Citi Turns 200: Banks Faces Postwar Challenge
June 29, 2012 09:00 AM
In celebration of Citigroup's 200th Anniversary, we are sharing stories from our rich history here on this blog. The 15th installation below covers how National City Bank sought out to find a new look post World War II. Read the 14th installment on how National City Bank embraced air travel by recognizing the advantages of air mail and commercial air transport for staff, here.
Bank faces postwar challenge
George Moore seeks a "new look" for the organization, and sees opportunities in a resurgent Europe
In 1948, George Moore was appointed to chair a committee to find a "new look" for the bank. "National City didn't have a game plan, didn't have yardsticks," he recalled many years later. As for the overseas division, "we found the thing such a mess that we concentrated on purely procedural recommendations." Anomalies included different sized drafts in the Bombay and Calcutta branches. Drafts by the branches in London were markedly different, not only in size but also in wording and general appearance.
Back in 1930, the 83 foreign branches of America's biggest international bank accounted for 29 percent of all the bank's lending and 30 percent of total profits. But several branches that were sold or closed either before or during World War II had never reopened, including many in China - and the branches in that country had accounted for almost half the overseas earnings remitted to New York between 1934 and 1938. By 1955, there were only 61 overseas branches, representing just 14 percent of the bank's loans and 16 percent of its profits.
By 1956, Moore was convinced that "we were doing an inadequate job everywhere, especially in Europe." The European Coal and Steel Community was already five years old and the Treaty of Rome, basis of the European Economic Community, was only one year away. When France and the Federal Republic of Germany formed the EEC with Italy, the Netherlands, Belgium, and Luxembourg in 1957, America's leading overseas bank had been reduced in Europe to two branches in Britain and two representative offices, in France and Germany.
If the bank's general absence from continental Europe was problematic, so too - in Moore's view - was the performance of the corps of overseas bankers, many of whom were nearing the ends of their careers, having joined the bank in the 1920s and 1930s. "American companies were selling to Europe, buying in Europe, producing in Europe in increasing numbers - and being served by European banks," Moore also noted later. "There were immense business opportunities in Europe, and we were doing nothing to grab them. And if we wanted to grab them, we didn't have the hands to do the work.