Major bank

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View from the west of the skyscrapers of the major banks in Frankfurt's banking district (June 2015)

A major bank is a credit institution whose size of business, measured in terms of total assets or business volume, is significantly larger than that of other credit institutions and belongs to the category of a large company .

history

The German banking market was made up of private bankers , savings banks and other institutions such as cooperative banks and central banks up until the early days . At that time a new group of banks arose, namely private banks in the legal form of joint-stock companies . The first private bank to be run as a stock corporation (AG) was A. Schaaffhausen'sche Bankverein , which was continued as an AG from August 28, 1848. The private joint-stock banks grew rapidly, and the largest of them were called the big banks.

Within the banking sector, the major German banks showed the greatest growth between 1895 and 1913, but did not achieve a dominant market share. The gap between the institutes increased not only due to the growing volume of business, but also due to capital increases. In particular, A. Schaaffhausen'sche Bankverein and Commerzbank refrained from capital measures, so that their distance from the leading institutions increased. The greatest growth in total assets between 1881 and 1890 was recorded by the National Bank for Germany (267%), Dresdner Bank (195%), Berliner Handelsgesellschaft (105%), Deutsche Bank (92%) and Commerzbank (40.2%). For Johann Christian Eberle in 1912, the big banks "tore the small pennies through their deposit boxes, which only worked as suction devices, in order to present them to the big ones (meaning big industry) ...". For Werner Sombart , big banks were seen in 1919 as the "fortresses of capitalism". Friedrich Böttcher divided the banks in 1929 according to their "capital strength" (amount of share capital ) into small, medium and large banks and listed Deutsche Bank (150 million marks), Disconto-Gesellschaft (135) and Dresdner Bank (100) as the largest on.

The growth to major banks was primarily the result of the takeover of dozen of small and medium-sized regional banks between 1900 and 1930. The first major merger in Germany was the merger of Deutsche Bank and Disconto-Gesellschaft in October 1929. Mergers and insolvencies during the German banking crisis in June In 1931 the number of big banks reduced to three institutes. What remained were Deutsche Bank, Dresdner Bank and Commerzbank. When their share prices fell, they tried to stabilize the price by buying back shares - which was permitted at the time - which, however, reduced their liable equity . Therefore, the Darmstädter und Nationalbank only had almost 50% real equity, the Commerz- und Privatbank 50%, Dresdner 66% and Deutsche Bank and Disconto-Gesellschaft 88%.

In England, a wave of mergers led to the five big banks "Big Five" Barclays Bank, Midland Bank , National Westminster Bank , Lloyds Banking Group and National Provincial Bank as early as 1917/1918 . The latter merged with Westminster Bank in 1968, leaving the Big Four . In Switzerland, the two big banks expanded their market shares between 1930 and 1998 from 39.8% to 66.7% at the expense of the cantonal banks and regional banks / savings banks in particular .

After the Second World War , the American Joseph M. Dodge presented a banking plan in December 1945 to decentralize and break up the major German banks, which the Allied Control Council advised on October 21, 1946. With the big banks, a dominant market power in certain areas in the credit system was supposed to disappear in order to improve the competitive conditions for smaller competitors as well as for bank customers. In the absence of an agreement, the American military government decided on May 6, 1947 by law No. 57 to separate the branch districts of Deutsche Bank, Dresdner Bank and Commerzbank located in its zone. The law was followed by the French and British military governments with laws of October 1, 1947 and April 1, 1948, respectively. As a result, the big banks were smashed by the victorious Allied powers and divided into 30 sub-banks in the western zones. In March 1949, activities began to prepare the public in the Anglo-Saxon countries for a recentralization of the big banks in Germany. Negotiations on this began in October 1949, on January 12 and 13, 1950, the Bundestag Committee on Money and Credit dealt with the question of the restructuring of the banking system, but only came to a request to the federal government to deal with the big banking problem as quickly as possible .

The Central Bank of the Bank of German countries commissioned on 10 February 1950, the Board of Directors , "Proposals for the Reform of large banks ... to submit." After lengthy explorations, a law on major banks (“Law on the Settlement Area of ​​Credit Institutions”) was created in March 1952, which confirmed the dissolution of the major banks and reduced the number of sub-institutions. It made it possible to partially reunite the regional institutes in three regions. As a result of the spin-offs in September 1952, the divisions of the previous major banks each received a successor institute. The merger law (officially "law to abolish the branches of credit institutions") of December 1956 repealed this "big bank law" and enabled the reunification of the successor banks to form today's big banks (see also residual quota ). In addition, it lifted the prohibition of personal ties between the management of the successor banks ( personal union ), their financial holdings among themselves ( cross- holdings ) and the exclusive issuance of registered shares. Deutsche and Dresdner Bank have had their headquarters in Frankfurt am Main since 1957, and Commerzbank has had its headquarters in Düsseldorf since 1958.

When bank sort codes were introduced in October 1970 , the fourth digit included the Gironetz, to which an institute belongs. The three big banks each had their own giro networks and therefore had their own key figures. There were merger impulses in the USA in 1990 with the abolition of the separate banking system and in 2000 when significant regional restrictions were removed. The number of “Commercial Banks” in the USA fell from 12,343 to 7,549 in late 1990 to mid-2005, while the number of branches and, above all, ATMs increased. In Italy, the change in the legal framework also triggered a wave of privatization combined with a strong merger dynamic. Cross-border mergers in Europe mainly emerged in the course of the standardization of market conditions, the lifting of national protective mechanisms and the introduction of the euro zone.

In 2014, the major German banks had a market share of 18.4% in terms of business volume, followed by the savings banks (16.6%), regional and commercial banks (16.1%), the cooperative sector (15.1%) ) and the Landesbanken (14.1%). If you combine the savings banks and Landesbanken into one sector, they lead with a market share of 30.7%.

Structure of the Deutsche Bundesbank

The Deutsche Bundesbank lists the big banks in its banking statistics as a subgroup of credit banks, along with regional banks, other credit banks and the branches of foreign banks. According to the Bundesbank, the banking group of major banks includes the banks Deutsche Bank and Commerzbank, which are traditionally represented nationwide, since January 1999 UniCredit Bank AG (formerly “ Bayerische Hypo- und Vereinsbank ”) and since December 2004 Postbank . The size differences between the German banks are very pronounced. The big banks and Landesbanken, which are usually also internationally active, are contrasted by a large number of medium-sized and smaller banks. According to the Bundesbank, large banks are characterized by their supra-regional, Germany-wide and mostly international business area and the legal form of a stock corporation .

Business aspects

general business studies

The same aspects apply to large banks in business administration as to large companies. These have some special features compared to small and medium-sized companies . This includes in particular questions of organization , cost reductions through the law of mass production and economies of scale . The farm size effect is explained by the fact that large farms are potentially able to produce more cheaply overall than small and medium-sized enterprises. According to the law of mass production, the proportion of fixed costs decreases with increasing capacity utilization per unit, resulting in economies of scale . If the increase in capacity leads to a reduction in costs, one speaks of economies of scale (static economies of scale). High fixed costs require production in large quantities, which is more likely in large firms. Large corporations often gain greater market share and market power so that they can take price leadership in some markets .

Banking management

In addition to the general economic peculiarities, there are also banking operational peculiarities at large banks. The fixed cost degression applies to the large banks with high fixed costs in particular. You must therefore ensure a high level of capacity utilization. The more bank customers who have a current account with the same bank as the payer and the payee , the lower the liquidity outflow in cashless payment transactions ("internal clearing"). The larger an institute is, the more likely it is that payments within the same institute can be offset and that they do not leave the institute network in a liquidity-burdening manner. Large branch banks have a nationwide, supraregional network of branches, which helps to improve "internal clearing". Big banks are a product of the concentration and rationalization of the banking industry. They not only displace and eliminate the private banker and the small bank, they also require a different way of doing business in terms of organization. Big banks are not protected from being taken over by other big banks (takeover of Dresdner Bank by Commerzbank in May 2009), but their high market capitalization can represent an obstacle to takeover.

What the big banks have in common is that they

Big banks represent the classic type of universal bank.

Others

Payment terms often provide for a "guarantee from a major German bank, savings bank or credit insurance company" as security. According to the BGH , this is harmless, although it discriminates against small banks and cooperative banks. As a result, only “suitable guarantors” - i.e. solvent credit institutions - should be selected. The major banks in this sense are the credit institutions listed in the Bundesbank's banking statistics.

International

While the market shares of the five largest banks in Germany rose from 22.7% (2008) to 33% (2012), the market concentration abroad is much higher. The market shares in Great Britain were 35.3% (40.6%), Spain 42.4% (51.4%), in Greece 69.5% (79.5%). In the Netherlands, the five largest banks have a market share of 82.1% (2008: 86.7%). In Spain and Greece, this is due to the banking crises there , which have also led to a migration of customers to the big banks.

The world's largest banks - measured by market capitalization - are the Industrial and Commercial Bank of China (311.3 billion US dollars), followed by Wells Fargo (284.5), China Construction Bank (244.9), JPMorgan Chase (235 , 8), Bank of China (222.6), Agricultural Bank of China (205.7), HSBC (193.0), Bank of America (167.3), Citigroup (161.8) and the Commonwealth Bank of Australia (114.3) joins the list of major banks. Wells Fargo tops the list of largest banks in the US, followed by JPMorgan Chase (235.8), Bank of America (167.3), Citigroup (161.8) and Goldman Sachs (87.8). In Switzerland, the banking statistics of the Swiss National Bank summarize the banks as large banks that offer all types of business, particularly investment banking , and operate globally. Since 2005, only Credit Suisse and UBS have fallen into this group. In Austria, the group of major banks includes Raiffeisen Bank International , Bank Austria , Erste Bank and BAWAG PSK . As a result of the Swedish banking crisis from 1990 to 1992 , in which many small banks had to merge, four large banks were formed in Sweden, which dominate the market. These are SEB , Svenska Handelsbanken , Nordea and Swedbank . Other major international banks are Westpac , Banco Itaú , Banco Bradesco , Royal Bank of Canada , Toronto-Dominion Bank , ICICI Bank , Mizuho Financial Group , Sumitomo Mitsui Financial Group , BNP Paribas , State Street , SunTrust Banks , US Bancorp , Société Générale and the Bank of New York Mellon .

Big international banks have the largest market shares in international credit transactions . Even major international banks make for reasons of risk reduction even in first-class borrowers from the financial instrument of the syndicated loan use. Major international banks tend to be favored, as they not only benefit from the economies of scale on the expense side with growing company size, but also benefit from the unbalanced fee structure of the euro market on the income side, since the lead managers have a disproportionately higher share of the total fee income than the other consorts received. Typical for big banks is in particular the acquisition of stakes in other financial institutions or non-banks and the securities business in all forms up to the issuing consortium.

They often focus on certain banking transactions and products that other banks cannot consider for reasons of financial strength or know-how . Large banks are usually the lead managers of major bond and loan syndicates and take on high syndicate quotas there. This in turn is due to the often absolutely higher liable equity, which enables higher large loans . They have expanded their activities in investment banking and other fee-based business areas through acquisitions. Only a few large international banks are in a position to cover the demanding cash management needs of large non-bank groups. Project finance has become an integral part of their range of services for major international banks . This assumes that the banks are ready to support their industrial customers in the development of major projects worldwide with financing . Large international banks take on the role of panel banks for the world's most important reference interest rates such as LIBOR or EURIBOR .

In addition to operational considerations, the strategic goal of banks to get bigger can also be seen in moral hazard if a bank wants to achieve the status of systemic importance due to its size . It can then expect to be rescued as “too big to fail” by the state or state institutions in the event of the banking crisis. Its status as a major bank causes the Financial Stability Board (FSB) mostly using it as a "systemically important financial institution" ( systemically relevant financial institution to be classified). These major FSB banks are therefore subject to special monitoring and stricter requirements for capital adequacy .

Empirical analyzes show that, on average, big banks generate higher own and systemic risks than smaller banks, especially when their equity capital is too low and refinancing is unstable . It turns out that because of the “too big to fail”, big banks often receive greater government support than smaller banks, which can lead to intensified risk-increasing incentives. Therefore, from January 2016, the big banks have to build up various capital buffers , namely a capital buffer for systemic risks according to Section 10e KWG, a capital buffer for global systemically important institutions according to Section 10f KWG and for other systemically important institutions according to Section 10g KWG, if the legal requirements for this are met are. The 30 largest major banks worldwide must also create additional capital buffers in addition to the existing core capital within the framework of the Total Loss-Absorbing Capacity (TLAC) ("ability to absorb losses") . This should increase the total capital ratios to at least 18% by 2022 .

Further development

The Separate Banks Act of August 2013 introduced, among other things, § 25f KWG for universal banks , a separate banking system , according to which the activities of the investment bank are to be outsourced from the commercial bank. Until July 2016, all banking transactions within the meaning of Section 3 Paragraphs 2 and 4 KWG are to be carried out at major banks in an economically, organizationally and legally independent company (financial trading institute). These are “prohibited transactions”, which include proprietary trading in derivatives and securities with the exception of market makers or credit and guarantee transactions with hedge funds . A materiality threshold stipulates that only large banks are affected whose trading portfolio and liquidity reserve exceed EUR 100 billion (absolute threshold) or 20% of their total assets and reach at least EUR 90 billion (relative threshold). Section 25f (1) and Section 64s (2) KWG stipulate that, from July 1, 2015, CRR credit institutions will have two forms of proprietary trading within one year of exceeding the threshold values, namely

  • proprietary business faked as proprietary trading by section 1 (1a) sentence 3 KWG (section 3 (2) sentence 2 no.1 KWG) (with the exception of proprietary trading on behalf of customers) and
  • proprietary trading using a high-frequency algorithmic trading technique (section 1 (1a) sentence 2 no. 4d KWG) - with the exception of market making - and
  • the loan and guarantee business with hedge funds

have to outsource to a financial trading institution.

literature

  • Matthias Fischer: Handbook Value Management in Banks and Insurance , Gabler, Wiesbaden 2004, ISBN 978-3-409-12528-4
  • Johannes-Tobias Lorenz: European Banking m & a: Die Kapitalmarktperspektiven , Springer, Berlin 2006, ISBN 978-3-8350-0475-7
  • Jörg Mußhoff: Successful M&A transactions in the European banking industry , DUV 2007, ISBN 978-3-8350-0872-4
  • Ingo Walter: Merger and Acquisitions in Banking and Finance , Oxford Uni Press, Oxford 2004, ISBN 0-19-515900-4

Web links

Individual evidence

  1. ↑ Detlef Krause: Die Commerz- und Disconto-Bank 1870-1920 / 23 , 2004, p. 228 ( limited preview in the Google book search).
  2. ↑ Detlef Krause 2004, p. 125 f.
  3. ^ Johann Christian Eberle, Money at reasonable interest , 1912, p. 35
  4. ↑ Werner Sombart, The German National Economy in the 19th Century and in the Beginning of the 20th Century , 1919, p. 171 f.
  5. ↑ Friedrich Böttcher: The economic tasks of the branch system of the major German banks , 1932, p. 11 ( limited preview in the Google book search)
  6. ↑ Manfred Pohl, banking system and banking concentration from the 1850s to 1918 , in: Europäische Bankengeschichte, ed. v. Hans Pohl, Frankfurt / Main 1993, pp. 218-233 u. 263-278
  7. ↑ Eckhard Wandel: Banks and Insurance Companies in the 19th and 20th Centuries , 1998, p. 95 ( limited preview in the Google book search).
  8. ↑ Andreas Busch: State and Globalization: The Policy Field of Banking Regulation in International Comparison , 2003, p. 195 ( limited preview in the Google book search)
  9. ^ Theo Horstmann, The Allies and the German Big Banks: Banking Policy after the Second World War in West Germany , 1991, p. 182
  10. ^ Rolf W. Nagel: The transformation of the bank for community economy , 1992, p. 121 ( limited preview in the Google book search).
  11. ^ Rudolf Eicke, Das deutsche Bankwesen: Structure, Tasks and Businesses of Banks, Savings Banks and Credit Cooperatives , 2013, p. 67, ISBN 9783322962799 , ( limited preview in the Google book search).
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  13. ↑ Lothar Gall, 1995, p. 507
  14. ↑ Hans E. Büschgen , Die Großbanken , 1983, p. 78
  15. ↑ The History of JPMorgan Chase & Co. ( Memento of the original from June 30, 2009 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. , P. 18 (pdf page 20), accessed on September 5, 2009  @1@ 2Template: Webachiv / IABot / www.jpmorganchase.com
  16. ^ Ownership and Control of Italian Banks: A Short Inquiry into the Roots of the Current Context , accessed September 10, 2009
  17. ↑ Statista statistics portal, market shares of banking groups in Germany based on business volume in 2014
  18. ↑ Werner Pepels: Product and Price Management in Corporate Banking , 2006, p. 194.
  19. ↑ Michael Kutschker, Stefan Schmid: Internationales Management , 2010, p. 435 ( limited preview in the Google book search).
  20. ↑ Birga Döring, Tim Döring, Wolfgang Harmgardt, Axel Lange, Kai Michaelsen: Allgemeine BWL , 2007, p. 13 ( limited preview in the Google book search).
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  22. ^ Nils Diederich, Empirische Wahlforschung , in: Staat und Politik, Volumes 8–11, 1965, p. 2
  23. ↑ Reinhold Adrian, Thomas Heidorn: Der Bankbetrieb , 2000, p. 29 ( limited preview in the Google book search).
  24. ↑ Gabler Bank-Lexikon, 1988, column 1004
  25. ^ BGH, judgment of February 12, 2009, Az .: VII ZR 39/08
  26. ↑ ZEIT ONLINE from June 30, 2014, The big banks are getting bigger
  27. ↑ Statista The Statistics Portal, Largest Banks Worldwide by Market Value, As of April 30, 2015
  28. ↑ Die Banken in der Schweiz 2013 , p. 29 ( Memento of the original dated December 13, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , Swiss National Bank (PDF file, 6.1 MB)  @1@ 2Template: Webachiv / IABot / www.snb.ch
  29. ↑ Dirk Lüth, Subsidiarity and Federal Monetary Union in Europe: A Results- and Process-Oriented Analysis , Volume 6 by ebs -forschung , series of the EUROPEAN BUSINESS SCHOOL Schloss Reichartshausen, 2013, ISBN 9783322976314 , p. 266 ( limited preview in the Google book search) .
  30. ↑ Michael Cramer: The international credit business of the banks , 1981, p. 58 ( limited preview in the Google book search).
  31. ^ Nils H. Tröger, Mergers & Acquisitions in the German Banking Sector , 2003, p. 130
  32. ↑ Michael Endres, Deutsche Bank positions itself in an attractive market , lecture at the Institute for Banking Economics in Cologne on July 1, 1998
  33. ↑ Hans E. Büschgen / Kurt Richolt, Handbook of International Banking Business , 1989, p. 223
  34. ^ Policy Measures to Address Systemically Important Financial Institutions. In: Financial Stability Board (FSB) of November 4, 2011 (PDF file; 105 kB)
  35. ↑ Update of the group of global systemically important banks (G-SIBs) (PDF; 43 kB) from November 1, 2012
  36. ↑ Luc Laeven, Lev Ratnovski, Hui Tong: Bank Size and Systemic Risk , 2014, p. 5 ( limited preview in the Google book search).
  37. ↑ Thorsten Beck: Bank Concentration and Crises , 2003, p. 3 ( limited preview in the Google book search).
  38. ↑ SPIEGEL ONLINE of November 9, 2015, Crisis preparedness: Big banks have to create higher capital buffers, accessed on November 12, 2015
  39. ↑ Oliver Everling, Karl-Heinz Goedeckemeyer: Bankenrating: Normative Bankenordnung in der Finanzmarktkrise , 2015, p. 389 f. ( limited preview in Google Book search).