Over the past decade, the world's biggest banks have only gotten bigger, as growth and industry consolidation have continued to bolster their balance sheets.The 10 largest financial institutions in the world now have market capitalizations of at least $100 billion each.
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Data source: Bank of America.
JPMorgan Chase, Wells Fargo, and Bank of America can all thank major acquisitions for their places at the top of the list. In 2008 alone:
- JPMorgan Chase bought Bear Stearns and Washington Mutual.
- Wells Fargo more than doubled in size by acquiring Wachovia.
- Bank of America inked its long-desired purchase of Merrill Lynch.
Moreover, given that most banks are leveraged by a factor of 10-to-1 or more, market capitalization gives only a partial hint of these banks' true size. To this end, JPMorgan Chase has $2.6 trillion worth of assets on its balance sheet, compared with $2.3 trillion at Bank of America and $2.0 trillion at Wells Fargo.
Image source: Getty Images.
And you can even take this one step further by including assets under management and/or custody. These aren't held on a bank's balance sheet but instead are merely administered on behalf of clients, who retain the assets on their own balance sheets.
That would add $481 billion to Wells Fargo's heft, $2.6 trillion to Bank of America (if you factor in all of its clients balances), and nearly $25 trillion to JPMorgan Chase, which serves as one of only a handful of custodial banks, overseeing trillions of dollars' worth of assets for institutional investors.
Most of the other banks on this list, aside from the Commonwealth Bank of Australia and HSBC, are based in China. This illustrates the point that Jamie Dimon, chairman and CEO of JPMorgan Chase, has made repeatedly over the past few years: If regulators in the United States break up the country's biggest banks, they'll cede the apex of global finance to institutions in China.
"I do not want any American to look back in 20 years and try to figure out how and why America's banks lost the leadership position in financial services," Dimon wrote in his 2015 shareholder letter. "If not us, it will be someone else and likely a Chinese bank."
The thing to watch going forward, in turn, is whether China's banks will in fact eventually emerge on top. The country is growing faster, it faces less stringent financial regulations, and its banks have the express backing of the government, given the blurring between public and private institutions in the East Asian country.
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