Major US and UK Banks: A Brief Comparative Analysis - International Finance

Major banks in the US and UK: a brief comparative analysis

The huge financial assistance from the states to large banks ("too large to fail" - this term was thrown in the period of threat of their total ruin during the crisis), contributed to their rapid recovery as early as 2010. However, the country picture in the banking sector was not the same. The process of unusually rapid growth of large banks in the leading countries of the world was reviewed by the example of the top 10 banks in Great Britain and the USA, comparing their financial positions in 1960 and 2010. (Tables 14.4 and 14.5).

Table 14.4. Top 10 UK banks in 1960 and 2010

Year

Financial institutions

Aggregate assets

billion

F.ст.

assets as% of GDP 1)

share in aggregate assets of the banking sector,% 2)

1960

Barclays Bank Ltd and affiliated banks

2.5

10

17

Midland Bank Ltd and affiliated banks

2.0

8

13

Lloyds Bank and affiliated banks

1.8

7

12

Westminster Bank Ltd and affiliated banks

1.3

5

8

National provincial Bank Ltd and affiliated banks

1D

4

7

Royal Bank of Scotland Ltd and affiliated banks

0.4

2

3

Martins Bank Ltd

0.4

1

3

Standard Bank of South Africa Ltd

0.4

1

2

Chartered Bank Ltd

0.3

1

2

Union Discount Company of London

0.3

1

2

Total:

10.5

1

2

2010

Financial institutions

Aggregate assets

billion

F.ст.

assets as% of GDP 3)

share in aggregate assets of the banking sector,% 4)

Royal Bank of Scotland Group

1696

122

26

Barclays Group

1526

110

23

HSBC Holdings Group

1463

105

22

Lloyds Banking Group

1027

74

16

Standard Chartered Group

270

19

4

Nationwide Building Society

191

14

3

Northern Rock PLC

87

6

1

Bradford and Bingley

49

4

1

The Co-Operative Bank

46

3

1

Yorkshire Building Society

23

2

0

Total

6378

459.0

97.3

1) Nominal GDP at market prices (£ 26 billion).

2) For all banks registered in the UK (71), for a total asset value of £ 15.15 billion

3) Nominal GDP at market prices (1.393 billion pounds sterling).

4) For 26 banks registered in the UK and 50 building societies for a total asset value of £ 6.520 billion

Sources: The Bankers. Almanac and Year Book. 1961-1962; data of the Bank of England.

The tabulated in Table. 14.4 data indicate an unusually high level of concentration of bank capital in England. The assets of Barclays Bank for 50 years increased from 2.5 billion to 1526 billion pounds sterling; Royal Bank of Scotland increased its assets from 0.4 billion to 1696 billion pounds sterling. In general, if in 1960 the 10 largest banks in England controlled assets in the amount of 10.5 billion pounds sterling. then in 2010 - about 6.4 trillion f.st. The share of this dozen banks in total banking assets is 97.3%. As a result, the financial sector accounts for more than half of GDP in its overall structure with simultaneous "leaching" actual industrial production.

A similar comparative analysis of the leading US banking tens in 1960 and 2010. shows almost the same picture, except that in the United States the level of concentration of bank capital is much lower than in the United Kingdom. The aggregate assets of the 10 largest American banks were $ 52.1 billion in 1960. They increased in 2010 to $ 8.8 trillion, which is 62.4% of assets from the US GDP and 73.4% of the total of the assets of the US banking sector (Table 14.5).

Table 14.5. Top 10 US banks, in 1960 and 2010.

Years

Financial institutions

Aggregate assets

billion

$.

assets as% of GDP

share in total assets of the banking sector,%

1960

Bank of America

11.2

2.1

4.4

Chase Manhattan Bank

8.4

1.6

3.3

First National City Bank of New York

8.2

1.6

3.2

Manufacture's Hanover Trust Company

5.9

1.1

2.3

Morgan Guaranty Trust Company

4.1

0.8

1.6

Chemical Bank New York Trust Company

4.1

0.8

1.6

Security First National Bank

3.4

0.7

1.3

Bankers Trust Company

3.1

0.6

1.2

First National Bank of Chicago

3.0

0.6

1.2

Bank of California

0.7

0.1

0.3

Total

52.1

9.9

20.3

2010

Bank of America

2363.9

16.7

19.7

JP Morgan

2014.0

14.3

16.8

Citigroup

1937.7

13.7

16.2

Wells Fargo

1225.9

8.7

10.2

US Bancorp

283.2

2.0

2.4

PNC Financial Services

261.8

1.9

2.2

Bank of New York Mellon

235.9

1.7

2.0

Suntrust banks

170.7

1.2

1.4

BB & amp; T corporation

155.1

1.1

1.3

State Street

160.7

1D

1.3

Total

8808.9

62.4

73.6

Sources: The Bankers. Almanac and Year Book. 1961-1962; data from the US Federal Reserve and the US Bureau of Economic Analysis, 2011.

The above data on the largest banks in the UK and the US over a long time period showed unusually high growth rates of assets in the segment of this extremely narrow banking group in both countries. Obviously, presented in Table. 14.4,14.5 giants-banks are a kind of classical international commercial banks, as well as the fact that they have a significant negative impact on the state of finance and the economy. The fact is that these banks definitely influence the behavior of the basic composition of banking and financial

institutions that provide the bulk of the clients' cash needs, although, of course, they have credit facilities that are not comparable to the banks of the top ten or even the first hundred.

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