Issues Arising from Euro-Bank Experience

In the period since the first Euro-banks appeared in the mid-1960s, an almost unprecedented physical growth in a boom atmosphere through 1973 was checked by a chain of psychological and economic shocks administered in 1974 by a series of bank failures, the prospect of substantial international loan losses for the first time since the Second World War, and the world-wide tremors created by the shift in resources to the OPEC countries. In the five years since this series of shocks, the Euro-banks have been confronted not only by increased competition in the international banking market which had drastically modified the risk/reward ratio in international lending, but also competition in a different sense from their stockholders which has forced them to reexamine their own objectives and strategy. Most Euro-banks have thus lived through periods of both boom and adversity, and, while many chapters in their history remain to be written, it is possible to identify in mid-1979 with greater precision the major unresolved issues confronted by these institutions.