Introduction
Households, businesses and governments all use banking of one form or another and chances are the bank you use has been part of a consolidation. Competition in the banking industry is extremely intense and one method banks use to improve their competitive advantage, increase their market power, grow their customer base, increase revenues and hopefully achieve greater profits is through consolidations.
This report discusses consolidation in the banking industry, including an overview of the industry, explanation of mergers and acquisitions, motivation behind and factors affecting consolidations, as well as a look at some significant consolidations at well-known financial institutions and a special look at a Chicagoland banking group that has successfully grown through acquisitions, Wintrust Financial Corporation.
Overview of the United States Banking Industry
The U.S. banking industry is comprised of several thousand small and medium sized community based banks, a lesser number of medium sized regional corporations, and a handful of extremely large multinational banking organizations (Jones and Critchfield, 2005). One core business in the banking industry is commercial banking, which consists of demand and time deposit taking, secured (mortgages) and unsecured (credit cards) lending, securities and treasury activities, and other types of financing, investment and cash and asset management offerings.
Although the financial services sector is comprised of four principle businesses including commercial banking, investment banking, insurance, and asset management, this report is geared towards a discussion of commercial banking activities.
Synopsis of mergers and acquisitions
Mergers and acquisitions is the s...
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...ttp://wintrust.com/investor-relations.html on March 21, 2014
Van Doorn, Philip. “Bank Consolidation Will Center on This U.S. City.” February 25, 2013. (Accessed March 31, 2014.)
Investment banking explained pp. 223-224
Douma & Schreuder, 2013, chapter 13
“Acquired Companies Prior to Close” http://www.mergerintegration.com/acquisitions
"Top Economists and Financial Experts Say We Must Break Up the Giant Banks". The Big Picture. Ritholtz.com. Retrieved 14 March 2013.
“The 12 Biggest Mergers in American History” http://www.billshrink.com/blog/6834/the-12-biggest-mergers-in-american-history
“Bank of America to buy Countrywide for $4 billion” Reuters, January 11, 2008. Reuters.com Accessed through Wikipedia, April 20, 2014
Countrywide Financial annual report, 2007
From 1986 to 1989, the Federal Savings and Loan Insurance Corp. (FSLIC) closed 296 institutions with assets totaling $125 billion. With the creation of the Resolution Trust Corp. (RTC) in 1989 an additional 747 thrifts with assets totaling $394 billion were closed. That is a combined total of $519 billions in assets that contributed to a massive restructuring of the number of firms in the industry as stated by Curry & Shibut (2000).
On February 23, 1784, a small advertisement appeared in The New York Packet, one of the many New York newspapers of that era. This advertisement announced that prominent New York citizens had established a bank. The bank, established by the prominent, would not officially open for business until June 9, 1784. That bank would come to be known as the bank of New York. Alexander Hamilton, a well-known New York attorney, was asked to write the constitution of the new bank. He complied and therefore Alexander Hamilton was credited with the founding of the Bank of New York. The Bank of New York is the oldest bank in New York and along with that is one of the oldest banks in the world since banking the way we know it today began in the 18th century.
First, Splitting commercial banks and investment banks could train two employees in two lines, whether professional techniques or professional management skills. Because in securities areas, employees could increase their professional technology and services by performing customers’ requirements, while commercial banks,
Bank of America is considered one of the major banks in the banking and financial industry. As of May 2015 it established a profit of 163 billion dollars. While creating a substantial amount of profitability in the market, it has also garnered 97.02 billion dollars’ worth of sales. This positive outlook has enabled the organization to have a stock of 15.38 with a positive 31 cents per share. The company functions as an organization that provides banking, non-banking services, and products within the United States and abroad. Its profitability depends on the five important segments needed to be successful and unique in the banking industry. The five segments consists of Consumer and Business banking, Consumer Real Estate Services, Global Banking, Global Markets, and Global Wealth& Investment Management. Consumer
Bank of America is an international and widely known banking and financial corporation. Its headquarters are located in Charlotte, North Carolina, and the Bank of America is the second largest bank holding company in the United States of America. A bank holding company is a company that owns and controls one or more banks, but does not necessarily take part in the act of banking itself. This gives it a greater range of flexibility that enables it to raise capital for itself more easier than a traditional bank. Other benefits include: “The holding company can assume debt of shareholders on a tax free basis, borrow money, acquire other banks and non-bank entities more easily, and issue stock with greater regulatory ease.”. In essence, this grants the bank holding company a much more freely moving business that has a distinct advantage over its lesser bank brethren. Bank of America has a variety of interesting topics that will be extensively and thoroughly covered. These include Bank of America’s history, its financial and stock analysis, its multitude of operations, and the large number of controversies that surround the Bank. Once the said topics have been rigorously and exhaustively described, the beautiful conclusion will rear its head and allow the reader to bask in the satisfaction of finishing this extremely interesting paper.
...dditionally, the merger can take place in smaller phases. For instance the first phase may include change of the physical look of the branches and the signage - – so as to convey a consistent view and experience for its customers. This phase may also include effective communication to the employees to educate them about the merger, ensure them of their positions and encourage them to participate in the merger. Second, the firm can totally combine the bank’s technology and the information systems which will allow the merged firm to operate as a single entity and to become fully operational. The management should implement the merger with care and prudence, aiming for minimal disruption for the customers and should communicate extensively to ensure all its stakeholders are kept fully informed as they make changes.
Banc One Corporation is the largest regional bank holding company headquartered in Ohio, as one of the most typical regional banking in the United States with $76.5 billion of asset base. By differing from the organization structure of other tranditional bank holding corporations (in which the parent controlled all its subsidiary banks), Banc One Corporation has a typical corporate structure known as three-tiered organizational structure. This structure allows the parent company, Banc One Corporation controlled 5 state bank holding companies, and in turn, these state banks owned 42 subsidiaries or affiliates. Therefore Banc One Corporation actually owned a large branch of banks and a aggregate of 78 banking affiliates through its Regional
The merger between J.P. Morgan and Chase Manhattan Bank is a neighboring market expansion. While looking to expand within their corresponding markets, at the same time they increased value for their consumers and their overall benefits from the merger. One of the benefits that Chase Manhattan bank gained from this merger is an increase in foreign presence in the areas of Europe, Asia and Latin America. (Chase/ J.P. Morgan Merger Part of Continuing Trend Toward Consolidation). While expanding in their corresponding markets both organization gained many benefits.
The U.S. consumer and commercial banking businesses serve customers under the Chase brand. The consumer businesses include: Branch, ATM, Telephone and Online Banking, Credit Cards, Small Business, Home Finance and Home Equity Loans, Auto Finance, Education Finance, Retirement & Investing, Retail Checking, and Merchant Services. And the commercial banking businesses include: Middle Market Banking, Business Credit, Equipment Finance, Commercial Term Lending and Community Development Banking.
This paper will encourage readers to learn more about Bank of America, the second largest in the world and is the fastest growing business in America, the investments that the bank has to offer is up to standards. Its revenue is one of the highest in the country, the headquarters is in Charlotte, NC, with dates of starting as back as far as the 1900’s. Also, people may not realize that Merrill Lynch is part of Bank of America, the bank is also with the NYSE. The company has expanded and grown over these years, and are still improving their services to continue with the work that is offered for individuals, corporations, international operations as well as the investment managements.
In Corporate and Institutional Banking (CIB) we will either upgrade or exit clients where returns are poor; favour network businesses such as Transaction Banking and Financial Markets; and build a leading position in banking selected buyers and their suppliers
Initially the bank’s core banking system was product oriented, but the need of the hour was to develop a customer oriented system, because the challenge is to build customer loyalty, cross sell, and enhance repeat business.
One example would be Bank of America (BofA), the bank that I currently bank with. BofA has begun operations of combining ...
Commercial banking is a monetary institution that offers various services. These services include auto loans, basic investments, certificates of deposit, business loans and savings accounts. Functions of commercial banking varies but are divided into two categories being primary and secondary. Primary functions include accepting deposits, granting loans and granting advances. Secondary functions include overdraft facility, discounting bills of exchange, and agency functions. The commercial bank plays a very crucial role in the economy being the money dealer. They transport payments by telegraph or internet, issue bank drafts, lend money, provide letters of credit, stores important paper work, advice on sale and distribution, private equity
It is a known fact that the banking industry plays a huge role in today’s society, the industry has grown rapidly of many decades and still growing. The banking sector is that sector of the society that is actually responsible for the handling of financial assets for other sector of the economy, they do this by investing the financial assets in order to create more wealth in the society while regulating all the activities involved in the process. (What is the banking Sector 2015)