The District's big banks are making a major push to get a chunk of the money making its way from Latin America into the Miami area.
American Security already has won government approval to set up a Miami corporation for that purpose.Now Riggs National Bank has joined in, applying to the Federal Reserve Board to set up an Edge Act facility in Miami to gain a share of the burgeoning Florida-Latin America connection. The Edge Act permits federal incorporation of organizations that want to engage in international banking operations.
The Miami drive makes sense for both American Security and Riggs because these banks have a substantial stake in Latin American trade already. As of 1977, about 30 percent of Riggs' loan portfolio came from Latin American business.
Those Latin American funds -- often called "flight money" by financial observers because they frequently are the result of an exodus from a troubled nation -- have been a boon to Miami banks. Now, District banks, already deeply involved with Latin American companies and financial institutions with offices here, are seeking a piece of that pie.
Already there are more than 20 Edge Act firms operating in Miami, and most of the nation's largest banks have set up offices there. It is estimated that Latin American investments in the Miami area top $2 billion.
With American Security poised to begin offering a variety of services in Miami, the Riggs application, filed two months after American Security received Fed approval to charter the Edge Act corporation, is further indication of both the importance of the Latin American market and the growing international scope of American Security and Riggs, the District's two largest banks.
Riggs wants to set up Riggs International Banking Corp., much like American Security Bank International, to operate its Miami facility, Riggs plans to employ eight people there initially.
In addition, the Miami-based corporation will have capital stock behind it valued at $9.5 million. Riggs National also plans to transfer to the new company about $20 million in loans to provide overhead for the Miami operation and head for the Miami operation and a loan base for bringing in new business. It could take three to five years to build a business base at such a new office.
The new Miami facility, much like American Security's office, would extend credit, effect money transfers, pay and collect funds from foreign countries, provide personal banking services for non-U.S. residents, and gather and distribute foreign credit and general economic information.
Why all the attention on Latin American busness? Obviously Miami is unique because it is one of the nation's few truly bilingual cities. Secondly, it has become a haven for many of the Latin American financial elite.
"Riggs believes that as a result of the special relationship it has built with the Latin American embassies, with central banks and other foreign government agencies, and with the major multinational financial organizations, RIBC will be in an especially strong position to compete in the Latin American market," Riggs said in its application with the Fed.
Although Riggs applied to form its Miami corporation after American Security, Riggs apparently has a wide lead over ASB in the battle for foreign funds. Riggs employs 114 persons in its multinational group, nearly four times the staff size ASB anticipates by the end of 1980.
Riggs says it has made direct of indirect loans to 71 countries. Since December 1979, Riggs has had an application pending at the Fed to open a branch in London. That office would be the only one in London operated by a Districk bank.
"The London branch will provide Riggs with direct access to the Eurodollar and Eurocurrency markets, thereby facilitating participation in short-, medum- and long-term lending activities," Riggs said in its Miami application.
Furthermore, Riggs says that a "substantial number of Middle East banks have indicated that they would bank with Riggs if it had a London branch."
In addition, Riggs says the London office will bring in business from central and foreign banks interested in Washington and from "Washington-based multinational institutions interested in trade or purchase of services from the London or European markets."
All this means that executives of the city's two largest banks have become keenly interested in international markets. Until recently, financiers and other business representatives made key decisions in the District, but went to New York for their banking.
If planners from Riggs and American Security have their way, those funds may never leave downtown Washington.