This acquisition has completely changed the landscape of the consumer banking industry. The merge between these major banks exemplifies the overall consolidation of the consumer banking industry. The global financial crisis has been devastating for many smaller banks. Many banks that were struggling to find sources of revenue had to merge in order to stay alive. Wachovia is an example of a bank that was having severe revenue issues, and as a result, it had no choice but to do the deal with Wells Fargo or fail. This deal will continue to have repercussions in the foreseeable future. The consumer banking industry used to consist of many banks that offered financial services to consumers. The failure of many of the smaller banks has essentially left only a few major companies to compete for consumer demand. Companies including Citigroup, Bank of America, Wells Fargo, and JP Morgan Chase dominate the industry because of the acquisition and failure of banks such as Wachovia. The Wells Fargo deal with Wachovia is just one example a major change in the consumer banking industry in the last few years.
-Justin Schaffer
Looking at banking giants Citigroup, Bank of America, Wells Fargo, and JP Morgan Chase, it appears as if success within the banking industry means covering all aspects of banking. Does this signal a growing trend/fate within the banking industry? Will we witness a declining number of smaller banks in years ahead as bigger banks take over and expand their presence? What about companies such as American Express? Even though this is a very successful company, does it have an incentive to merge given that it currently only functions on a consumer banking level?
ReplyDeleteThe Big banks aren't having complete success though. If you look at this article( http://online.wsj.com/article/SB10001424052748704814204575508343880177212.html ) you can see that sometimes they can also be the one's taking the biggest hits. looking at J.P. morgan for example, the past two months it has been doing horrible in the stocks. I don't think these companies should even think about merging until they can take care of themselves. If they can't then merging will hurt them more then it helps them.
ReplyDeleteI thik that this is not surprising due to the fact that the financial crisis created a great disparity between banks. The banks that were too big to fail (regardless of acquiring money from the federal government) are now capable of take advantage of the smaller banks. This pattern of big banks acquiring smaller ones to size a greater part of the market may probably continue throughout the year.
ReplyDeleteTo respond to Molly's comment, I think those questions will be extremely important to analyze as we watch the consumer banking industry change over the next few years. While I think companies that specialize exclusively in the credit card market such as American Express will remain, I think we will see the most change within the banks. As banks look to expand operations, mergers between banks will become more common. This market could become an oligopoly quickly. What do you guys think?
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