Regional banks find foreigners are grabbing their business

Most regional banks are concerned that if multistate banking is allowed, they will lose their customers to banks such as Citibank, which has large resources for wooing potential customers.

However, the danger may come from another direction. Edward L. Palmer, chairman of the executive committee of Citibank, sys foreign banks already are grabbing up these customers. He cites a recent trip he took to St. Louis. On the way, he stopped in Bentonvville, Ark., to visit a new corporate customer of the bank's St. Louis Edge Act branch.

After Mr. Palmer's visit, he asked the Edge Act branch manager where the new customer had been banking previously. Mr. Palmer expected it would be a local Arkansas bank. Instead, he was surprised to find out, it was from Credit Lyonnais, the large French bank -- busy banking in the nation's remote hea rtland.

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