Why big banks are going global once again

Britain's NatWest recently secured Federal Reserve approval for a so-called representative office in the United States, the Financial Times reported on August 26. The term describes a type of outpost for a non-U.S. bank, which under Fed rules allows the company to solicit new business, conduct research and act as a liaison between customers and the head office. The representative office is not allowed, however, to take deposits or directly lend money. It's easy to spot the anecdotal signs of this new pro-global shift. JPMorgan, for instance, is pushing into [UK](https://www.breakingviews.com/considered-view/jpmorgans-uk-push-will-be-trickier-than-goldmans/) and German retail banking. On Wednesday, Reuters reported BNP Paribas is eyeing a stake in Vietnam's Techcombank. NatWest, formerly known as Royal Bank of Scotland (RBS), secured approval for a "representative office" in the United States, according to the [Financial Times](https://www.ft.com/content/940339db-b5b5-4b53-95e6-cfbc42eb6c06?syn-25a6b1a6=1). It's a modest growth step: representative offices can solicit new business but can't take deposits. Still, it's symbolic. After a slew of ill-advised foreign takeovers culminated in a 2008 bailout, RBS' post-crisis strategy was to retrench to the United Kingdom. More broadly, advisers in Europe are excited about potential cross-border bank combinations. It's a stark contrast to the period between 2009 and 2024, where M&A largely centred on domestic consolidation or the [sales](https://www.breakingviews.com/considered-view/bnp-paribas-left-with-an-agreeable-cash-dilemma/) of [foreign units](https://www.breakingviews.com/considered-view/bbva-shows-european-banks-how-to-exit-the-u-s/). Now, a key question on bankers' minds is whether capital-rich, domestic-focused lenders - like CaixaBank, Lloyds Banking Group and Intesa Sanpaolo - could be convinced to buy a chunky peer abroad. The business model of global banking seemed to be dying not long ago. Citigroup's Jane Fraser, who took charge in 2021, [hacked away](https://www.breakingviews.com/considered-view/citis-mexico-exit-leaves-it-neater-but-not-better/) at the American lender's global sprawl. HSBC did the [same](https://www.breakingviews.com/considered-view/hsbcs-10-bln-canada-sale-is-ad-for-bank-breakups/), and even faced investor [pressure](https://www.breakingviews.com/features/ping-ans-hsbc-campaign-fails-the-financial-test/) for a full-blown breakup. Ana Botín's Banco Santander, and others with far-flung lending operations, seemed to suffer a [valuation penalty](https://www.breakingviews.com/features/ping-ans-hsbc-campaign-fails-the-financial-test/) relative to more geographically focused rivals like Lloyds Banking Group and CaixaBank. Yet that all seems to be changing. The market is implicitly giving CEOs permission to cross borders once more. Expect more international expansion, including M&A, hopefully without the pre-2008 levels of hubris. The data matches the tone of the chatter. First, banks increasingly seem willing to lend money abroad. The Bank for International Settlements collects [data](https://www.bis.org/statistics/rppb2607.htm) on cross-border bank credit, which rose by $1.7 trillion in the first quarter of 2026, representing an 11.4% year-on-year increase. That annual rise was close to the previous quarter's 11.5%. They're the two highest readings since the first quarter of 2008, after which the growth readings were either negative or negligible for many years. It suggests that, even setting aside M&A, bank lending is re-globalising fast. Second, the valuation penalty for having multi-country operations seems to be shrinking. Milan-based UniCredit, for example, which spans Germany and other nations beyond its home market, trades at just an 8% discount to more Italy-focused Intesa Sanpaolo, using forward tangible book value multiples. The gap was 20% or more before 2025. These multiples depend largely on the returns investors expect. But even adjusting for that, the multi-country penalty is ebbing. Banks keep a close eye on the implicit return that investors require for holding their shares, known as the cost of equity. There has often been a big gap between multi-country lenders like HSBC, Santander, UniCredit, Barclays, BBVA and Deutsche Bank, when compared with more domestic-focused Lloyds, NatWest, CaixaBank, Commerzbank and Intesa Sanpaolo. This gap implied that investors saw geographic sprawl as an added source of risk. Now however, the average implied cost of equity for both of these cohorts is about 10%, according to a Breakingviews calculation. If investors are on board with cross-border banking, it's little surprise that CEOs are too.

Why big banks are going global once again

Context note on NatWest's U.S. office

Signs of renewed international ambition

Big banks are returning to cross-border expansion

Lending data and valuations suggest the penalty is fading

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