A money center bank (also written money-center bank) is a

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

bank holding company A bank holding company is a company that controls one or more banks, but does not necessarily engage in banking itself. The compound bancorp (''banc''/''bank'' + '' corp ration') or bancorporation is often used to refer to such companies as w ...

that is a particular kind of high-end

commercial bank A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit. It can also refer to a bank or a division of a larger bank that deals with whol ...

: located in a major

financial center A financial centre (financial center in American English) or financial hub is a location with a significant concentration of commerce in financial services. The commercial activity that takes place in a financial centre may include banking, ...

such as New York or San Francisco, its lending operations are financed by borrowings from other banks or by issuing bonds. Money center banks tend to engage in a number of different or related businesses, such as

corporate banking Wholesale banking is the provision of services by banks to larger customers or organizations such as mortgage brokers, large corporate clients, mid-sized companies, real estate developers and investors, international trade finance businesses, i ...

investment banking Investment banking is an advisory-based financial service for institutional investors, corporations, governments, and similar clients. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by und ...

, foreign exchange services, currency trading, securities trading, derivatives trading, issuing credit cards, and making loans to private equity firms and to foreign governments. Money center banks have extremely large

balance sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business ...

s, and are large enough and embedded enough within

international finance International finance (also referred to as international monetary economics or international macroeconomics) is the branch of monetary economics, monetary and macroeconomics, macroeconomic interrelations between two or more countries. Internation ...

that they are often considered to be in the "

too big to fail "Too big to fail" (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected with an economy that their failure would be disastrous to the greater e ...

" category. Being a money center bank does not have a firm definition, and in some cases, observers may disagree on exactly where the boundary is between money center banks and very large

regional bank A regional bank is a depository institution, such as a bank, savings and loan, or credit union, which is larger than a community bank and operates below the state level, but not so large that it would operate either nationally or internationall ...

s. As a general tendency, money center banks get more of their funds via

money market The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a compo ...

s compared to getting funds from the

deposit account A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained bel ...

s of consumers. While money center banks can and do accept deposits from consumers and otherwise behave like a

retail bank Retail banking, also known as consumer banking or personal banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are often described as wholesale banking (corporate ba ...

in certain of their locations, that is not their major source of income. There is some overlap between the idea of a money center bank and that of a

universal bank A universal bank is a type of bank which participates in many kinds of banking activities and is both a commercial bank and an investment bank as well as providing other financial services such as insurance. These are also called full-service ...

. The term 'money center bank' seems to have first started gaining appearances in the 1960s and 1970sSe
this New York Times search
/ref> although the phrase has been found occurring earlier. According to one breakdown, during the 1980s there were as many as eleven money center banks in the United States. At p. 126/126n. , the prime examples of American money center banks are

JPMorgan Chase JPMorgan Chase & Co. (stylized as JPMorganChase) is an American multinational financial services, finance corporation headquartered in New York City and incorporated in Delaware. It is List of largest banks in the United States, the largest ba ...

and

Citigroup Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services company based in New York City. The company was formed in 1998 by the merger of Citicorp, t ...

. Two others are often included as well,

Bank of America The Bank of America Corporation (Bank of America) (often abbreviated BofA or BoA) is an American multinational investment banking, investment bank and financial services holding company headquartered at the Bank of America Corporate Center in ...

and

Wells Fargo Wells Fargo & Company is an American multinational financial services company with a significant global presence. The company operates in 35 countries and serves over 70 million customers worldwide. It is a systemically important fi ...

. Some ancestor companies of these were considered, in their time, as money center banks; in the case of JPMorgan Chase, these include Manufacturers Hanover Corporation and Chemical Banking Corporation, as well as the denoted

Chase Manhattan Bank JPMorgan Chase Bank, N.A., doing business as Chase, is an American national bank headquartered in New York City that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and financial services holding ...

and J.P. Morgan & Co. Besides their headquarters, money center banks have offices in major financial centers around the world, such as in London and Hong Kong. Money center banks can be foreign-owned, for instance

Bankers Trust Bankers Trust was a historic American banking organization. The bank merged with Alex. Brown & Sons in 1997 before being acquired by Deutsche Bank in 1999. Deutsche Bank sold the Trust and Custody division of Bankers Trust to State Street Corp ...

has been owned by

Deutsche Bank Deutsche Bank AG (, ) is a Germany, German multinational Investment banking, investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Stock Exchange. ...

and

HSBC Bank USA HSBC Bank USA, National Association, an American subsidiary of the British banking group HSBC, is a bank with its operational head office in New York City and its nominal head office in Tysons, Virginia (as designated on its charter). HSBC Bank ...

HSBC HSBC Holdings plc ( zh, t_hk=滙豐; initialism from its founding member The Hongkong and Shanghai Banking Corporation) is a British universal bank and financial services group headquartered in London, England, with historical and business li ...

References

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External links

Entry at Investopedia

Definition according to Nasdaq
Banking Banking terms International finance

See also

References

External links