Global Finance reveals its annual listing of the World’s 50 Biggest Banks for 2012, as measured by total assets.
There is relative stability among the largest banks in the world as far as the total value of their assets. Deutsche Bank has jumped from second to take the lead -it is now the largest bank in the world, followed by HSBC and BNP Paribas.
China again has six banks in top 50-the largest group from any single country, and the Industrial and Commercial Bank of China jumps from ninth to fourth-largest in the world. The US, UK, France and Germany each have five banks in the top 50.
\The list will be published in the October issue of Global Finance magazine.
Read more: http://www.gfmag.com/tools/best-banks/11986-worlds-50-biggest-banks-2012.html#ixzz2XBhp0UXA
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|Traded as||Euronext: BNP,OTCQX: BNPQY|
|Founded||23 May 2000|
|Headquarters||Boulevard des Italiens, Paris,France|
|Key people||Baudouin Prot (Chairman)
Jean-Laurent Bonnafé (CEO)
|Products||Asset management,consumer banking, corporate banking, credit cards,investment banking,mortgage loans, private banking, wealth management, islamic finance,islamic banking|
|Revenue||€47.86 billion (2011)|
|Operating income||€9.677 billion (2011)|
|Profit||€6.050 billion (2011)|
|Total assets||€1.965 trillion (2011)|
|Total equity||€85.62 billion (2011)|
BNP Paribas is a French bank and financial services company with headquarters in Paris and a second global headquarters in London. It was formed through the merger of Banque Nationale de Paris (BNP) and Paribas in 2000 and is one of the largest banks in the world. Based on 2012 information BNP Paribas was ranked as the fourth largest bank in the world, as measured by total assets, by Bloomberg and Forbes.
BNP Paribas escaped the 2007–09 credit crisis relatively unscathed reporting a €3 billion net profit for the year of 2008, and €5.8 billion for 2009, both years boosted by profits from trading in its CIB (Corporate and Investment Banking) division. BNP Paribas has one of the highestcredit ratings in its peer group with the long term debt of the group currently ranked A+ by S&P,A2 by Moody’s and A+ by Fitch.
The firm is a universal bank split into three strategic business units: Retail Banking, Corporate & Investment Banking and Investment Solutions (which includes Asset Management, custodial banking, and real estate services).
BNP Paribas’s four domestic markets are France, Italy, Belgium, and Luxembourg. It also has significant retail operations in the United States, Poland, Turkey, Ukraine, and North Africa, as well as large-scale investment banking operations in New York, London, Hong Kong, andSingapore.
In 2013 BNP Paribas was awarded the Bank of the Year award by The International Financing Review (“IFR”), Thomson Reuters‘ leading financial industry publication. The IFR awards are a key industry benchmark and Bank of the Year is the top honour awarded.
- 1 History
- 2 Business units
- 3 Events in 2005
- 4 Notable current and former employees
- 5 Controversy
- 6 See also
- 7 References
- 8 External links
History[edit source | editbeta]
Background and heritage as two banks: 1820 – 2000[edit source | editbeta]
BNP (Banque Nationale de Paris)[edit source | editbeta]
On March 7, 1848 by the French Provisional Government founded the Comptoir national d’escompte de Paris (CEP) in response to the financial shock caused by the revolution of February 1848. The upheaval destroyed the old credit system, which was already struggling to provide sufficient capital to meet the demands of the railway boom and the resulting growth of industry. The CEP grew steadily in France and overseas, although in 1889 there was a crisis in which it was temporarily placed in receivership.
Separately on April 18, 1932 the French Government replaced Banque nationale de crédit (BNC) which failed as a result of the 1930s recession with the new bank Banque nationale pour le commerce et l’industrie (BNCI). The former banks headquarter and staff were used to create BNCI with fresh capital of 100 millions francs. The bank initially grew rapidly through absorbing a number a regional banks that got into financial trouble. After the Second World War it continued to grow steadily. It grew its retail business in France and its commercial business overseas in the French colonial empire.
After the end of the Second World War, the French State decided to “put banks and credit to work for national reconstruction”. René Pleven, then Minister of Finance, launched a massive reorganization of the banking industry. A law passed on 2 December 1945 and which went into effect on the 1 January 1946 Nationalized the four leading French retail banks: Banque nationale pour le commerce et l’industrie (BNCI),Comptoir national d’escompte de Paris (CNEP), Crédit Lyonnais and Société Générale.
In 1966 the French government decided to merge Comptoir national d’escompte de Paris with Banque nationale pour le commerce et l’industrie to create one new bank called Banque Nationale de Paris (BNP).
Paribas (Banque de Paris et des Pays-Bas)[edit source | editbeta]
Banque de Paris et des Pays-Bas (Paribas) was established on January 27, 1872 through the merger of Banque de Crédit et de Dépôt des Pays-Bas, which had been established in 1820 by Louis-Raphaël Bischoffsheim in Amsterdam, and Banque de Paris which had been founded in 1869 by a group of Paris bankers. It went on to develop a strong investment banking business both domestically in France and overseas.
During the period 1872 to 1913 it was involved in raising funds for the French and other governments as well as big businesses through a number of bond issues. It helped the French government raise funds during the first world war and raised further capital and expanded into investments into industrial companies during the great depression. It stagnated and lost assets during the second world war.
After World War II, it missed the nationalisation of the other French banks due to its status as an investment bank and managed to take advantage of that by expanding its operations overseas. It also directs its activity towards businesses and participates in the development and restructuring of French industry including names such as Groupe Bull and Thomson-CSF.
The bank was nationalized in 1982 by the government of Pierre Mauroy under François Mitterrand as part of a law that nationalized five major industrial companies, thirty-nine registered banks and two financial companies, Suez and Paribas. It was re-privatized in January 1987 by theChirac government.
In the 1990s Paribas had an active policy of acquisitions and divestiture. This included selling the Ottoman Bank to Doğuş Holding, and setting up the joint venture lending company Cetelem in Germany. It sold Crédit du Nord to Société Générale and in 1998 it merged with Compagnie Bancaire, renaming the bank with the official name Compagnie Financière de Paribas.
Founding of BNP Paribas till date: 2000 – till date[edit source | editbeta]
In 1999, BNP and Société Générale fought a complex battle on the stock market, with Société Générale bidding for Paribas and BNP bidding for Société Générale and counter-bidding for Paribas. BNP’s bid for Société Générale failed, while its bid for Paribas succeeded leading to a merger of BNP and Paribas one year later on 22 May 2000.
On 9 August 2007, BNP Paribas became the first major financial group to acknowledge the impact of the sub-prime crisis by closing two funds exposed to it. This day is now generally seen as the start of the credit crisis and the bank’s quick reaction saved it from the fate of other large European banks such as UBS.
On 6 October 2008, BNP took over 75% of troubled bank Fortis‘ activities in Belgium, and 66% in Luxembourg, in exchange for the Belgian government becoming the new group’s major shareholder. The sales of the Fortis shares was suspended by a court order from the Court of Appeal on Friday 12 December
In the end of January, the Belgian government and BNP negotiated for a 75% partnership in Fortis Bank Belgium. Fortis Insurance Belgium would be reintegrated in Fortis Holding.
On 11 February, Fortis’ shareholders decided that Fortis Bank Belgium and Fortis Insurance Belgium should not become property of BNP Paribas. However the acquisition was completed and BNP Paribas took 75% share holding and renamed the new subsidiary BNP Paribas Fortis. After this only Fortis Insurance International was left in Fortis Holding and this was renamed as Ageas, a business that had Insurance all over Europe and Asia. The remaining Fortis Bank Netherlands was in the hands of the Dutch Government which merged it with other ABN AMRO holdings it already owned under the name ABN AMRO.
In May 2009, BNP Paribas became the majority shareholder (65.96%) of BGL (formerly Fortis Bank Luxembourg), the State of Luxembourg retaining 34% making BNP the eurozone‘s largest bank by deposits held. . On 21 September, the bank’s registered name was changed toBGL BNP Paribas and in February 2010, BGL BNP Paribas became the 100% owner of BNP Paribas Luxembourg. The transfer was finalised on 1 October 2010 with the incorporation of BNP Paribas Luxembourg’s business in the operational platforms of BGL BNP Paribas. In 2013 BNP Paribas was awarded the Bank of the Year award by The International Financing Review (“IFR”), Thomson Reuters‘ leading financial industry publication. The IFR awards are a key industry benchmark and Bank of the Year is the top honour awarded.
Business units[edit source | editbeta]
Retail banking[edit source | editbeta]
Retail banking is BNP Paribas’ largest business unit representing 45% of its 2009 revenues and employing 59% of the group’s headcount. Its operations are concentrated in Europe, especially in the group’s three domestic markets of France, Italy (where it operates as Banca Nazionale del Lavoro (BNL), and Belgium (as BNP Paribas Fortis). The group also owns an American subsidiary BancWest which operates as Bank of the West in the western United States and First Hawaiian Bank in Hawaii. BNP Paribas’s Europe Mediterranean group also runs large retail banks in Poland, Turkey, Ukraine, and northern Africa.
BNP Paribas is the largest bank in the Eurozone by total assets and second largest by market capitalization according to The Bankermagazine, just behind Banco Santander. It employs over 201,000 people, according to the bank as of 31 December 2009, of which 80,000 work in Europe, and maintains a presence in 87 countries.
Domestic markets[edit source | editbeta]
- France: BNP Paribas runs one of France’s largest retail banking networks with 2,200 branches and over 3,200 ATMs. In Paris alone the bank has 187 agencies. BNP Paribas serves over 6 million French households and 60,000 corporate customers. In 2009 The French Retail Banking unit (FRB) had revenues of €6.1 billion (15.2% of total group’s), income of €1.5 billion (15% of total group’s), and employs 31,000 people (15.4% of total group’s workforce)
- Italy: In 2006 BNP Paribas purchased Banca Banca Nazionale del Lavoro (BNL), Italy’s sixth largest bank at the time. In 2009 BNL had 810 branches in Italy, 2.5 million individual clients, and over 150,000 corporate clients. It grossed €2.9 billion in revenue (7.2% of the total group’s) and €540 million of net income (9.3% of the total group’s), and employs around 13,000 employees (6.5% of the total group’s).
- Belgium: BNP Paribas acquired BNP Paribas Fortis when it acquired the retail banking assets of the Belgian lender Fortis in 2009. This deal also included Fortis’s subsidiaries in Poland and Turkey, now grouped in the “Europe Mediterranean” division.
United States[edit source | editbeta]
In the United States, BNP Paribas owns BancWest, which in turn operates retail banking subsidiaries Bank of the West and First Hawaiian Bank. Bank of the West operates in 19 Western US states (where it ranks as the 7th largest bank by assets), while First Hawaiian is Hawaii’s leading bank with a 40% market share in deposits. Together the two banks operate 710 branches, and service 5 million clients.
The two banks were merged into BancWest 1998, and BNP Paribas took full control of the combined entity in 2001.
The group has a strong presence on niche markets such as lending for marine and recreational vehicles, church lending, and agribusiness. In 2009 BancWest had €2.1 billion in revenues (5.2% of the total group’s), and 11,200 employees (5.5% of the total group’s headcount).BancWest lost €223 millon in 2009 largely due to its exposure in the subprime mortgage crisis in California, Arizona, and Nevada.
Emerging markets[edit source | editbeta]
In 2009 BNP Paribas reorganized its retail banking divisions renaming its “Emerging Markets” group the “Europe Mediterranean” group. This change was made because after the integration of Fortis Bank‘s Polish and Turkish subsidiaries, BNP Paribas’s emerging market activities are now heavily concentrated in Eastern Europe and the southern half of the Mediterranean basin.
BNP Paribas is a member of the Global ATM Alliance, a joint venture of several major international banks that allows customers of the banks to use their ATM card or check card at another bank within the Global ATM Alliance with no ATM surcharges when traveling internationally. Other participating banks are Barclays (United Kingdom), Bank of America (United States), China Construction Bank (China), Deutsche Bank(Germany), Santander Serfin (Mexico), UkrSibbank (Ukraine), Scotiabank (Canada) and Westpac (Australia and New Zealand).
Corporate and investment banking[edit source | editbeta]
In addition to its retail activities, BNP Paribas is also a leading global investment bank through its Corporate & Investment Banking unit. Although present in all investment banking markets, it is recognized as a global leader in derivatives trading, structured finance, and project finance.
The firm is divided into 6 key business areas:
- Fixed Income: BNP Paribas’ fixed income team helps companies hedge their exposure toforeign exchange, interest rate, and credit risks, primarily though the structuring and sale ofderivative products such as interest rate and foreign exchange swaps, foreign exchange options and credit derivatives. It also trades in these markets on behalf of clients or for its ownproprietary account. On an average day, a quarter of a trillion dollars in fixed income instruments are traded at BNP Paribas Americas’ fixed income trading floor located just blocks from the NASDAQ MarketSite in Manhattan, New York City.
- Equity & Derivatives: BNP Paribas’ Equity & Derivatives team helps companies manage their risks and investment portfolios with equity derivatives such as options, futures, and swaps, as well as highly complex, customized solutions such as structured products. It also trades in these markets on behalf of clients or for its own proprietary account.
- Commodity Derivatives: BNP Paribas’ Commodity Derivatives team helps clients hedge their exposure to commodity risk though the structuring and sale of commodity futures and OTC commodity swaps. It also trades in these markets on behalf of its clients or proprietaryaccount.
- Investment Banking: BNP Paribas’ Corporate Finance team performs most of the traditional investment banking functions of the group including mergers and acquisitions advisory, and equity raising operations such as Initial Public Offerings (IPOs), rights issues, andconvertible bond issues.
- Structured Finance: BNP Paribas’ Structured Finance group offers clients project finance solutions, export financing, syndicated loans, and financing for acquisitions and leveraged buyouts.
- Corporate & Transaction Group: BNP Paribas’ Corporate and Transaction group offers clients simplified flow banking services including trade finance, international cash management, and basic hedging solutions.
In 2009 BNP CIB earned €12.2 billion in revenue (30% of total group’s), €4.4 billion in pre-tax income (48.9% of total group’s), and 18,000 employees (9.0% of total group’s headcount.)
Investment solutions[edit source | editbeta]
On 11 June 2008, BNP Paribas formally signed the final terms of an agreement to purchase the Prime Brokerage Services division of Bank of America Securities. The sale is widely believed to be completed by the end of the 3rd Quarter, 2008.
- Asset Management: The asset management activities of BNP Paribas are grouped into BNP Paribas Investment Partners. In 2009 BNP Paribas IP had 2,400 employees in more than 70 countries and 518 billion of assets under management.
Events in 2005[edit source | editbeta]
On 23 September 2005, BNP Paribas was set to take a 20 percent stake in China’s Nanjing City Commercial Bank, a Chinese official and state press reports said. “BNP is going to sign a deal with us to buy a stake next month,” an official from Nanjing City Commercial told AFP. The Shanghai-based Oriental Morning Post said BNP would pay up to US$100 million, although the bank official said the figure was incorrect. He declined to give further details. The French newspaper La Tribune reported in August 2005 that BNP Paribas had talked to four Chinese commercial banks—Ningbo, Wuxi, Nanjing and Suzhou—and was prepared to invest US$50–100 million. “We’ve talked to different financial institutions, but only BNP showed its good faith. It was not easy for us to reach an agreement,” the Nanjing City Commercial Bank official said. BNP Paribas refused to comment. The International Financial Corporation, the investment arm of the World Bank, already owns 15 percent of Nanjing City Commercial Bank, which has regulatory approval to list on the country’s domestic stock markets.
Major shareholders[edit source | editbeta]
|Traded as||NYSE: JPM
Dow Jones Industrial Average Component
S&P 500 Component
|Industry||Banking, financial services|
|Predecessor(s)||Chase Manhattan Corporation
J.P. Morgan & Co.
|Headquarters||270 Park Avenue, Manhattan,
New York, New York, U.S.
|Key people||Jamie Dimon
(Chairman, President &CEO)
|Products||Consumer banking, corporate banking, credit cards, finance and insurance, foreign currency exchange, global banking, investment banking,mortgage loans, private banking, private equity, risk management, wealth management|
|Revenue||US$ 97.03 billion (2012)|
|Operating income||US$ 28.91 billion (2012)|
|Net income||US$ 21.30 billion (2012)|
|Total assets||US$ 2.509 trillion (2012)|
|Total equity||US$ 204.06 billion (2012)|
|Divisions||J.P. Morgan Asset Management|
|Subsidiaries||Chase, J.P. Morgan & Co.,J.P. Morgan Cazenove, One Equity Partners|
JPMorgan Chase & Co. is an American multinational banking and financial services holding company. It is the largest bank in the United States by assets, and as of 2012, it ranks as the second largest bank in the world by assets (after HSBC) with total assets of $2.509 trillion. It is a major provider of financial services, and according to Forbes magazine is the world’s second largest public company based on a composite ranking. The hedge fund unit of JPMorgan Chase is one of the largest hedge funds in the United States. It was formed in 2000, when Chase Manhattan Corporation merged with J.P. Morgan & Co.
The J.P. Morgan brand, historically known as Morgan, is used by the investment banking as well as the asset management, private banking, private wealth management and treasury & securities services divisions. Fiduciary activity within private banking and private wealth management is done under the aegis of JPMorgan Chase Bank, N.A.—the actual trustee. TheChase brand is used for credit card services in the United States and Canada, the bank’sretail banking activities in the United States, and commercial banking. The corporate headquarters are in 270 Park Avenue, Midtown, Manhattan, New York City, New York, and theretail and commercial bank is headquartered in Chase Tower, Chicago Loop, Chicago,Illinois, United States. JPMorgan Chase & Co. is considered to be a universal bank.
JPMorgan Chase is one of the Big Four banks of the United States with Bank of America,Citigroup and Wells Fargo. According to Bloomberg, as of October 2011 JPMorgan Chase surpassed Bank of America as the largest U.S. bank by assets. Its predecessor, the Bank of the Manhattan Company, was the 22nd oldest bank in the world.
History[edit source | editbeta]
JPMorgan Chase, in its current structure, is the result of the combination of several large U.S. banking companies since 1996, including Chase Manhattan Bank, J.P. Morgan & Co., Bank One,Bear Stearns and Washington Mutual. Going back further, its predecessors include major banking firms among which are Chemical Bank, Manufacturers Hanover, First Chicago Bank, National Bank of Detroit, Texas Commerce Bank, Providian Financial and Great Western Bank.
Chemical Banking Corporation[edit source | editbeta]
The New York Chemical Manufacturing Company was founded in 1823 as a maker of various chemicals. In 1824, the company amended its charter to perform banking activities and created the Chemical Bank of New York. After 1851, the bank was separated from its parent and grew organically and through a series of mergers, most notably with Corn Exchange Bank in 1954,Texas Commerce Bank (a large bank in Texas) in 1986, and Manufacturer’s Hanover Trust Company in 1991 (the first major bank merger “among equals”). In the 1980s and early 1990s, Chemical emerged as one of the leaders in the financing of leveraged buyout transactions. In 1984, Chemical launched Chemical Venture Partners to invest in private equity transactions alongside various financial sponsors. By the late 1980s, Chemical developed its reputation for financing buyouts, building a syndicated leveraged finance business and related advisory businesses under the auspices of pioneering investment banker, Jimmy Lee. At many points throughout this history, Chemical Bank was the largest bank in the United States (either in terms of assets or deposit market share).
In 1996, Chemical Bank acquired the Chase Manhattan Corporation taking the more prominent Chase name. In 2000, the combined company acquired J.P. Morgan & Co. and combined the two names to form what is today JPMorgan Chase & Co. JPMorgan Chase retains Chemical Bank‘s headquarters at 270 Park Avenue and stock price history.
Chase Manhattan Bank[edit source | editbeta]
The Chase Manhattan Bank was formed upon the 1955 purchase of Chase National Bank(established in 1877) by the Bank of the Manhattan Company (established in 1799), the company’s oldest predecessor institution. The Bank of the Manhattan Company was the creation of Aaron Burr, who transformed The Manhattan Company from a water carrier into a bank.
According to page 115 of An Empire of Wealth by John Steele Gordon, the origin of this strand of JPMorgan Chase’s history runs as follows:
At the turn of the nineteenth century, obtaining a bank charter required an act of the state legislature. This of course injected a powerful element of politics into the process and invited what today would be called corruption but then was regarded as business as usual.Hamilton‘s political enemy—and eventual murderer—Aaron Burr was able to create a bank by sneaking a clause into a charter for a company, called the Manhattan Company, to provide clean water to New York City. The innocuous-looking clause allowed the company to invest surplus capital in any lawful enterprise. Within six months of the company’s creation, and long before it had laid a single section of water pipe, the company opened a bank, the Bank of the Manhattan Company. Still in existence, it is today J. P. Morgan Chase, the largest bank in the United States.
Led by David Rockefeller during the 1970s and 1980s, Chase Manhattan emerged as one of the largest and most prestigious banking concerns, with leadership positions in syndicated lending, treasury and securities services, credit cards, mortgages, and retail financial services. Weakened by the real estate collapse in the early 1990s, it was acquired by Chemical Bank in 1996, retaining the Chase name. Before its merger with J.P. Morgan & Co., the new Chase expanded the investment and asset management groups through two acquisitions. In 1999, it acquired San Francisco-based Hambrecht & Quist for $1.35 billion. In April 2000, UK-based Robert Fleming & Co. was sold to the new Chase Manhattan Bank for $7.7 billion.
J.P. Morgan & Company[edit source | editbeta]
September 16, 1920: a bomb exploded in front of the headquarters of J.P. Morgan Inc. at 23 Wall Street, injuring 400 and killing 38 people.
The heritage of the House of Morgan traces its roots to the partnership of Drexel, Morgan & Co., which in 1895 was renamed J.P. Morgan & Co. (see also: J. Pierpont Morgan). Arguably the most influential financial institution of its era, J.P. Morgan & Co. financed the formation of the United States Steel Corporation, which took over the business of Andrew Carnegie and others and was the world’s first billion dollar corporation. In 1895, J.P. Morgan & Co. supplied the United States government with $62 million in gold to float a bond issue and restore the treasury surplus of $100 million. In 1892, the company began to finance the New York, New Haven and Hartford Railroad and led it through a series of acquisitions that made it the dominant railroad transporter in New England. Although his name was big, Morgan owned only 19% of Morgan assets. The rest was owned by the Rothschild family following a series of bailouts and rescues attributed by some to Morgan’s stubborn will and seemingly “non-existent” investment savvy.
Built in 1914, 23 Wall Street was known as the “House of Morgan”, and for decades the bank’s headquarters was the most important address in American finance. At noon, on September 16, 1920, a terrorist bomb exploded in front of the bank, injuring 400 and killing 38. Shortly before the bomb went off, a warning note was placed in a mailbox at the corner of Cedar Street and Broadway. The warning read: “Remember we will not tolerate any longer. Free the political prisoners or it will be sure death for all of you. American Anarchists Fighters.” While there are many hypotheses regarding who was behind the bombing and why they did it, after 20 years of investigation the FBI rendered the case inactive without ever finding the perpetrators.
In August 1914, Henry P. Davison, a Morgan partner, traveled to the UK and made a deal with theBank of England to make J.P. Morgan & Co. the monopoly underwriter of war bonds for the UK and France. The Bank of England became a “fiscal agent” of J.P. Morgan & Co., and vice-versa. The company also invested in the suppliers of war equipment to Britain and France. Thus, the company profited from the financing and purchasing activities of the two European governments.
In the 1930s, all of J.P. Morgan & Co. along with all integrated banking businesses in the United States, was required by the provisions of theGlass–Steagall Act to separate its investment banking from its commercial banking operations. J.P. Morgan & Co. chose to operate as acommercial bank, because at the time commercial lending was perceived as more profitable and prestigious. Additionally, many within J.P. Morgan believed that a change in political climate would eventually allow the company to resume its securities businesses but it would be nearly impossible to reconstitute the bank if it were disassembled.
In 1935, after being barred from securities business for over a year, the heads of J.P. Morgan spun off its investment-banking operations. Led by J.P. Morgan partners, Henry S. Morgan (son of Jack Morgan and grandson of J. Pierpont Morgan) and Harold Stanley, Morgan Stanley was founded on September 16, 1935 with $6.6 million of nonvoting preferred stock from J.P. Morgan partners. In order to bolster its position, in 1959, J.P. Morgan merged with the Guaranty Trust Company of New York to form the Morgan Guaranty Trust Company. The bank would continue to operate as Morgan Guaranty Trust until the 1980s, before beginning to migrate back toward the use of the J.P. Morgan brand. In 1984, the group finally purchased the Purdue National Corporation of Lafayette Indiana, uniting a history between the two figures of Salmon Portland Chase and John Purdue. In 1988, the company once again began operating exclusively as J.P. Morgan & Co.
Bank One Corporation[edit source | editbeta]
In 2004, JPMorgan Chase merged with Chicago based Bank One Corp., bringing on board current chairman and CEO Jamie Dimon as president and COO and designating him as CEO William B. Harrison, Jr.‘s successor. Dimon’s pay was pegged at 90% of Harrison’s. Dimon quickly made his influence felt by embarking on a cost-cutting strategy, and replaced former JPMorgan Chase executives in key positions with Bank One executives—many of whom were with Dimon at Citigroup. Dimon became CEO in January 2006 and Chairman in December 2006.
Bank One Corporation was formed upon the 1998 merger between Banc One of Columbus, Ohio and First Chicago NBD. These two large banking companies had themselves been created through the merger of many banks. This merger was largely considered a failure until Dimon—recently ousted as President of Citigroup—took over and reformed the new firm’s practices—especially its disastrous technology mishmash inherited from the many mergers prior to this one. Dimon effected changes more than sufficient to make Bank One Corporation a viable merger partner for JPMorgan Chase.
Bank One Corporation traced its roots to First Bancgroup of Ohio, founded as a holding company for City National Bank of Columbus, Ohio and several other banks in that state, all of which were renamed “Bank One” when the holding company was renamed Banc One Corporation. With the beginning of interstate banking they spread into other states, always renaming acquired banks “Bank One”, though for a long time they resisted combining them into one bank. After the First Chicago NBD merger, adverse financial results led to the departure of CEO John B. McCoy, whose father and grandfather had headed Banc One and predecessors. Dimon was brought in to head the company. JPMorgan Chase completed the acquisition of Bank One in the third quarter of 2004. The former Bank One and First Chicago headquarters in Chicago serve as the headquarters of Chase, JPMorgan Chase’s commercial and retail banking subsidiary.
Bear Stearns[edit source | editbeta]
At the end of 2007, Bear Stearns & Co. Inc. was the fifth largest investment bank in the United States but its market capitalization had deteriorated through the second half of 2007. On Friday, March 14, 2008 Bear Stearns lost 47% of its equity market value to close at $30.00 per share as rumors emerged that clients were withdrawing capital from the bank. Over the following weekend it emerged that Bear Stearns might prove insolvent and on or around March 15, 2008 the Federal Reserve engineered a deal to prevent a wider systemic crisis from the collapse of Bear Stearns.
On March 16, 2008, after a weekend of intense negotiations between JPMorgan, Bear, and the federal government, JPMorgan Chase announced that it had plans to acquire Bear Stearns in astock swap worth $2.00 per share or $240 million pending shareholder approval scheduled within 90 days. In the interim, JPMorgan Chase agreed to guarantee all Bear Stearns trades and business process flows. Two days later, on March 18, 2008, JPMorgan Chase formally announced the acquisition of Bear Stearns for $236 million. The stock swap agreement was signed in the late-night hours of March 18, 2008, with JPMorgan agreeing to exchange 0.05473 of each of its shares upon closure of the merger for one Bear share, valuing the Bear shares at $2 each. 
On March 24, 2008, after considerable public discontent by Bear Stearns shareholders over the low acquisition price threatened the deal’s closure, a revised offer was announced at approximately $10 per share. Under the revised terms, JPMorgan also immediately acquired a 39.5% stake in Bear Stearns (using newly issued shares) at the new offer price and gained a commitment from the board (representing another 10% of the share capital) that its members would vote in favor of the new deal. With sufficient commitments to ensure a successful shareholder vote, the merger was completed on June 2, 2008.
Top 50 Banks in the World
|Traded as||FWB: DBK, NYSE: DB|
|Industry||Banking, Financial services|
|Headquarters||Deutsche Bank Twin Towers, Taunusanlage 12
|Key people||Paul Achleitner (Chairman)
Juergen Fitschen (Co-CEO)
Anshuman Jain (Co-CEO)
|Products||consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans,private banking, private equity,savings, Securities, asset management, wealth management, Credit cards|
|Revenue||€33.70 billion (2012)|
|Operating income||€784 million (2012)|
|Profit||€237 million (2012)|
|Total assets||€2.012 trillion (2012)|
|Total equity||€54.00 billion (2012)|
Deutsche Bank AG (literally “German Bank”; pronounced [ˈdɔʏtʃə ˈbaŋk]) is a German global banking and financial services company with its headquarters in the Deutsche Bank Twin Towers in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia-Pacific and the emerging markets. In 2009, Deutsche Bank was the largest foreign exchange dealer in the world with a market share of 21 percent.
Deutsche Bank has offices in major financial centres including London, New York City,Singapore, Hong Kong, Tokyo, Paris, Moscow, Sydney, Toronto, Istanbul, Madrid, Dublin,Amsterdam, Warsaw, Mumbai, Kuala Lumpur, São Paulo, Dubai, Riyadh, Bangkok, Karachi,Belgrade, Manila and George Town (Cayman Islands).
The bank offers financial products and services for corporate and institutional clients along with private and business clients. Services include sales, trading, research and origination of debt and equity; mergers and acquisitions (M&A); risk management products, such as derivatives,corporate finance, wealth management, retail banking, fund management, and transaction banking.
On 26 July 2011, along with its second quarter earnings report, Deutsche Bank reported thatAnshu Jain, head of investment banking and Juergen Fitschen, head of the German business, will replace Josef Ackermann as co-CEOs starting in 2012. Fears that Deutsche Bank could neglect its German roots and expand risk-taking activities prompted key members of the supervisory board to opt for the dual CEO model. Deutsche Bank is listed on both the Frankfurt (FWB) and New York stock exchanges (NYSE).
Deutsche Bank was founded in Berlin in 1870 as a specialist bank for foreign trade. The bank’s statute was adopted on 22 January 1870, and on 10 March 1870 the Prussian government granted it a banking license. The statute laid great stress on foreign business:
The object of the company is to transact banking business of all kinds, in particular to promote and facilitate trade relations between Germany, other European countries and overseas markets.
Two of the founders were G. Siemens whose father’s cousin had founded Siemens and Halske, and L. Bamberger. Previous to the founding of Deutsche Bank, German importers and exporters were dependent upon English and French banking institutions in the world markets—a serious handicap in that German bills were almost unknown in international commerce, generally disliked and subject to a higher rate of discount than English or French bills.
The bank’s first domestic branches, inaugurated in 1871 and 1872, were opened in Bremenand Hamburg. Its first foray overseas came shortly afterwards, in Shanghai (1872) and London (1873)  followed sometime by South America (1874-1886). The branch opening in London, after one failure and another partially successful attempt, was a prime necessity for the establishment of credit for the German trade in what was then the world’s money center.
Major projects in the early years of the bank included the Northern Pacific Railroad in the USand the Baghdad Railway (1888). In Germany, the bank was instrumental in the financing of bond offerings of steel company Krupp (1879) and introduced the chemical company Bayer to the Berlin stock market.
The second half of the 1890s saw the beginning of a new period of expansion at Deutsche Bank. The bank formed alliances with large regional banks, giving itself an entrée into Germany’s main industrial regions. Joint ventures were symptomatic of the concentration then under way in the German banking industry. For Deutsche Bank, domestic branches of its own were still something of a rarity at the time; the Frankfurt branch dated from 1886 and the Munich branch from 1892, while further branches were established in Dresden and Leipzig in 1901.
In addition, the bank rapidly perceived the value of specialist institutions for the promotion of foreign business. Gentle pressure from the Foreign Ministry played a part in the establishment of Deutsche Ueberseeische Bank in 1886 and the stake taken in the newly established Deutsch-Asiatische Bank three years later, but the success of those companies in showed that their existence made sound commercial sense.
The immediate postwar period was a time of liquidations. Having already lost most of its foreign assets, Deutsche Bank was obliged to sell other holdings. A great deal of energy went into shoring up what had been achieved. But there was new business, too, some of which was to have an impact for a long time to come. The bank played a significant role in the establishment of the film production company, UFA, and the merger of Daimler and Benz.
The bank merged with other local banks in 1929 to create Deutsche Bank und DiscontoGesellschaft, at that point the biggest ever merger in German banking history. Increasing costs were one reason for the merger. Another was the trend towards concentration throughout the industry in the 1920s. The merger came at just the right time to help counteract the emerging world economic and banking crisis. In 1937, the company name changed back to Deutsche Bank.
The crisis was, in terms of its political impact, the most disastrous economic event of the century. The shortage of liquidity that paralyzed the banks was fuelled by a combination of short-term foreign debt and borrowers no longer able to pay their debts, while the inflexibility of the state exacerbated the situation. For German banks, the crisis in the industry was a watershed. A return to circumstances that might in some ways have been considered reminiscent of the “golden age” before World War I was ruled out for many years.
After Adolf Hitler came to power, instituting the Third Reich, Deutsche Bank dismissed its three Jewish board members in 1933. In subsequent years, Deutsche Bank took part in the aryanization of Jewish-owned businesses; according to its own historians, the bank was involved in 363 such confiscations by November 1938. During the war, Deutsche Bank incorporated other banks that fell into German hands during the occupation of Eastern Europe. Deutsche provided banking facilities for the Gestapo and loaned the funds used to build the Auschwitz camp and the nearby IG Farben facilities. Deutsche Bank revealed its involvement in Auschwitz in February 1999. In December 1999 Deutsche, along with other major German companies, contributed to a US$5.2 billion compensation fund following lawsuits brought by Holocaust survivors. The history of Deutsche Bank during the Second World War has been documented by independent historians commissioned by the Bank.
During World War II, Deutsche Bank became responsible for managing the Bohemian Union Bank in Prague, with branches in the Protectorate and in Slovakia, the Bankverein in Yugoslavia (which has now been divided into two financial corporations, one in Serbia and one in Croatia), the Albert de Barry Bank in Amsterdam, the National Bank of Greece in Athens, the Creditanstalt-Bankverein in Austria and Hungary, the Deutsch-Bulgarische Kreditbank in Bulgaria, and Banca Commercial Romana in Bucharest. It also maintained a branch in Istanbul, Turkey.
Following Germany’s defeat in World War II, the Allied authorities, in 1948, ordered Deutsche Bank’s break-up into ten regional banks. These 10 regional banks were later consolidated into three major banks in 1952: Norddeutsche Bank AG; Süddeutsche Bank AG; and Rheinisch-Westfälische Bank AG. In 1957, these three banks merged to form Deutsche Bank AG with its headquarters in Frankfurt.
In 1959, the bank entered retail banking by introducing small personal loans. In the 1970s, the bank pushed ahead with international expansion, opening new offices in new locations, such as Milan (1977), Moscow, London, Paris and Tokyo. In the 1980s, this continued when the bank paid US$603 million in 1986 to acquire the Banca d’America e d’Italia, the Italian subsidiary that Bank of America had established in 1922 when it acquired Banca dell’Italia Meridionale. The acquisition represented the first time Deutsche Bank had acquired a sizeable branch network in another European country.
In 1989, the first steps towards creating a significant investment-banking presence were taken with the acquisition of Morgan, Grenfell & Co., a UK-based investment bank. By the mid-1990s, the build up of a capital-markets operation had got under way with the arrival of a number of high-profile figures from major competitors. Ten years after the acquisition of Morgan Grenfell, the U.S. firm Bankers Trust was added.
Deutsche continued to build up its presence in Italy with the acquisition in 1993 of Banca Popolare di Lecco from Banca Popolare di Novara for about US$476 million.
In October 2001, Deutsche Bank was listed on the New York Stock Exchange. This was the first NYSE listing after interruption due toSeptember 11 attacks. The following year, Deutsche Bank strengthened its U.S. presence when it purchased Scudder Investments. Meanwhile, in Europe, Deutsche Bank increased its private-banking business by acquiring Rued Blass & Cie (2002) and the Russian investment bank United Financial Group (2006). In Germany, further acquisitions of Norisbank, Berliner Bank and Deutsche Postbank strengthened Deutsche Bank’s retail offering in its home market. This series of acquisitions was closely aligned with the bank’s strategy of bolt-on acquisitions in preference to so-called “transformational” mergers. These formed part of an overall growth strategy that also targeted a sustainable 25% return on equity, something the bank achieved in 2005.
The company’s headquarters, the Deutsche Bank Twin Towers building, was extensively renovated beginning in 2007. The renovation took approximately three years to complete. The renovated building was certified LEED Platinum and DGNB Gold.
From as late as 2001 to at least 2007, the Bank engaged in covert espionage on its critics. The bank has admitted to episodes of spying in 2001 and 2007 directed by its corporate security department, although characterizing them as “isolated.” According to the Wall Street Journal‘s page one report, Deutsche Bank had prepared a list of names of 20 people who it wished investigated for criticism of the bank, including Michael Bohndorf (an activist investor in the bank) and Leo Kirch (a former media executive in litigation with bank). Also targeted was the Munich law firm of Bub Gauweiler & Partner, which represents Kirch. According to the Wall Street Journal, the bank’s legal department was involved in the scheme along with its corporate security department. The bank has since hired Cleary Gottlieb Steen & Hamilton, a New York law firm, to investigate the incidents on its behalf. The Cleary firm has concluded its investigation and submitted its report, which however has not been made public. According to the Wall Street Journal, the Cleary firm uncovered a plan by which Deutsche Bank was to infiltrate the Bub Gauweiler firm by having a bank “mole” hired as an intern at the Bub Gauweiler firm. The plan was allegedly cancelled after the intern was hired but before she started work. Peter Gauweiler, a principal at the targeted law firm, was quoted as saying “I expect the appropriate authorities including state prosecutors and the bank’s oversight agencies will conduct a full investigation.”
In May 2009 Deutsche Bank informed the public that the executive management learned about possible violations which occurred in past years of the bank’s internal procedures or legal requirements in connection with activities involving the bank’s corporate security department. Deutsche Bank immediately retained the law firm Cleary Gottlieb Steen & Hamilton in Frankfurt to conduct an independent investigation and informed the German Federal Financial Supervisory Authority (BaFin). The principal findings by the law firm, published in July 2009, are as follows: Four incidents that raise legal issues such as data protection or privacy concerns have been identified. In all incidents, the activities arose out of certain mandates performed by external service providers on behalf of the Bank’s Corporate Security Department. The incidents were isolated and no systemic misbehaviour has been found. And there is no indication that present members of the Management Board have been involved in any activity that raise legal issues or have had any knowledge of such activities. This has been confirmed by the Public Prosecutor’s Office in Frankfurt in October 2009. Deutsche Bank has informed all persons affected by the aforementioned activities and expressed its sincere regrets. BaFin found deficiencies in operations within Deutsche Bank’s security unit in Germany but found no systemic misconduct by the bank. The Bank has initiated steps to strengthen controls for the mandating of external service providers by its Corporate Security Department and their activities.
Housing credit bubble and CDO market
Deutsche Bank was one of the major drivers of the collateralized debt obligation(CDO) market during the housing credit bubble from 2004–2008, creating ~$32,000,000,000 worth. The 2011 US Senate Permanent Select Committee on Investigations report on Wall Street and the Financial Crisis analyzed Deutsche Bank as a ‘case study’ of investment banking involvement in the mortgage bubble, CDO market, credit crunch, and recession. It concluded that even as the market was collapsing in 2007, and its top global CDO trader was deriding the CDO market and betting against some of the mortgage bonds in its CDOs, Deutsche bank continued to churn out bad CDO products to investors.
The report focused on one CDO, Gemstone VII, made largely of mortgages from Long Beach, Fremont, and New Century, all notorious subprime lenders. Deutsche Bank put risky assets into the CDO, like ACE 2006-HE1 M10, which its own traders thought was a bad bond. It also put in some mortgage bonds that its own mortgage department had created but couldn’t sell, from the DBALT 2006 series. The CDO was then aggressively marketed as a good product, with most of it being described as having A level ratings. By 2009 the entire CDO was almost worthless and the investors (including Deutsche Bank itself) had lost most of their money.
Gregg Lippman, head of global CDO trading, was betting against the CDO market, with approval of management, even as Deutsche was continuing to churn out product. He was a large character in Michael Lewis’ “The Big Short“, which detailed his efforts to find ‘shorts’ to buy Credit Default Swaps for the construction of Synthetic CDOs. He was one of the first traders to foresee the bubble in the CDO market as well as the tremendous potential that CDS offered in this. As portrayed in the book “The Big Short” of Michael Lewis, Lipmann in the mid of the CDO and MBS frenzy was orchestrating presentations to investors, demonstrating his bearish view of the market, offering them the idea to start buying CDS, especially to AIG in order to profit from the forthcoming collapse. As regards the Gemstone VII deal, even as Deutsche was creating and selling it to investors, Lippman emailed colleagues that it ‘blew’, and he called parts of it ‘crap’ and ‘pigs’ and advised some of his clients to bet against the mortgage securities it was made of. Lippman called the CDO market a ‘ponzi scheme’, but also tried to conceal some of his views from certain other parties because the bank was trying to sell the products he was calling ‘crap’. Lippman’s group made money off of these bets, even as Deutsche overall lost money on the CDO market.
Deutsche was also involved with Magnetar Capital in creating its first Orion CDO. Deutsche had its own group of bad CDOs called START. It worked with Elliot Advisers on one of them; Elliot bet against the CDO even as Deutsche sold parts of the CDO to investors as good investments. Deutsche also worked with John Paulson, of the Goldman Sachs Abacus CDO controversy, to create some START CDOs. Deutsche lost money on START, as it did on Gemstone.