International payments, correspondent banking and the American challenge to Belgian banks in the 1960s

Studying the competition from American banks forces us to address a fundamental problem: what should be the role of our bank in the future? Should it settle for being the number one bank in Belgium or should it also prepare to present itself, both in Europe and abroad, as one of the great international banks?

So concluded a 1968 internal report by Belgium’s Société Générale de Banque (SGB) on what some scholars have referred to as the “American challenge”.[i] After 1945, U.S. commercial banks were eager to follow their multinational corporate customers (MNCs) abroad, escape the constraints of rules separating commercial and investment banking[ii] and attract U.S. dollar deposits. Nowhere was this wave of bank internationalisation more conspicuous than in the City of London, where the number of U.S. bank branches increased five-fold between 1958 and 1974. But it affected other countries in continental Europe too.[iii] American banks had size and an appetite for competition that upset local bankers across the region. By the late 1960s, European bankers came to see American banks as “predators in what had hitherto been a relatively peaceful and protected set of domestic markets”.[iv]

Thanks to scholars like Duncan Ross and Alexis Drach, we know that European banks reacted to this challenge by cooperating in banking clubs and consortia, which offered medium- and long-term credit provision and investment banking.[v] As the following paragraphs indicate, however, SGB also leveraged its status as the largest Belgian correspondent bank and actively solicited the help of its international correspondent network to defend its international payment activities.

The American challenge and international payments

Although the number of U.S. banks operating in Belgium was small when SGB’s report on the American challenge was written their presence was clearly on the rise. In 1960, there were just two U.S. banks with operations in Belgium (American Express in Antwerp and Morgan Guaranty Trust in Brussels).[vi] By 1968, four U.S. banks had branches in the country, while four others were major shareholders in local banks and two had representative offices (see Table 1).

One of the topics in the SGB report was U.S. banks’ competitive push into international payments. They could clear dollar payments in New York quickly, crediting customer accounts with the proceeds of cheques drawn on New York upon presentation or the following day. Their direct telex links with New York meant their ability to swiftly execute dollar bank transfers was unmatched. In the domain of foreign exchange, U.S. banks could quote preferential rates due to the huge volume of dollar transactions they processed thanks to the centralisation of much of their global cash management operations in New York. They also wooed potential corporate customers in Belgium by offering reduced exchange commissions. Furthermore, U.S. banks tended to direct their documentary collections towards their own Belgian offices, often stipulating that bills drawn by SGB’s customers under the letters of credit they issued to facilitate payments for exports to the U.S. could only be negotiated at the U.S. bank’s local branch or Belgian affiliate.[vii]


Table 1: American Banks in Belgium, c. 1968









Bank of America

Banque de Commerce (Chase Manhattan)

Manufacturers Hannover


First National City Bank

Banque européenne d'Outremer (Continental Illinois)

Crocker Citizens


Morgan Guaranty Trust

Banque du Bénélux (Bankers Trust)



American Express







Bank of America

Banque de Commerce



First National City Bank

Banque du Bénélux



Morgan Guaranty Trust








Europa Bank3


1 Company under non-Belgian law
2 Company under Belgian law
3 Majority owned by the International Bank of Washington
Source: Phillip Muuls, “La Concurrence des banques américaines”, Appendix 1, April 1968, AGR2 BSGB 834.


Even more threatening than the low cost and high speed of U.S. banks’ international payments services was their attitude to credit extension. SGB expressed a mix of frustration and fascination with U.S. bankers’ particular “mentalité” and their “dynamic conception” of creditworthiness evaluation. While Belgian banks were accustomed to extending credit based on “real guarantees”, U.S. banks focussed on borrowers’ cash flow (i.e. ratio of credit to gross profits). Furthermore, instead of basing credit decisions on past performance, net worth and liquid resources, U.S. banks’ lending hinged on a corporation’s future growth potential, the quality of its management, and economic forecasting.[viii]

SGB found U.S. bankers particularly enterprising business developers. They pro-actively initiated sectoral studies to identify growth opportunities and develop credit formulas tailored to customers’ specific needs. To secure business from large local corporate customers, U.S. banks offered pre-approved credit lines and were willing to do so at a loss if it generated new business. The Belgian branches of U.S. banks acted as “credit relays” for their head offices. By leveraging their relationships with the directors of American MNCs, U.S. bankers could ensure that clients operating in Belgium dealt exclusively with their local branch or affiliate.[ix]

Not all U.S. banks were equally aggressive in their tactics. Almost all of them had signed the Belgian Bankers’ Association’s binding interbank agreements establishing the interest paid on deposits and the commissions on cheque and bill collection, foreign exchange transactions, and documentary credit settlements. Bank of America, however, refused to do so, invoking U.S. anti-trust law. Other U.S. banks cited the same reason when they refused to formally ratify an additional set of ad hoc interbank agreements governing the minimum commission Belgian-based banks charged foreign correspondents for discounting and collecting commercial paper. Nevertheless, with the exception of Bank of America, they respected them in practice.[x]

Mounting the resistance: the role of correspondent banking

To resist the American challenge, SGB sought to leverage its status as a major correspondent bank. In Belgium, SGB’s domestic network of 800 branches meant U.S. banks operating in Belgium still relied heavily on its correspondent banking services to make and receive payments. SGB expressed frustration at having to collect commissions on behalf of U.S. banks without pocketing any of the proceeds, so it decided to introduce a minimum (rather than a maximum) commission on such operations in order to “penalise the banks which we want to counteract”. It also hoped to increase the cost of U.S. banks’ payment and trade finance operations by coordinating with other Belgian banks.[xi]

SGB envisaged taking “direct action” against the most egregious U.S. bank, Bank of America. Insofar as the institution only kept limited balances at the National Bank of Belgium, it relied heavily on SGB to clear domestic payments. Traditionally, SGB had allowed Bank of America to draw cheques on credit balances at its Antwerp branch even before payments from foreign correspondents had been covered by its Brussels headquarters. Conscious that its competitor was taking advantage of the flexibility it traditionally afforded its correspondents, SGB considered ending this practice. It knew all too well that the resulting delay, however modest, would create liquidity management problems for Bank of America and frustrate one of its main selling points—namely, its “ability to put funds at the disposal of its customers in every major financial centre without any loss of interest payments”.[xii]

SGB also solicited the help of its foreign correspondents in its efforts to counter the American challenge. When members of its Foreign Department visited foreign correspondents, they underlined the competitive threat of U.S. banks operating in Europe and outlined the advantages SGB could offer in terms of reciprocity. It asked foreign correspondents making payments to Belgian firms holding accounts with U.S. banks to encourage them to deposit cash balances at SGB instead. These efforts appeared to pay off. In 1967, the bank recuperated 185 million Belgian francs in deposits destined for Morgan Guaranty from a single corporate client.[xiii]

In addition to establishing a direct telex connection with its New York affiliate, SGB relied on U.S. correspondents to help them accelerate the clearing of dollar-denominated cheques in New York. To that end, SGB developed what it referred to as the “pouch loose system”. Under this system, which brought the time it took to clear cheques in New York from four days down to two, cheques were grouped into packets and sent by air to New York. Once they had been received by a member of the New York Clearing House, they were presented for payment at a correspondent bank specifically selected because it did not operate in Belgium (e.g. Irving Trust, Manufacturers Hanover Trust, Chemical Bank, or Marine Midland).[xiv]

Finally, SGB planned to use its correspondent network for the purpose of business development. By identifying corporate customers’ foreign bankers, SGB might “collaborate with them to examine solutions which would provide mutual benefits while offering advantages to the customer”. Foreign correspondents could also facilitate direct contacts with foreign corporations likely to be interested in investing in Belgium or in increasing their commercial and financial dealings with the country. And they could serve as a distribution channel for English-language grey literature on how to do business in the country.[xv]

A fruitful direction of enquiry

The creation of banking clubs and consortia were undoubtedly part of SGB’s strategy in the face of the American challenge. The bank also put high hopes in its New York-based European American Banking Corporation, which allowed it to be “in the field” by straddling the Atlantic.[xvi] Nevertheless, as these paragraphs have highlighted, SGB saw the activation of its network of correspondents as another important means of improving its competitive edge in the international payments and business spheres. More research is now needed to evaluate whether banks in other countries adopted a similar strategy in their resistance to the American challenge.


Battilossi, Stefano. ‘Introduction: International Banking and the American Challenge in Historical Perspective’, In European Banks and the American Challenge: Competition and Cooperation in International Banking under Bretton Woods, eds. Stefano Battilossi and Youssef Cassis, Oxford: Oxford University Press, 2002, 1–35.

Drach, Alexis. ‘An Early Form of European Champions? Banking Clubs between European Integration and Global Banking (1960s–1990s)’, Business History 0, no. 0 (7 February 2022): 1–24.

Ross, Duncan M. ‘Clubs and Consortia: European Banking Groups as Strategic Alliances’, In European Banks and the American Challenge: Competition and Cooperation in International Banking under Bretton Woods, eds. Stefano Battilossi and Youssef Cassis, Oxford: Oxford University Press, 2002, 135–60.

Schenk, Catherine R. ‘“Parasitic Invasions” or Sources of Good Governance: Constraining Foreign Competition in Hong Kong Banking, 1965–81’, Business History 51, no. 2 (1 March 2009): 157–80.

Sylla, Richard. ‘United States Banks and Europe: Strategy and Attitudes’, In European Banks and the American Challenge: Competition and Cooperation in International Banking under Bretton Woods, eds. Stefano Battilossi and Youssef Cassis, Oxford: Oxford University Press, 2002, 53–73.



[i] Philippe Muuls, “La concurrence des banques américaines”, April 1968, AGR2 BSGB 834. Quote at pp. 70-71.

[ii] See Sylla, ‘United States Banks and Europe’.

[iii] Battilossi, ‘Introduction: Historical Perspective’. The “American challenge” didn’t just affect Europe. Indeed, U.S. banks were among the other foreign banks characterised as “parasitic invasions” by the Hong Kong Banking Commissioner in 1968. See Schenk, ‘“Parasitic Invasions” or Sources of Good Governance’.

[iv] Ross, ‘Clubs and Consortia’, in European Banks and the American Challenge: Competition and Cooperation in International Banking under Bretton Woods, ed. Battilossi et al.

[v] Drach, ‘An Early Form of European Champions?’

[vi] The Bankers’ Almanac and Yearbook, 1960-61, London: Thomas Skinner, 1043-1046.

[vii] Ph. Verhoosel, “Enquête sur la concurrence des banques américaines en Belgique”, April 1968, 18, 17, AGR2 BSGB 834 ; Muuls, “Concurrence des banques américaines”, 49, 58.

[viii] Muuls, 17-19, 52, 67 ; Verhoosel, 10.

[ix] Muuls, 17, 52-53 ; Verhoosel, 10.

[x] Muuls, 38-41.

[xi] Verhoosel, 17, 26.

[xii] Verhoosel, 24.

[xiii] Verhoosel, 23,16.

[xiv] Verhoosel, 18.

[xv] Verhoosel, 26 ; Muuls, 66.

[xvi] Muuls, 65.