How does cross-country divergence in banking regulation shape domestic banking systems? We study whether an increase in host-country capital requirements significantly rebalances the competitive landscape toward global banks that are not subject to host regulation. Using novel Peruvian data on global bank lending that relies on representative offices, we uncover that this locally unregulated organizational form accounts for nearly 25% of corporate dollar credit. We find that higher host-country capital requirements significantly reshape credit allocation: banks outside host regulation expand by 7-10pp relative to locally regulated lenders, even for the same borrower.