Sunday, September 28, 2008

Concentration Risk Among U.S. Deposits

With JP Morgan acquiring WaMu's deposit base, they rocketed above Citigroup as the biggest bank in terms of deposits. This increases concentration among the largest five deposit holders to a massive 45% by market share (assuming $7 Trillion in total deposits), but I'm not so convinced that bigger is better.

And further concentration is likely... per CNNMoney.com:
Wachovia is reportedly mulling a deal with another large bank, including Citigroup and Spain's Banco Santander, according to reports published Friday afternoon.
Should Citi and Wachovia merge, the big 3 (Citi, JP Morgan, and Bank of America) would combine for almost $3 Trillion in total U.S. deposits.

Just another data point as to why additional regulation and oversight is so important...

Source: Infectious Greed
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2 comments:

  1. NobleSeptember 28, 2008 at 12:37 PM

    Would it make it easier to nationalize? I think consolidation and nationalization are natural and given outcomes here. Great charts by the way. Always appreciated.

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  2. JakeSeptember 28, 2008 at 1:48 PM

    Likely.

    I agree with you regarding consolidation. Less earnings power equals consolidation of back office, retail outlets, etc... to reduce costs. On a positive point, a few large (rather than many small) players makes the system easier to regulate.

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