International banking activities are dominated by large banks. But international banks are also quite heterogeneous with regard to the countries in which they are active and the particular mode of entry that they choose. In this paper, we argue that recent insights into the behaviour of multinational non-financial firms help understand patterns of international banking. Based on a theoretical model describing the extensive and the intensive margin of international banking, we follow a two-step estimation strategy. In a first step, we obtain a measure of bank productivity similar in spirit to Levinsohn and Petrin (2003). In a second step, we use a self-selection model to analyze the impact of productivity on the extensive and the intensive margin of international banking. An ordered probit model describes the extensive margin of entry into different modes of international activities. Based on this self-selection, we model the intensive margin as the volume of banks’ international positions. We find a productivity pecking order in the sense that more complex internationalization choices require a higher productivity.