Big Four (banking)

The Big Four is the colloquial name for the four main banks in several countries, where the banking industry is dominated by just four institutions and where the phrase has gained currency.

International use

Internationally, the term "Big Four Banks" has traditionally referred to the following central banks:^[1]

• The Federal Reserve
• The People's Bank of China
• The Bank of Japan
• The European Central Bank

The Bank of England is occasionally also included in the list:^[2]

• The Bank of England

Australia/New Zealand

In Australia, the "big four banks" refers to the four largest banks^[3] by market share, who between them hold 80% of the home loan markets in the country. In 2012, their combined total asset is A$2.66 trillion, which is about 200% of Australian GDP in 2011. In order of size, these are:

• Commonwealth Bank (CBA) (government owned until 1996)
• Westpac (WBC)
• Australia and New Zealand Banking Group (ANZ)
• National Australia Bank (NAB)

A longstanding policy of the federal government in Australia has been to maintain this status quo, called the "four pillars policy". The policy has been maintained through the Global Recession of 2008–09, as Westpac acquired St.George Bank and the Commonwealth Bank acquired Bankwest, reinforcing the special status of the "big four".

Being New Zealand's closest neighbour, with very close ties culturally and economically, has helped Australia dominate the banking sector there. Often referred to collectively as the 'big banks'^[4][5][6] or the 'big Aussie banks', the "Big Four" Australian banks also dominate the New Zealand banking sector in the form of:

• Australia and New Zealand Banking Group, or ANZ, also comprising the former business of The National Bank.
• ASB Bank, formerly Auckland Savings Bank, wholly owned by the Commonwealth Bank
• The Bank of New Zealand (BNZ), wholly owned by the National Australia Bank
• Westpac, formerly known as WestpacTrust after a merger with the Trust Bank.

Together they hold over 90% of gross loans and advances in New Zealand ^[7] as well as close to 90% of all mortgages.^[8]

These four subsidiaries are massively profitable and in some cases even outperform the Australian parent company.^[9] The extent to which they dominate the banking sector can be seen in profits: In the 2012/2013 financial year, the largest of the Big Banks, ANZ New Zealand, made a profit of NZ$1.37 billion. The smallest, BNZ, made a profit of NZ$695 million.^[4] State-owned Kiwibank, community trust-owned TSB Bank, SBS Bank (formerly Southland Building Society) and Heartland Bank, the next four largest banks by profit, made NZ$97 million,^[10] NZ$73.5 million,^[11] NZ$14 million^[12] and NZ$7 million (albeit with an underlying result of about NZ$30 million) respectively.^[13] In other words, the profit of New Zealand's next four largest banks (after the Big Four) is equal to less than 30% of the smallest of the Big Four, BNZ.

Brazil

In Brazil, the "big four", according to the Central Bank of Brazil database (http://www4.bcb.gov.br/top50/port/top50.asp) are:

• Banco do Brasil - The largest bank in Brazil; state-run.
• Itaú Unibanco - The largest private bank.
• Caixa Econômica Federal - state-run.
• Banco Bradesco

Canada

The term "Big Five", is used as opposed to four, with five banks dominating Canadian banking. The operation of Canadian banks include retail banking, mutual funds, insurance, credit cards, and brokerage activities. In addition, they have large international subsidiaries operated through subsidiaries (i.e. CIBC FirstCaribbean International Bank, and TD Bank, N.A.). The Canadian banking operations of the Big Five are largely conducted out of each parent company, unlike U.S. banks that use a holding company structure to hold their primary retail banking subsidiaries. The Big Five include:

• Royal Bank of Canada
• Toronto-Dominion Bank
• Bank of Nova Scotia
• Bank of Montreal
• Canadian Imperial Bank of Commerce

China

During the 1920s, the term “Big Four” applied to the Four Northern Banks of the Republic of China (i.e. the four most capitalized commercial banks in Northern China).^[14] These were the Yien Yieh Commercial Bank, the Kincheng Banking Corporation, the Continental Bank and The China & South Sea Bank. These were contrasted with the Three Southern Banks of Southern China.

By 1949, the Big Four banks were the Bank of China, the Bank of Communications, the Central Bank of China and the Farmers Bank of China. All four were state-owned banks. These four, together with Central Trust of China, Postal Savings and Remittance Bureau of China, Central Cooperative Treasury of China, were called the "Four Banks, Two Bureaus, One Treasury" or "四行两局一库".^[15]

Currently, in the People's Republic of China, the Big Four commercial banks ("四大商业银行") are:

• Bank of China
• China Construction Bank
• Industrial and Commercial Bank of China
• Agricultural Bank of China

and have been described as such in the Western press. All four are state-controlled banks with commercial banking operations.

India

In India, the four largest banks by assets are:^[16]

• State Bank of India - The largest bank in India; state-run.
• ICICI Bank - The largest private bank in India.
• Bank of Baroda
• Punjab National Bank

Ireland

In Ireland, the term "big four" applies to the four largest banks by market capitalisation.^[17][18] These all operate in both the Republic of Ireland and Northern Ireland, and have a wider international presence.^[19]

• Bank of Ireland
• Allied Irish Banks (operates as First Trust Bank in Northern Ireland^[20]
• Danske Bank (also operates as Danske Bank in Northern Ireland^[21]) - Irish Branch of Danske Bank A/S since 2007.
• Ulster Bank - Subsidiary of The Royal Bank of Scotland Group since 2000/2001.

Ever since Danske Bank has phased out its personal banking services, it has been suggested that either KBC Ireland or Permanent TSB could replace, in the medium-term, Danske Bank in the "Big Four" ranking.

Italy

In Italy the term "big four" is not explicitly used. Banks are rated according to the listed market index. The first four are:^[22]

• Intesa Sanpaolo
• UniCredit
• UBI Banca
• Gruppo Mediolanum

Japan

In Japan, the "big four" are:^[23]

• Mitsubishi UFJ Financial Group
• Sumitomo Mitsui Financial Group
• Mizuho Financial Group
• Japan Post Bank

Pakistan

The "top five" banks of Pakistan are:^[24]

• Habib Bank
• MCB Bank Limited
• National Bank of Pakistan
• United Bank
• Allied Bank Limited

South Africa

In South Africa, the "big four" are:^[25]

• Standard Bank (Not related to Standard Chartered Bank)
• FirstRand Bank (operators of First National Bank)
• Nedbank - owned by Old Mutual.
• Barclays Africa Group Limited trading as ABSA (also capitalised as Absa)- majority owned by Barclays since 2005; remainder owned by the public.

Spain

In Spain, the "big four" are:^[26]

• Bankia (Bank of Madrid and Valencia)
• BBVA (Bank of Bilbao and Biscay)
• Caixabank (Bank of Barcelona and Catalonia)
• Santander

Sweden

In Sweden, the "big four" are:^[27]

• Nordea Bank AB
• Skandinaviska Enskilda Banken AB
• Svenska Handelsbanken AB
• Swedbank AB

United Kingdom

In relation to the United Kingdom, the phrase "big four banks" is currently used to refer to the four largest UK-based banking groups, being:

• Barclays;
• HSBC;
• Lloyds Banking Group; and
• The Royal Bank of Scotland Group.^[28][29]

Until 1970, the phrase "big five banks" was used to refer to the five largest UK clearing banks (institutions which clear bankers' cheques), which in England and Wales were:

• Barclays Bank (now part of Barclays);
• Midland Bank (now HSBC Bank and part of HSBC);
• Lloyds Bank (now part of Lloyds Banking Group);
• National Provincial Bank and
• Westminster Bank

After the merger of Westminster Bank and National Provincial Bank to form NatWest (now part of The Royal Bank of Scotland Group) in 1970, the term "big four" was used.

In Scotland the "big four" were:

• The Royal Bank of Scotland ("RBS") (part of The Royal Bank of Scotland Group);
• Bank of Scotland (part of Lloyds Banking Group);
• Clydesdale Bank (part of National Australia Group); and
• Trustee Savings Bank ("TSB") (now part of TSB Banking Group ).^[30]

United States

In the United States, the "big four" banks hold 39% of all U.S. customer deposits (as of 2009), and consist of:^[31][32]

• JPMorgan Chase (headquartered in New York, New York, bank chartered in Columbus, Ohio)
• Bank of America (headquartered and bank chartered in Charlotte, North Carolina)
• Citigroup (headquartered in New York, New York, bank chartered in Sioux Falls, South Dakota)
• Wells Fargo (headquartered in San Francisco, California, bank chartered in Sioux Falls, South Dakota)

From a retail banking perspective, U.S. Bancorp (headquarters in Minneapolis, Minnesota/bank charter Cincinnati, Ohio) and PNC Financial Services (headquarters in Pittsburgh, Pennsylvania/bank charter Wilmington, Delaware) both have significantly more branches than Citibank, the retail banking arm of Citigroup.^[33] However, Citibank still has significantly more assets than U.S. Bancorp and PNC.^[34]

References