Banks are an essential part of the U.S. economy and come in many forms, including: holding companies, money center banks, regional banks, community banks, asset-based lenders, credit unions, trust companies and savings banks. In addition to the core services such as accepting deposits and making loans, banks offer access to capital markets, investment management, security trading, insurance and tax preparation services. Competition requires that banks apply up-to-date technologies to create differentiated products and services in order to retain customers and to reach new ones. Internet banking and electronic payment instruments are now essential products offered by the banking industry.

Over the years, many Canadian-based companies have looked south of the Canadian border to grow and expand. Due to the massive size of the U.S. market, the opportunity for growth is very enticing. Cross-border trade between Canada and the U.S. exceeds $600 billion (U.S.) per year, forming the largest trading partnership in the world. While there are risks in entering the U.S. market, a brief review of some of the differences between the U.S. and Canadian banking systems will enable Canadian-based companies to make informed decisions relative to cross-border banking issues.

Inevitably, after a decision is made to expand and grow sales south of the border, banking topics that should be considered include the following:

• Will a Canadian bank continue to meet day-to-day banking needs?
• Will a Canadian bank provide financing with respect to those assets located outside of Canada?
• At what point should a Canadian company consider establishing a relationship with a U.S. bank?
• In what locale should a relationship with a U.S. bank occur?

Addressing these questions, and more, enable Canadian-based management to properly plan and execute a strategy for growing business south of the border.