingen
743
2
28
5
9
97
3
3
8
Handelsbank in Lubeck
663
4
32
3
17
98
4
2
5
Effectenbank-Warburg
605
5
30
4
31
86
5
1
3
a Peer group was generated on the basis of total assets at yearend
1981.
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Secret
Appendix E
The Donaubank opened in Vienna in 1974 after
nearly a decade of intergovernmental negotiations.
The Austrians welcomed the bank because it en-
hanced Vienna's reputation as a major center for
East-West trade. Donaubank was, however, issued
only a limited charter to conduct bank operations.
Donau was restricted in terms of local activities; it
was not allowed to offer savings accounts, issue
mortgage bonds, or trade in mutual funds. The bank
was, however, allowed to operate freely in trade
financing, foreign exchange, and Eurocurrency opera-
tions.
Donau got off to a bad start, losing its entire capital of
about $5 million in the first 10 months of operation in
Table E-1
Donaubank Balance Sheet a
transactions unrelated to East-West trade. The loans
causing this catastrophe were made to two Austrian
concerns-a plastics firm and a private bank-both of
which folded soon after the loans were made. Follow-
ing these episodes, Donau's shareholders-Gosbank
and Vneshtorgbank-issued additional capital to keep
the bank afloat and replaced several senior Soviet
bank officials including the chairman of the board.
Since that initial year, the bank has more conserva-
tively concentrated on the direct financing of and
documentary services related to Austrian trade with
the USSR and other CEMA member countries.F_
Cash and notes due from 175.2
banks
227.1
264.0
10.1
14.0
Deposits and notes due to 294.9
banks
12.3
13.2
17.4
16.5
Surpluses, profits, and reserves 0.5
0.6
0.6
0.7
Total 311.5
287.7
420.2
482.1
Unaudited yearend data as reported by the bank; because of
rounding, components may not add to the totals shown.
n 1983 data are estimated on the basis of 1980-82 trends.
287.8
14.7
14.6
17.9
0.8
535.2
25X1
25X1
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Table E-2
Donaubank Income Statement a
Taxes and extraordinary items
0.0
0.0
0.0
Net income
0.1
0.1
0.1
a Unaudited yearend data as reported by bank; because of round-
ing, components may not add to the totals shown.
Table E-3
Donaubank Peer Group Comparison, 1982 a
Total Deposits
Total Capital
Liquidity
Capital Adequacy Return on
Return on
(Capital/Assets)
Income
Equity
Million
US $
Rank in
Peer
Group
Million
US $
Rank in
Peer
Group
Quick
Assets/
Deposits
Loans/
Deposits
(Net
Income/
Revenue)
(Net
Income/
Capital)
Donaubank
452
1
17
1
44
58
4
0.2
0.6
Adria Banking
103
2
5
3
70
48
5
1.0
1.0
Bank Gebruder Gutmann
28
3
1
5
30
60
4
0.0
7.0
Internationale Bank fur
Aussenhandel
25
4
4
4
NA
NA
1
1.0
6.0
Central Wechsel and
Creditbank
15
5
6
2
NA
NA
2
1.0
3.0
a Peer group was generated on the basis of total assets at yearend
1981.
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Appendix F
East-West United Bank (EWUB)
The Luxembourg-based bank-chartered as Banque
Unie Est-Ouest-is the newest of the Soviet-owned
banks in the West, having opened its doors in 1974.
This bank's purpose was to finance Soviet trade with
the Benelux countries and other European Economic
Community (EEC) members. Able to take advantage
of its location in the rapidly expanding EEC financial
center-home to the EEC currency fund, the Euro-
bank clearing system, and primary and secondary
foreign exchange markets-EWUB demonstrated
rapid growth in assets, mostly interbank deposits,
surpassing even its sister banks during the mid-1970s.
Luxembourg also permitted it to engage in some
Table F-1
East-West United Bank Balance Sheet a
Cash and notes due from 448.3
banks
Deposits and notes due 503.8
to banks
a Unaudited yearend data as reported by the bank; because of
rounding, components may not add to the totals shown.
forms of banking operations that were forbidden to
Ost-West Handelsbank by West German law. Until
almost the end of the decade, East-West was very
active in syndicated Eurocurrency loans and the
aforfait market. Although East-West United began
as a rising star among the Soviet-owned banks, it
currently enjoys a poor reputation among Western
bankers-perhaps reflecting its poor profitability and
inactivity in the financial marketplace.
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Table F-2
East-West United Bank Income Statement a
a Unaudited yearend data as reported by the bank; because of
rounding, components may not add to the totals shown.
Table F-3
East-West United Bank Peer Group Comparison, 1982 a
Capital Adequacy Return on
Return on
(Capital/Assets)
Income
Equity
Million
US $
Rank in
Peer
Group
Million
US $
Rank in
Peer
Group
Quick
Assets/
Deposits
Loans/
Deposits
(Net
Income/
Revenue)
(Net
Income/
Capital)
Westfalenbank
International
553
1
16
4
34
3
3
0
1
Trinkaus and Burkhardt
International
553
1
14
5
40
71
2
1
6
Societe Europeenne de
Banque
515
3
19
3
68
48
4
2
7
Provinsbanken
International
505
5
22
2
29
66
4
4
10
a Peer group was generated on the basis of total assets at yearend
1981.
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Secret
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