Industry Overview
The bailout of America’s banking institutions has been written about and discussed in every major newspaper. It is comforting to note that many of the banks have already repaid much of the bailout money, if not all of it, and the banks seem to be on the road to recovery, hopefully learning from their previous mistakes. Bank holding companies held 78% of all banking and non-banking assets. That number might have decreased.
Along with the financial meltdown came many bank mergers and buy-outs. People banking with small local/community banks find themselves suddenly banking with the biggest American banks without ever having moved their money.
The first commercial bank in this country was opened in Philadelphia in 1782. Commercial banks are responsible for the main functions inherent in U.S. banking. These banks provide a flexible credit platform; easy transfer of funds between individuals and corporations; savings accounts; currency conversion; banks are now able to act as brokers for stocks and commodities.
Wall Street, the center finance for the world and banking center in New York City has been reorganizing the stock market as well as the banks. Many of Charlotte’s banks are headquarters for many of the merged banking institutions.
The FDIC oversees much of the banking industry in this country.
Industry Trends
As banks re-emerge, the trends that will guide and govern them and their depositors, are:
Amount of Government involvement, intervention and regulation
Move to lower risk/lower return markets (alpha to beta markets)
De-leveraging where the return on investment will be lower
From Fragmentation to Consolidation (already happening)
The reversal from Buyer Beware to Seller Beware
Brand Names
Among the big players in the banking industry today are J. P. Morgan Chase, Wachovia/Wells Fargo, Bank of America and Fifth Third.