1. Commercial and investment
banking activity in the USA
1
17.10.2011
Natalia Turkina, Dmitriy Pustovalov

2. Agenda
1. Historical separation of US investment and commercial banks
2. Risk tolerance
3. Disappearance of investment banks
4. Commercial and investment banking activities. Bank of America
5. Conclusion
2
3. ONE
TWO
THREE
FOUR
FIVE
Historical separation of US investment and commercial banks
3
4. Specialization
4
5. Classification of U.S. financial intermediaries
5
6. 1930 - 1933
1999
Great Depression
Globalization
Glass-Steagall Act
Gramm Leach Bliley Act
Commercial banks engage only in banking activities, whereas investment banks were limited to capital market activities.
Allowed commercial, investment banks, security firms and insurance companies to consolidate.
6
7. Gramm Leach Bliley Act facilitated
the creation of the so-called universal banks

They combined commercial and investment banking and use their massive to underprice the traditional investment banks.

8. The financial services industry has undergone a consolidating phase of commercial banks and investment banks becoming one.7
9. ONE
TWO
THREE
FOUR
FIVE
Risk tolerance
8
10. 9
11. TWO
THREE
Disappearance of Investment Banks
10
12. Too big to fail
11
13. The results of the credit crises
12
14. THREE
FOUR
FIVE
Commercial and investment banking activities. Bank of America
13
15. Top 10 U.S. commercial banks
Source: National Informational Center, 2011
14
16. Products and service segmentation
15
17. Major Market Segments
16
18. Revenue (current and outlook)
17
19. Revenue Growth Rate (current and outlook)
18
20. Top 10 U.S. investment banks
19
21. Founded: 1904
Products
Credit cards
Consumer banking (savings, mortgages,
loans, transactions)
Corporate banking
Finance and insurance
Investment banking
Arranges financing for corporations and governments (bonds, stocks)
Advises on mergers and acquisitions (M&A) transactions
Revenue: $ 111.4 billion (2010)
Net income: $ 2.238 billion (2010)
Total assets: $ 2.264 trillion (2010)
Total equity: $ 228.248 billion (2010)
Employees: 288000 (2010)
20
22. The largest bank holding company in the United States by assets and 2nd largest bank by market capitalization after Citigroup
The 5thlargest company in the United States by total revenue and 2nd largest non-oil company after Walmart
Bank of America serves clients in more than 150 countries and has relationship with 99% of the U.S. Fortune 500 companies
The banks 2008 acquisition of Merrill Lynch (all-stock deal worth $50 billion) made Bank of America the worlds largest wealth manager and a major player in the investment banking
21
23. 22
24. FOUR
FIVE
Conclusions
23
25. 24
26. 25
References
Financial times. Investment Banking Review
National Informational Center. Top 50 bank holding companies
Moynihan, Brian T. (2011).Bank of America 2010 Annual Report. Charlotte, NC: Bank of America. p.28
IBISWorld Industry Report. Commercial banking in the US (2008)
Bloomberg News.