National Westminster Bank | History and definition of the National Westminster Bank | National Westminster Bank Logo

National Westminster Bank Plc, commonly known as NatWest, is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group (RBS) is ranked as the second largest bank in the world by assets. It was established in 1968 by the merger of National Provincial Bank (established 1833 as National Provincial Bank of England) and Westminster Bank (established 1834 as London County and Westminster Bank). Traditionally considered one of the Big Four clearing banks, NatWest has a large network of 1,600 branches and 3,400 cash machines across Great Britain and offers 24-hour Actionline telephone and online banking services. Today it has more than 7.5 million personal customers and 850,000 small business accounts. In Northern Ireland it operates through its Ulster Bank subsidiary.

The bank can trace its roots back to 1650 with the foundation of Smith's of Nottingham. The creation of the modern bank was announced in 1968 and National Westminster Bank Limited commenced trading on 1 January 1970, after the statutory process of integration had been completed in 1969. The famous three arrowheads symbol was adopted as the new bank's logo; said either to symbolise circulation of money in the financial system or the bank's three constituents, National Provincial, Westminster, and District Bank (established 1829), the latter being taken over by National Provincial Bank in 1962 and allowed to operate under its own name until the formation of National Westminster Bank. The District, National Provincial, and Westminster Bank were fully integrated in the new firm's structure, while Coutts & Co. private bankers (a 1920 National Provincial acquisition, established 1692), Ulster Bank in Northern Ireland (a 1917 Westminster acquisition, established 1836) and the Isle of Man Bank (a 1961 National Provincial acquisition, established 1865) continued as separate operations. Westminster Foreign Bank (established 1913) was restyled International Westminster Bank in 1973. Duncan Stirling, outgoing chairman of Westminster Bank, became first chairman of the fifth largest bank in the world. In 1969 David Robarts, former chairman of National Provincial, assumed Stirling's position. In 1975 it was one of the first London banks to open a representative office in Scotland. It was a founder member of the Joint Credit Card Company (with Lloyds Bank, Midland Bank and the Royal Bank of Scotland) which launched the Access credit card (now MasterCard) in 1972 and in 1976 it introduced the Servicetill cash machine. The same banks (although this time not including Lloyds) were later responsible for the introduction of the Switch debit card (later branded Maestro) in 1988.

Deregulation in the 1980s, culminating in the Big Bang in 1986, also encouraged the bank to enter the securities business. County Bank, its merchant banking subsidiary formed in 1965, acquired various stockbroking and jobbing firms to create the investment banking arm County NatWest. National Westminster Home Loans was established in 1980 and other initiatives included the launch of the Piggy Account for children in 1983, the Credit Zone, a flexible overdraft facility on which customers only pay interest (now commonplace, this so-called pink debt was innovative when launched) and the development of the Mondex electronic purse (later sold to MasterCard Worldwide) in 1990. The Action Bank advertising campaign spearheaded a new marketing-led approach to business development. Under the direction of Robin Leigh-Pemberton, later Lord Kingsdown, who became chairman in 1977, the bank also expanded internationally, forming National Westminster Bancorp in the United States of America with a network of 340 branches across two states, National Westminster Bank of Canada, NatWest Australia Bank and opening branches on the European continent and in the Far East. In 1982, the Frankfurt office of International Westminster Bank was merged with Global Bank AG to form Deutsche Westminster Bank and in 1988, National Westminster Bank SA was incorporated and took over the bank's six branches in France and Monaco. In 1989, International Westminster Bank was merged into National Westminster Bank by Act of Parliament as there was no longer any advantage in operating separately.

Completed in 1980, the bank built the iconic National Westminster Tower in London to serve as its international headquarters. At a height of 600 feet (183 m) it was the tallest building in the UK until the topping-out of Canary Wharf Tower 10 years later, its footprint in the shape of the bank's logo. Also worthy of note is National Westminster House in Birmingham, no longer owned by the bank, the building was most recently sold to British Land.

The bank's expansion strategy hit trouble with the stock market crash of 1987 and involvement in the financial scandal surrounding the collapse of Blue Arrow. The Department of Trade and Industry report on the affair was critical of the bank's management and resulted in the resignation of several members of the board, including then chairman Lord Boardman. Later, the bank would divest its overseas subsidiaries. The North American operations were sold to Fleet Bank and Hongkong Bank of Canada respectively. Thereafter the bank concentrated on its core domestic business as the restyled NatWest Group, reflecting its modern positioning as a portfolio of businesses. In 1993, the NatWest Tower was devastated by a Provisional IRA bomb and the bank vacated the building, subsequently selling it. Then, in 1997, NatWest Markets, the corporate and investment banking arm formed in 1992, revealed a £50m loss had been discovered, escalating to £90.5m after further investigations. Investor and shareholder confidence was so badly shaken that the Bank of England had to instruct the board of directors to resist calls for the resignation of its most senior executives in an effort to draw a line under the affair. The bank's internal controls and risk management were severely criticised in 2000 and its aggressive push into investment banking questioned, after a lengthy investigation by the Securities and Futures Authority. The bank's move into complicated derivative products that it did not fully understand seemed to indicate poor management. By the end of 1997 parts of NatWest Markets had been sold, others becoming Greenwich NatWest in 1998.

In 1999, the chairman, Lord Alexander of Weedon, announced a merger with Legal & General in a friendly £10.7bn deal, the first between a bank and an insurance company in UK history. The move received a poor reception in the London financial markets and NatWest's share price fell substantially. Seen as a driver of the ill-advised investment banking expansion, Derek Wanless was forced to resign as chief executive following the appointment of Sir David Rowland (who became executive chairman). Also in 1999, in response to the weakened NatWest share value, the Governor and Company of the Bank of Scotland began a hostile takeover bid for the bank, an audacious move for the much smaller Scottish bank. The Bank of Scotland's aim was to break-up the NatWest Group and dispose of its non-retail assets. NatWest was forced to abandon its merger, but refused to agree to a takeover by a rival bank. The Royal Bank of Scotland tabled another hostile offer and trumped the Bank of Scotland with a £21bn bid. The takeover of NatWest in early 2000 was the biggest in UK history. National Westminster Bank, once Britain's most profitable bank, was delisted from the London Stock Exchange and became, with its subsidiaries, component parts of The Royal Bank of Scotland Group. The outcome of this bitter struggle set the tone for a round of consolidation in the financial sector as it prepared for a new age of fierce global competition. The Royal Bank of Scotland Group became the second largest bank in the UK and Europe (after HSBC) and the fifth largest in the world by market capitalisation. According to Forbes Global 2000, it was the then 13th largest company in the world. While NatWest was retained as a distinct brand with its own banking licence, many back office functions were merged with those of the Royal Bank leading to over 18,000 job losses.

In 2008, it was announced that HM Government would take a stake of up to 58% in the Royal Bank of Scotland in a move aimed at recapitalising the Group. HM Treasury subscribed for £5 billion in preference shares and underwrote the issuance of £15bn of new ordinary shares offered to RBS shareholders and new institutional shareholders at the fixed price of 65.5p. As a consequence of the mismanagement which necessitated this rescue, the chief executive, Sir Fred Goodwin (who secured the takeover of NatWest), offered his resignation which was duly accepted. Chairman, Sir Tom McKillop, also confirmed he would stand down from that role when his contract expired in 2009. Goodwin was replaced by Stephen Hester, previously chief executive of British Land. Subsequently, in 2009, it was announced that all 311 Royal Bank branches in England and Wales (until 1985, Williams & Glyn's Bank) together with the seven NatWest branches in Scotland were to be divested by the Group to comply with European Union state aid requirements. The process could take up to four years to complete. In August 2010, it was announced that the branch divestment would be to Santander UK, along with 1.8 million personal customers and 244,000 SME customers.

The Royal Bank of Scotland Group Plc operates internationally through its two principal subsidiaries, the Royal Bank (in Scotland) and NatWest (in England and Wales). The NatWest group of companies comprises National Westminster Bank Plc and its subsidiary and associated undertakings. The principal subsidiary undertakings of the bank today are:

1. Coutts & Co., part of RBS Group Wealth Management, incorporating RBS Coutts Bank (formerly Coutts Bank von Ernst) Ltd. trading as RBS Coutts International in Switzerland;
2. RBS Securities Inc., previously Greenwich Capital Markets Inc., broker-dealer, trading as RBS Greenwich Capital (formerly Greenwich NatWest) in the US; and
3. Ulster Bank Limited, incorporating, from 2001, Ulster Bank Ireland Ltd. in the Republic of Ireland.

Until 2003 National Westminster Bank was a wholly owned subsidiary of The Royal Bank of Scotland Group, now the ultimate holding company. In January 2003 ownership of the bank's entire issued ordinary share capital was transferred from the ultimate holding company to The Royal Bank of Scotland Plc, as holding company. At that time the entire issued share capital of Lombard North Central Plc was transferred by the bank to the holding company. Ownership of National Westminster Home Loans Limited was passed to the holding company in December 2005. In December 2000 the bank transferred National Westminster Life Assurance Limited to RBS Life Investments Limited, effectively establishing the business as a joint venture between the Group and Norwich Union.

The Royal Bank of Scotland Group comprises the ultimate holding company and its subsidiary and associated undertakings. The Group is structured into the following main operating areas:

* Retail Markets, providing a broad range of retail services across different brands and channels to personal and small business customers;

* Corporate Markets, a leading banking partner to UK commercial customers and major corporations and governmental institutions around the world, providing an extensive range of debt, risk and investment services;

* RBS Insurance, the second-largest general insurer in the UK, with brands including Direct Line, Churchill and Green Flag;

* Ulster Bank Group, incorporating the former First Active Plc in the Republic of Ireland; and

* Citizens Financial Group, which provides retail and corporate banking services across 13 states in the northeastern and midwestern US, with a retail and commercial presence in more than 30 other states.

* Business Services, a division dealing with administrative operations, managing group technology, procurement and property, in tandem with the other divisions of RBS Group.

NatWest provide a full range of banking and insurance services to personal, business and commercial customers, including the first dedicated bank account in Britain to be delivered and supported entirely in the Polish language. In 2005 it announced the reintroduction of a mobile banking service, providing banking facilities to remote communities in Cornwall. The bank has won Your Mortgage Magazine's Best Bank for Mortgages award 13 times in the last 17 years, more than any other lender.

In 2006 The Royal Bank of Scotland Group undertook the first trial of PayPass contactless debit and credit cards in Europe. These can be used to pay for purchases under £10 by tapping an enabled card on the retailer's terminal. In an effort to enhance security, hand-held devices for use with a card to authorise online banking transactions were introduced in 2007. These card readers do not retain personal information but verify numbers during a transaction. From autumn 2009, NatWest and RBS are migrating debit cards from Maestro and Solo to Visa Debit. The bank participates fully in the Faster Payments Service, an initiative to speed up certain payments, launched in 2008. Established in 1989, Streamline is the leading provider of merchant accounts in Europe, giving businesses the ability to accept credit and debit card payments and handling around half of all such transactions. In 2009 it was merged into RBS WorldPay.

The bank is authorised and regulated by the Financial Services Authority, a member of the Financial Ombudsman Service, the Financial Services Compensation Scheme, the Association for Payment Clearing Services and of the British Bankers' Association; it subscribes to the Banking Code and Business Banking Code. Mortgages, available in England, Scotland and Wales only, are provided by National Westminster Home Loans Limited, a member of the Council of Mortgage Lenders, the NatWest One account is a secured personal account with the Royal Bank of Scotland Plc. The Spanish Mortgage is provided by Adam and Company Plc, a subsidiary of the Royal Bank of Scotland, trading as NatWest. NatWest Insurance Services is a trading name of RBS Business Insurance Services Limited, acting as intermediary and broker for general insurance. Life Protector and Guaranteed Bond products are provided by National Westminster Life Assurance Limited. The Royal Bank of Scotland International Limited trading as NatWest operates branches in Jersey, Guernsey, the Isle of Man and Gibraltar. Share dealing services are provided by NatWest Stockbrokers Limited, which is a member of the London Stock Exchange and PLUS. NatWest Stockbrokers is operated by a joint venture between The Royal Bank of Scotland Group and the Toronto-Dominion Bank, TD Waterhouse Investor Services (Europe) Limited. In 2010, RBS Intermediary Partners was re-branded NatWest Intermediary Solutions.

Wachovia | History and definition Wachovia | Wachovia logo

Wachovia

Wachovia (known as Wachovia Bank, a division of Wells Fargo Bank, N.A.) is a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo, Wachovia was the fourth-largest bank holding company in the United States based on total assets. The purchase of Wachovia by Wells Fargo and Company was completed on December 31, 2008. Wells Fargo acquired Wachovia after a government-forced sale to avoid a failure of Wachovia.

Starting in 2009, the Wachovia brand is being absorbed into the Wells Fargo brand in a process that was initially estimated to last three years. In July 2009, Wachovia Securities became Wells Fargo Advisors. The merger of Wells Fargo and Wachovia bank charters was completed on March 20, 2010.

As an independent company, Wachovia provided a broad range of banking, asset management, wealth management, and corporate and investment banking products and services. The company was organized into four divisions: General Bank (retail, small business, and commercial customers), Wealth Management (high net worth, personal trust, and insurance business), Capital Management (asset management, retirement, and retail brokerage services), and Corporate and Investment Bank (capital markets, investment banking, and financial advisory).

At its height, it was one of the largest providers of financial services in the United States, operating financial centers in 21 states and Washington, D.C., with locations from Connecticut to Florida and west to California. Wachovia provides global services through more than 40 offices around the world.

It served retail brokerage clients under the name Wachovia Securities nationwide as well as in six Latin American countries, and investment banking clients in selected industries nationwide. In 2009, Wachovia Securities was the first Wachovia business to be converted to the Wells Fargo brand, when the business became Wells Fargo Advisors. Wachovia also operated Calibre, its wealth management services to ultra-high net worth families with net worth exceeding $25 million. In 2010, Calibre was renamed Wells Fargo Family Wealth.

The company's corporate and institutional capital markets and investment banking groups operated under the Wachovia Securities brand, while its asset management group operated under the Evergreen Investments brand until 2010, when the Evergreen fund family merged with Wells Fargo Advantage Funds, and institutional and high net worth products merged with Wells Capital Management and its affiliates.

Wachovia (pronounced /wɑːˈkoʊviə/ wah-koh-vee-ə) has its origins in the Latin form of the Austrian name Wachau. When Moravian settlers arrived in Bethabara, North Carolina, in 1753, they gave this name to the land they acquired, because it resembled the Wachau valley along the Danube River. The area formerly known as Wachovia now makes up most of Forsyth County, and the largest city is now Winston-Salem.

Legacy Wachovia Corporation began on June 16, 1879 in Winston-Salem, North Carolina as the Wachovia National Bank. The bank was opened by William Lemly. In 1911, the bank merged with Wachovia Loan and Trust Company, which had been founded on June 15, 1893. Wachovia grew to become one of the largest banks in the Southeast partly on the strength of its accounts from the R.J. Reynolds Tobacco Company, which was also headquartered in Winston-Salem. On December 12, 1986, Wachovia purchased First Atlanta. Founded as Atlanta National Bank on September 14, 1865, and later renamed to First National Bank of Atlanta, this institution was the oldest national bank in Atlanta. This purchase made Wachovia one of the few companies with dual headquarters: one in Winston-Salem and one in Atlanta. In 1998, Wachovia acquired two Virginia-based banks, Jefferson National Bank and Central Fidelity Bank. In 1997, Wachovia acquired both 1st United Bancorp and American Bankshares Inc, giving its first entry into Florida. In 2000, Wachovia made its final purchase, which was Republic Security Bank.

On April 16, 2001, Charlotte-based First Union Corporation announced it would merge with Winston-Salem based Wachovia Corporation. As an important part of the deal, First Union would shed its name and assumed the Wachovia identity and stock ticker (NYSE: WB).

This merger was viewed with great surprise by the financial press and security analysts. While Wachovia had been viewed as an acquisition candidate after running into problems with earnings and credit quality in 2000, the suitor shocked analysts as many speculated that Wachovia would be sold to SunTrust.

The deal met with skepticism and criticism. Analysts, remembering the problems with the CoreStates acquisition, were concerned about First Union's ability to merge with another large company. Winston-Salem's citizens and politicians suffered a blow to their civic pride because Wachovia's corporate headquarters would move to Charlotte, a larger city than Winston-Salem. The city of Winston-Salem was concerned both by job losses and the loss of stature from losing a major corporate headquarters. First Union was concerned by the potential deposit attrition and customer loss in the city. First Union responded to these concerns by placing the wealth management and Carolinas-region headquarters in Winston-Salem.

On May 14, 2001, Atlanta-based SunTrust announced a rival takeover bid for Wachovia, the first hostile takeover attempt in the banking sector in many years. In its effort to make the deal appeal to investors, SunTrust argued that it would provide a smoother transition than First Union and offered a higher cash price for Wachovia stock than First Union.

Wachovia's board of directors rejected SunTrust's offer and supported the merger with First Union. SunTrust continued its hostile takeover attempt, leading to a bitter battle over the summer between SunTrust and First Union. Both banks increased their offers for Wachovia, took out newspaper ads, mailed letters to shareholders, and initiated court battles to challenge each other's takeover bids. On August 3, 2001, Wachovia shareholders approved the First Union deal, rejecting SunTrust's attempts to elect a new board of directors for Wachovia and ending SunTrust's hostile takeover attempt.

Another problem concerned each bank's credit card division. In April 2001, Wachovia agreed to sell its $8 billion credit card portfolio to Bank One. The cards, which would have still been branded as Wachovia, would have been issued through Bank One's First USA division. First Union had sold its credit card portfolio to MBNA in August 2000. After entering into negotiations, the new Wachovia agreed to buy back its portfolio from Bank One in September 2001 and resell it to MBNA. Wachovia paid Bank One a $350 million termination fee.

On September 4, 2001, First Union and Wachovia officially merged to form the new Wachovia Corporation, though First Union was the surviving entity. In order to prevent a repeat of the CoreStates problems, the new Wachovia took its time phasing-in the conversion of legacy Wachovia computer systems to First Union systems. The company first began converting systems in the southeast United States (where both banks had branches), before moving to the Northeast, where First Union branches only had to change their signs to reflect the new company name and logo. This process ended on August 18, 2003, almost 2 years after the merger took place.

In comparison to the CoreStates purchase, the merger of First Union and Wachovia was billed as a success by analysts. The company's deliberate pace of conversion seems to have prevented any large-scale customer attrition. In fact, every year since the merger, Wachovia has been ranked number one in customer satisfaction among major banks by the University of Michigan's annual American Customer Satisfaction Index.

When Wachovia and First Union merged, Charlotte, North Carolina's One, Two, and Three First Union buildings became One, Two, and Three Wachovia Center (respectively), and the 55-story First Union Financial Center in downtown Miami became the Wachovia Financial Center. The merger also affected the names of the indoor professional sports arenas in Philadelphia and Wilkes-Barre, Pennsylvania. Formerly known as the First Union Center and the First Union Spectrum (both Philadelphia) and First Union Arena (Wilkes-Barre), they were renamed the Wachovia Center (now known as Wells Fargo Center), Wachovia Spectrum, and Wachovia Arena at Casey Plaza (now known as Mohegan Sun Arena at Casey Plaza), respectively.

Wachovia Securities and the Prudential Securities Division of Prudential Financial, Inc. combined to form Wachovia Securities LLC on July 1, 2003. Wachovia owns 62% of this entity, while Prudential Financial owns the remaining 38%. At the time, the new firm had client assets of $532.1 billion, making it the nation's third largest full service retail brokerage firm based on assets.

Michael Serricchio, a broker for Prudential Securities, was called to active duty in the Air Force reserve in September 2001. At the time, he was handling about 250 accounts with assets totaling $15 million and earning $80000 a year. He was not offered his old position back after his military stint was over, instead being given a job to make cold calls for a $2,000-a-month advance on his commissions. Wachovia also shuffled all of Serricchio's clients away, leaving him with just 4. He sued Wachovia, who had purchased Prudential Securities. A jury found that Wachovia had breached the Uniformed Services Employment and Re-employment Rights Act by intentionally making Serricchio an offer that they knew that he would reject.

Wachovia agreed to purchase Golden West Financial for a little under $25.5 billion on May 7, 2006. This acquisition gave Wachovia an additional 285-branch network spanning 10 states. Wachovia greatly raised its profile in California, where Golden West held $32 billion in deposits and operated 123 branches.

Golden West, which operated branches under the name World Savings Bank, was the second largest savings and loan in the United States. The business was a small savings and loan in the San Francisco Bay area when it was purchased in 1963 for $4 million by Herbert and Marion Sandler. Golden West specialized in option ARMs loans, marketed under the name "Pick-A-Pay." These loans gave the borrower a choice of payment plans, including the option to defer paying a part of the interest owed, which was then added onto the balance of the loan. In 2006, Golden West Financial was named the "Most Admired Company" in the mortgage services business by Fortune magazine. By the time Wachovia announced its acquisition, Golden West had over $125 billion in assets and 11,600 employees. By October 2, 2006 Wachovia had closed the acquisition of Golden West Financial Corporation. The Sandlers agreed to remain on the board at Wachovia.

While Wachovia Chairman and CEO G. Kennedy "Ken" Thompson had described Golden West as a "crown jewel", investors did not react positively to the deal at the time. Analysts have since said that Wachovia purchased Golden West at the peak of the US housing boom. Wachovia Mortgage's mortgage-related problems led to Wachovia suffering writedowns and losses that far exceeded the price paid in the acquisition, ending up in the fire-sale of Wachovia to Wells Fargo.

Though Citigroup was providing the liquidity that allowed Wachovia to continue to operate, Wells Fargo and Wachovia announced on October 3, 2008 they had agreed to merge in an all-stock transaction requiring no FDIC involvement, apparently nullifying the Citigroup deal. Wells Fargo announced it had agreed to acquire all of Wachovia for $15.1 billion in stock. Wachovia preferred the Wells Fargo deal, as it would be worth more than the Citigroup deal and kept all of its businesses intact. Also, there is far less overlap between the banks, as Wells Fargo is dominant in the West and Midwest compared to the redundant footprint of Wachovia and Citibank along the East Coast and South. Both companies' boards unanimously approved the merger on the night of October 2.

Citigroup explored their legal options and demanded that Wachovia and Wells Fargo cease discussions, claiming that Wells Fargo engaged in "tortious interference" with an exclusivity agreement between Citigroup and Wachovia. That agreement states in part that until October 6, 2008 "Wachovia shall not, and shall not permit any of its subsidiaries or any of its or their respective officers, directors, take any action to facilitate or encourage the submission of any Acquisition Proposal."

Citigroup convinced Judge Charles E. Ramos of the New York State Supreme Court to grant a preliminary injunction temporarily blocking the Wells Fargo deal. This ruling was later overturned by Judge James M. McGuire of the New York State Court of Appeals, partly because he believed Ramos did not have the right to rule on the case in Connecticut.

On October 9, 2008, Citigroup abandoned their attempt to purchase Wachovia's banking assets, allowing the Wachovia-Wells Fargo merger to go through. However, Citigroup pursued $60 billion in claims, $20 billion in compensatory and $40 billion in punitive damages, against Wachovia and Wells Fargo for alleged violations of the exclusivity agreement. Wells Fargo settled this dispute with Citigroup Inc. for $100 Million on November 19, 2010. Citigroup may have been pressured by regulators to back out of the deal; Bair endorsed Wells Fargo's bid because it removed the FDIC from the picture. Geithner was furious, claiming that the FDIC's reversal would undermine the government's ability to quickly rescue failing banks. However, Geithner's colleagues at the Fed were not willing to take responsibility for selling Wachovia.

The Federal Reserve unanimously approved the merger with Wells Fargo on October 12, 2008. The merger is, however, contingent on certain conditions, that the Federal Reserve has yet to announce.

The combined company will be headquartered in San Francisco, home to Wells Fargo. However, Charlotte will be the headquarters for the combined company's East Coast banking operations, and Wachovia Securities will remain in St. Louis. Three members of the Wachovia board will join the Wells Fargo board. It will be the largest bank branch network in the United States.

In filings unsealed two days before the merger approval in a New York federal court, Citigroup argued that its own deal was better for U.S taxpayers and Wachovia shareholders. They said that they had exposed themselves to "substantial economic risk" by stating their intent to rescue Wachovia after less than 72 hours of due diligence. Citigroup had obtained an exclusive agreement in order to protect itself. Wachovia suffered a $23.9 billion loss in the third quarter.

In September 2008, the Internal Revenue Service issued a notice providing tax breaks to companies that acquire troubled banks. According to analysts, these tax breaks were worth billions of dollars to Wells Fargo. Vice Chairman Bill Thomas of the Financial Crisis Inquiry Commission indicated that these tax breaks may have been a factor in Wells Fargo's decision to purchase Wachovia.

Wells Fargo's purchase of Wachovia closed on December 31, 2008.

Bank of Canada | History and definition of the Bank of Canada | Type of government institution Canada

The Bank of Canada (in French: Banque du Canada) is Canada's private central bank. It opened in 1935 after the passing of the Bank of Canada Act, which, among other things, gave the bank a monopoly on the issuance of banknotes. Its stated purpose is to "promote the economic and financial well-being of Canada."

The bank's headquarters are located in the Bank of Canada Building at the corner of Wellington and Bank Streets in downtown Ottawa.

For many years, Canada did not have a central bank. Each of the nation's large banks issued its own currency and there was little government regulation of the nation's money supply. The federal finance department only issued small and very large denomination bank notes ($5 and under, and $500 and higher.) The Bank of Montreal, then the nation's largest bank, acted as the government's banker. Canada, with its extensive branch banking, had a very stable banking system. There was deemed to be little need for a lender of last resort and the banking system was not hit by the same seasonal liquidity problems as banks in the US. The banking system was regulated by the Canadian Bankers Association that worked in close concert with the government.

While there were some advocates for a central bank in the early part of the twentieth century, most notably bankers and the government, the status quo remained unaltered. This changed with the onset of Great Depression. Many in Canada blamed the policies of the Canadian banks for aggravating the Depression. The money supply was contracting and deflation was common, as the economy corrected from the high inflation in the 1920s. The government claimed it was constrained by its foreign debts, and it would be less costly to borrow money if it could be repaid in debased currency. A major proponent was the Royal Bank of Canada, which wanted to see the government business taken away from the rival Bank of Montreal. The government also claimed it was constrained by its inability to deal directly with its foreign debts. The farmers were joined by manufacturing interests and other groups in favor of a depreciating currency, all demanding a central bank.

Prime Minister R.B. Bennett called a Royal Commission in 1933 and it reported in favour of a central bank. Its members consisted of Britain's chief propagandist during World War I, Lord Macmillan, who supported central banking, as well as various British and Canadian bankers. Gerald Grattan McGeer was one of the most forceful voices in Canada advocating government intervention in the monetary system and nationalizing the credit system. His vision of monetary reform predated the establishment of the Bank of Canada. Also involved was John Edward Brownlee, then Premier of Alberta, petitioning in favor of a central bank because western farmers wanted cheap credit.

The bank began operations on March 11, 1935, after the passage of the Bank of Canada Act. Initially the bank was founded as a privately owned corporation in order to ensure it was free from political influence. In 1938, under Prime Minister William Lyon Mackenzie King, it became " a special type of " Crown corporation, fully owned by the government; thus, in effect, by the Canadian taxpayers; with the governor appointed by Cabinet. The responsibility for creating small bills was transferred from the finance department and the private banks were ordered to remove their currency from circulation by 1949. It is important to distinguish between the right to "issue money", which is the sole right of the Bank of Canada, and the ability to "create money", which, through legislation and regulation enacted by Parliament, is largely done by commercial banks through the taking of deposits and the issuance of loans. Presently, the Bank of Canada "issues" less than 5% of Canada's money; more than 95% of Canada's money is "created" by commercial banks, bearing interest, through the process of fractional-reserve banking.

The bank played an important role in financing Canada's war effort during World War II by printing money and buying the government's debt. After the war, the bank's role was expanded as it was mandated to encourage economic growth in Canada. The subsidiary Industrial Development Bank was formed to stimulate investment in Canadian businesses. The monetary policy of the bank was geared towards increasing the money supply to cause low interest rates, and have full employment with little concern about rising prices. When inflation began to rise in the early 1960s, the governor James Coyne ordered a reduction in the money supply. Prime Minister John Diefenbaker disagreed with this move, and ordered a return to the full-employment policies. Since the 1980s, keeping inflation low has been its main priority. The bank's Ottawa headquarters building is the site of the Currency Museum, which opened in December 1980.

The principal role of the Bank of Canada, as defined in the Bank of Canada Act, is "to promote the economic and financial welfare of Canada." The bank's current mission statement is:

The Bank of Canada's responsibilities focus on the goals of low and stable inflation, a safe and secure currency, financial stability, and the efficient management of government funds and public debt.

In practice, however, it has a more narrow and specific internal definition of that mandate: to keep the rate of inflation (as measured by the Consumer Price Index) between 1% and 3%. Since the Bank's creation, the average annual inflation rate was 3.13%. The most potent tool the Bank of Canada has to achieve this goal is its ability to set the interest rate for borrowed money. At one time the Bank of Canada could dictate the amount of reserves that Canadian chartered banks must keep but that power was removed in the early 1990s.

Since 1998, the Bank's policy has been to intervene in the foreign exchange market only under exceptional circumstances. In this sense, the Canadian dollar's value is determined by the market supply and demand for Canadian currency.

The Bank is not a government department as it performs its activities at arm's-length from the government; it is claimed to be a Crown corporation owned by the Government. Shares are directly held by the Ministry of Finance, and the bank's earnings go into the federal treasury. The Governor and Senior Deputy Governor are appointed by the Bank's Board of Directors. The Deputy Minister of Finance sits on the Board of Directors but does not have a vote. The Bank submits its spending to the Board of Directors, while federal departments submit their spending estimates to the Treasury Board. Its employees are regulated by the Bank and not the federal public service agencies. Its books are audited by external auditors who are appointed by Cabinet on the recommendation of the Minister of Finance, not by the Auditor General of Canada.

The head of the Bank of Canada is the Governor, who is appointed by the Bank's Board of Directors. The Governor is appointed for a seven-year term, and can be dismissed by the government. In case of a profound disagreement between the government and the Bank, the Minister of Finance can issue written instructions for the Bank to change its policies. This has never actually happened in the history of the Bank to date. In practice, the Governor sets monetary policy independently of the government.

Bank of England | History and definition of the Bank of England | Shape of the Bank of England Logo

The Bank of England (formally the Governor and Company of the Bank of England) is (despite its name) the central bank of the whole of the United Kingdom and is the model on which most modern central banks have been based. It was established in 1694 to act as the English Government's banker, and to this day it still acts as the banker for HM Government. The Bank was privately owned and operated from its foundation in 1694. It was subordinated to the Treasury after 1931 in making policy and was nationalised in 1946.

In 1997 it became an independent public organisation, wholly owned by the Treasury Solicitor on behalf of the Government, with independence in setting monetary policy.

The Bank has a monopoly on the issue of banknotes in England and Wales, although not in Scotland, Northern Ireland, the Isle of Man, or the Channel Islands. The Bank's Monetary Policy Committee has devolved responsibility for managing the monetary policy of the country. The Treasury has reserve powers to give orders to the committee "if they are required in the public interest and by extreme economic circumstances" but such orders must be endorsed by Parliament within 28 days. The Bank's Financial Policy Committee held its first meeting in June 2011 as a macro prudential regulator to oversee regulation of the UK's financial sector.

The Bank's headquarters has been located in London's main financial district, the City of London, on Threadneedle Street, since 1734. It is sometimes known by the metonym The Old Lady of Threadneedle Street or simply The Old Lady. The current Governor of the Bank of England is Sir Mervyn King, who took over on 30 June 2003 from Sir Edward George. As well as the London offices, the Bank of England also has secondary offices on King Street in Leeds.

England's crushing defeat by France, the dominant naval power, in naval engagements culminating in the 1690 Battle of Beachy Head, became the catalyst to England rebuilding itself as a global power. England had no choice but to build a powerful navy if it was to regain global power. As there were no public funds available, in 1694 a private institution, the Bank of England, was set up to supply money to the King. £1.2m was raised in 12 days; half of this was used to rebuild the Navy.

As a side-effect, the huge industrial effort needed started to transform the economy, from iron works making nails to agriculture feeding the quadrupled strength of the Royal Navy. This helped the new United Kingdom – England and Scotland were formally united in 1707 – to become prosperous and powerful. Together with the power of the navy, this made Britain the dominant world power in the late eighteenth and early nineteenth centuries.

The establishment of the bank was devised by Charles Montagu, 1st Earl of Halifax, in 1694, to the plan which had been proposed by William Paterson three years before, but had not been acted upon. He proposed a loan of £1.2m to the government; in return the subscribers would be incorporated as The Governor and Company of the Bank of England with long-term banking privileges including the issue of notes. The Royal Charter was granted on 27 July through the passage of the Tonnage Act of 1694. Public finances were in so dire a condition at the time that the terms of the loan were that it was to be serviced at a rate of 8% per annum, and there was also a service charge of £4000 per annum for the management of the loan. The first governor was Sir John Houblon, who is depicted in the £50 note issued in 1994. The charter was renewed in 1742, 1764, and 1781.

The Bank's original home was in Walbrook in the City of London, where during the building's reconstruction in 1954 archaeologists found the remains of a Roman temple to Mithras (Mithras was – rather fittingly – worshipped as being the God of Contracts); the Mithraeum ruins are perhaps the most famous of all twentieth-century Roman discoveries in the City of London and can now be viewed by the public.

In 1734 the Bank of England moved to its current location on Threadneedle Street, and thereafter slowly acquired neighbouring land to create the edifice seen today. Sir Herbert Baker's rebuilding of the Bank of England, demolishing most of Sir John Soane's earlier building was described by architectural historian Nikolaus Pevsner as "the greatest architectural crime, in the City of London, of the twentieth century".

When the idea and reality of the National Debt came about during the 18th century this was also managed by the bank. By the charter renewal in 1781 it was also the bankers' bank – keeping enough gold to pay its notes on demand until 26 February 1797 when war had so diminished gold reserves that the government prohibited the Bank from paying out in gold. This prohibition lasted until 1821.

The 1844 Bank Charter Act tied the issue of notes to the gold reserves and gave the bank sole rights with regard to the issue of banknotes. Private banks which had previously had that right retained it, provided that their headquarters were outside London and that they deposited security against the notes that they issued. A few English banks continued to issue their own notes until the last of them was taken over in the 1930s. The Scottish and Northern Irish private banks still have that right.

Britain remained on the gold standard until 1931 when the gold and foreign exchange reserves were transferred to the Treasury. But their management was still handled by the Bank. In 1997 the bank was given responsibility for interest rate policy.

During the governorship of Montagu Norman, which lasted from 1920 to 1944, the Bank made deliberate efforts to move away from commercial banking and become a central bank. In 1946, shortly after the end of Norman's tenure, the bank was nationalised by the Labour government.

After 1945 the Bank pursued the multiple goals of Keynesian economics, especially "easy money" and low interest rates to support aggregate demand. It tried to keep a fixed exchange rate, and attempted to deal with inflation and sterling weakness by credit and exchange controls.

In 1977, the Bank set up a wholly owned subsidiary called Bank Of England Nominees Limited (BOEN), a private limited company, with 2 of its 100 £1 shares issued. According to its Memorandum & Articles of Association, its objectives are:- “To act as Nominee or agent or attorney either solely or jointly with others, for any person or persons, partnership, company, corporation, government, state, organisation, sovereign, province, authority, or public body, or any group or association of them....” Bank of England Nominees Limited was granted an exemption by Edmund Dell, Secretary of State for Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976 , because, “it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders.” The Bank of England is also protected by its Royal Charter status, and the Official Secrets Act. Historically, BOEN was a vehicle for Governments and Heads of State to (subject to approval from the Secretary of State) invest in UK companies, exempt from the usual disclosure requirements, providing they undertook "not to influence the affairs of the company". BOEN is nowadays a dormant company with assets less than £1 million and is "no longer exempt from company law disclosure requirements". BOEN has 2 shareholders: the Bank of England, and the Secretary of the Bank of England.

On 6 May 1997, following the 1997 general election which brought a Labour government to power for the first time since 1979, it was announced by the Chancellor of the Exchequer, Gordon Brown, that the Bank of England would be granted operational independence over monetary policy. Under the terms of the Bank of England Act 1998 (which came into force on 1 June 1998), the bank's Monetary Policy Committee was given sole responsibility for setting interest rates to meet the Government's stated Retail Prices Index (RPI) inflation target of 2.5%. The target has now changed to 2% since the Consumer Price Index (CPI) replaced the Retail Prices Index as the treasury's inflation index. If inflation overshoots or undershoots the target by more than 1%, the Governor has to write a letter to the Chancellor of the Exchequer explaining why, and how he will remedy the situation.

The handing over of monetary policy to the Bank of England had featured as a key plank of the Liberal Democrats' economic policy since the 1992 general election. A Conservative MP Nicholas Budgen had also proposed this as a Private Member's Bill in 1996, but the bill failed as it had neither the support of the government nor that of the opposition.

More recently, in 2007 the Bank of England, in its role as lender of last resort, helped support Northern Rock, a specialist mortgage lender that suddenly became unable to rely on wholesale market borrowing to finance its lending operation following the 2007 subprime mortgage crisis. The role of supporting Northern Rock, and other UK banks caught up in the late 2000s financial crisis, is now performed by UK Financial Investments Limited, set up by the UK Government. The Bank of England of course still remains lender of last resort in the case of any further unexpected shock to the UK financial system.

The Bank of England performs all the functions of a central bank. The most important of these is supposed to be maintaining price stability and supporting the economic policies of the British Government, thus promoting economic growth. There are two main areas which are tackled by the Bank to ensure it carries out these functions efficiently:

Monetary stability

Stable prices and confidence in the currency are the two main criteria for monetary stability. Stable prices are maintained by making sure price increases meet the Government's inflation target. The Bank aims to meet this target by adjusting the base interest rate, which is decided by the Monetary Policy Committee, and through its communications strategy.

Financial stability

Maintaining financial stability involves protecting against threats to the whole financial system. Threats are detected by the Bank's surveillance and market intelligence functions. The threats are then dealt with through financial and other operations, both at home and abroad. In exceptional circumstances, the Bank may act as the lender of last resort by extending credit when no other institution will.

The Bank works together with several other institutions to secure both monetary and financial stability, including:

• HM Treasury, the Government department responsible for financial and economic policy.
• The Financial Services Authority, an independent body that regulates the financial services industry.
• Other central banks and international organisations, with the aim of improving the international financial system.

The 1997 Memorandum of Understanding describes the terms under which the Bank, the Treasury and the FSA work toward the common aim of increased financial stability. In 2010 the incoming Chancellor announced his intention to merge the FSA back into the Bank.

The Bank of England acts as the Government's banker, and as such it maintains the Government's Consolidated Fund account. It also manages the country's foreign exchange and gold reserves. The Bank also acts as the bankers' bank, especially in its capacity as a lender of last resort.

The Bank of England has a monopoly on the issue of banknotes in England and Wales. Scottish and Northern Irish banks retain the right to issue their own banknotes, but they must be backed one to one with deposits in the Bank of England, excepting a few million pounds representing the value of notes they had in circulation in 1845. The Bank decided to sell its bank note printing operations to De La Rue in December 2002, under the advice of Close Brothers Corporate Finance Ltd.

Since 1997 the Monetary Policy Committee (MPC) has had the responsibility for setting the official interest rate. However, with the decision to grant the Bank operational independence, responsibility for government debt management was transferred to the new UK Debt Management Office in 1998, which also took over government cash management in 2000. Computershare took over as the registrar for UK Government bonds (known as gilts) from the Bank at the end of 2004.

The Bank used to be responsible for the regulation and supervision of the banking industry, although this responsibility was transferred to the Financial Services Authority in June 1998.

In order to help maintain economic stability, the Bank attempts to broaden understanding of its role, both through regular speeches and publications by senior Bank figures, and through a wider education strategy aimed at the general public. It maintains a free museum and runs the Target Two Point Zero competition for A-level students.

The Bank of England has issued banknotes since 1694. Notes were originally hand-written; although they were partially printed from 1725 onwards, cashiers still had to sign each note and make them payable to someone. Notes were fully printed from 1855. Until 1928 all notes were "White Notes", printed in black and with a blank reverse. In the 18th and 19th centuries White Notes were issued in £1 and £2 denominations. During the 20th century White Notes were issued in denominations between £5 and £1000. The Bank issued notes for ten shillings and one pound for the first time on 22 November 1928 when the Bank took over responsibility for these denominations from the Treasury which had issued notes of these denominations three days after the declaration of war in 1914 in order to remove gold coins from circulation.

During the Second World War the German Operation Bernhard attempted to counterfeit various denominations between £5 and £50 producing 500,000 notes each month in 1943. The original plan was to parachute the money on the UK in an attempt to destabilise the British economy, but it was found more useful to use the notes to pay German agents operating throughout Europe – although most fell into Allied hands at the end of the war, forgeries frequently appeared for years afterwards, which led banknote denominations above £5 to be removed from circulation.

Citigroup | History and definition of Citigroup | Form of a logo from Citigroup

Citigroup

Citigroup Inc. is an American multinational financial services company based in New York City. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate Travelers Group on April 7, 1998.

Citigroup Inc. has the world's largest financial services network, spanning 140 countries with approximately 16,000 offices worldwide. The company employs approximately 260,000 staff around the world, and holds over 200 million customer accounts in more than 140 countries. It is a primary dealer in US Treasury securities.

Citigroup suffered huge losses during the global financial crisis of 2008 and was rescued in November 2008 in a massive stimulus package by the U.S. government. Its largest shareholders include funds from the Middle East and Singapore. On February 27, 2009, Citigroup announced that the United States government would take a 36% equity stake in the company by converting $25 billion in emergency aid into common shares; the stake was reduced to 27% after Citigroup sold $21 billion of common shares and equity in the largest single share sale in US history, surpassing Bank of America's $19 billion share sale one month prior.

Citigroup is one of the Big Four banks in the United States, along with Bank of America, JP Morgan Chase and Wells Fargo.

Citigroup was formed on October 9, 1998, following the $140 billion merger of Citicorp and Travelers Group to create the world's largest financial services organization. The history of the company is, thus, divided into the workings of several firms that over time amalgamated into Citicorp, a multinational banking corporation operating in more than 100 countries; or Travelers Group, whose businesses covered credit services, consumer finance, brokerage, and insurance. As such, the company history dates back to the founding of: the City Bank of New York (later Citibank) in 1812; Bank Handlowy in 1870; Smith Barney in 1873, Banamex in 1884; Salomon Brothers in 1910.

The history begins with the City Bank of New York, which was chartered by New York State on June 16, 1812, with $2 million of capital. Serving a group of New York merchants, the bank opened for business on September 14 of that year, and Samuel Osgood was elected as the first President of the company. The company's name was changed to The National City Bank of New York in 1865 after it joined the new U.S. national banking system, and it became the largest American bank by 1895. It became the first contributor to the Federal Reserve Bank of New York in 1913, and the following year it inaugurated the first overseas branch of a U.S. bank in Buenos Aires, although the bank had, since the mid-nineteenth century, been active in plantation economies, such as the Cuban sugar industry. The 1918 purchase of U.S. overseas bank International Banking Corporation helped it become the first American bank to surpass $1 billion in assets, and it became the largest commercial bank in the world in 1929. As it grew, the bank became a leading innovator in financial services, becoming the first major U.S. bank to offer compound interest on savings (1921); unsecured personal loans (1928); customer checking accounts (1936) and the negotiable certificate of deposit (1961).

The bank changed its name to The First National City Bank of New York in 1955, which was shortened in 1962 to First National City Bank on the 150th anniversary of the company's foundation. The company organically entered the leasing and credit card sectors, and its introduction of USD certificates of deposit in London marked the first new negotiable instrument in market since 1888. Later to become MasterCard, the bank introduced its First National City Charge Service credit card – popularly known as the "Everything card" – in 1967.

In 1976, under the leadership of CEO Walter B. Wriston, First National City Bank (and its holding company First National City Corporation) was renamed as Citibank, N.A. (and Citicorp, respectively). Shortly afterward, the bank launched the Citicard, which pioneered the use of 24-hour ATMs. As the bank's expansion continued, the Narre Warren-Caroline Springs credit card company was purchased in 1981. John S. Reed was elected CEO in 1984, and Citi became a founding member of the CHAPS clearing house in London. Under his leadership, the next 14 years would see Citibank become the largest bank in the United States, the largest issuer of credit cards and charge cards in the world, and expand its global reach to over 90 countries.

On April 6, 1998, the merger between Citicorp and Travelers Group was announced to the world, creating a $140 billion firm with assets of almost $700 billion. The deal would enable Travelers to market mutual funds and insurance to Citicorp's retail customers while giving the banking divisions access to an expanded client base of investors and insurance buyers.

Although presented as a merger, the deal was actually more like a stock swap, with Travelers Group purchasing the entirety of Citicorp shares for $70 billion, and issuing 2.5 new Citigroup shares for each Citicorp share. Through this mechanism, existing shareholders of each company owned about half of the new firm. While the new company maintained Citicorp's "Citi" brand in its name, it adopted Travelers' distinctive "red umbrella" as the new corporate logo, which was used until 2007.

The chairmen of both parent companies, John Reed and Sandy Weill respectively, were announced as co-chairmen and co-CEOs of the new company, Citigroup, Inc., although the vast difference in management styles between the two immediately presented question marks over the wisdom of such a setup.

The remaining provisions of the Glass–Steagall Act – enacted following the Great Depression – forbade banks to merge with insurance underwriters, and meant Citigroup had between two and five years to divest any prohibited assets. However, Weill stated at the time of the merger that they believed "that over that time the legislation will change...we have had enough discussions to believe this will not be a problem". Indeed, the passing of the Gramm-Leach-Bliley Act in November 1999 vindicated Reed and Weill's views, opening the door to financial services conglomerates offering a mix of commercial banking, investment banking, insurance underwriting and brokerage.

Joe Plumeri headed the integration of the consumer businesses of Travelers Group and Citicorp after the merger, and was appointed CEO of Citibank North America by Weill and Reed. He oversaw its network of 450 retail branches. J. Paul Newsome, an analyst with CIBC Oppenheimer, said: "He's not the spit-and-polish executive many people expected. He's rough on the edges. But Citibank knows the bank as an institution is in trouble-it can't get away anymore with passive selling-and Plumeri has all the passion to throw a glass of cold water on the bank." It was conjectured that he might become a leading contender to run all of Citigroup when Weill and Reed stepped down, if he were to effect a big, noticeable victory at Citibank. In that position, Plumeri boosted the unit's earnings from $108 million to $415 million in one year, an increase of nearly 400%. He unexpectedly retired from Citibank, however, in January 2000.

In 2000, Citigroup acquired Associates First Capital Corporation, which, until 1989, had been owned by Gulf+Western (now part of National Amusements). The Associates was widely criticized for predatory lending practices and Citi eventually settled with the Federal Trade Commission by agreeing to pay $240 million to customers who had been victims of a variety of predatory practices, including "flipping" mortgages, "packing" mortgages with optional credit insurance, and deceptive marketing practices.

Over the past several decades, the United States government has engineered at least four different rescues of the institution now known as Citigroup. During the most recent tax-payer funded rescue, by November 2008, Citigroup was insolvent, despite its receipt of $25 billion in federal TARP bailout money, and on November 17, 2008, Citigroup announced plans for about 52,000 new job cuts, on top of 23,000 cuts already made during 2008 in a huge job cull resulting from four quarters of consecutive losses and reports that it was unlikely to be in profit again before 2010. Many senior executives were fired but Wall Street responded by dropping its stock market value to $6 billion, down from $300 billion two years prior. As a result, Citigroup and Federal regulators negotiated a plan to stabilize the company and forestall a further deterioration in the company's value. The arrangement calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in the company. The assets remain on Citigroup's balance sheet; the technical term for this arrangement is ring fencing. In a New York Times op-ed, Michael Lewis And David Einhorn described the $306 billion guarantee as "an undisguised gift" without any real crisis motivating it. The plan was approved late in the evening on November 23, 2008. A joint statement by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp announced: "With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy."

Citigroup in late 2008 held $20 billion of mortgage-linked securities, most of which have been marked down to between 21 cents and 41 cents on the dollar, and has billions of dollars of buyout and corporate loans. It faces potential massive losses on auto, mortgage and credit card loans if the economy worsens. [This paragraph requires a reference, particularly to the $20 billion figure quoted above. It is likely that this number is a severe underestimate of the value of CDO holdings held in off-balance sheet SIVs.]

On January 16, 2009, Citigroup announced its intention to reorganize itself into two operating units: Citicorp for its retail and investment banking business, and Citi Holdings for its brokerage and asset management. Citigroup will continue to operate as a single company for the time being, but Citi Holdings managers will be tasked to "tak[e] advantage of value-enhancing disposition and combination opportunities as they emerge", and eventual spin-offs or mergers involving either operating unit have not been ruled out. On February 27, 2009 Citigroup announced that the United States government would be taking a 36% equity stake in the company by converting $25 billion in emergency aid into common shares. Citigroup shares dropped 40% on the news.

On June 1, 2009, it was announced that Citigroup Inc. would be removed from the Dow Jones Industrial Average effective June 8, 2009, due to significant government ownership. Citigroup Inc. was replaced by Travelers Co.

Securities and Banking

1. Investment banking
2. Debt and equity markets (including prime brokerage)
3. Lending
4. Private equity
5. Hedge funds
6. Real estate
7. Structured products
8. Private Bank
9. Equity and Fixed Income research

Transaction Services

1. Cash management
2. Trade services
3. Custody and fund services
4. Clearing services
5.  Agency/trust

This division of Citigroup generated 12 billion in revenue and more than $4 billion in net income in 2006 , Global Consumer Group comprises four sub-divisions: Cards (credit cards), Consumer Lending Group (Real-Estate Lending, Auto Loans, Student Loans), Consumer Finance, and Retail Banking. Targeting individual consumers as well as small- to medium-sized businesses, GCG offers financial services across its worldwide branch network, including banking, loans, insurance, and investment services. On March 31, 2008, Citigroup announced that it will create 2 new global businesses – Consumer Banking and Global Cards out of the existing Global Consumer Group. This has since changed. Consumer Banking "The Americas" is managed by Manuel Medina Mora who was the CEO of Banamex prior to its merger with Citigroup. Western Europe, Central Europe and Asia are under Business Managers responsible for both the Consumer and Corporate/Investment businesses. After 2008, Citigroup carved out CitiHoldings as a separate entity to manage the businesses on the block. Citigroup Nominates 4 Independent Directors by New York Times (March 16, 2009)

Consumer Finance division (branded as "CitiFinancial") accounts for about 20% of GCG's profits, and offers personal loans and homeowner loans to consumers in 20 countries worldwide.[26] There are over 2,100 branches in the U.S. and Canada.[27] The takeover of Associates First Capital in September 2000 enabled CitiFinancial to expand its reach outside of the United States, particularly capitalizing on Associates' 700,000 customers in Japan and Europe.[28] Citi ended its CitiFinancial operations in the UK in 2008 [3].[29] Citifinancial is head by Mary Mcdowell in Baltimore, Maryland. On December 8, 2010, CitiGroup announced a rebranding name change taking into effect summer of 2011 where CitiFinancial will then be operating under the name OneMain Financial.

Finally, the retail bank encompasses the Citi's global branch network, branded Citibank. Citibank is the third largest retail bank in the United States based on deposits (although it has considerably fewer retail branches than many of its smaller rivals), and it has Citibank branded branches in countries throughout the world, with the exception of Mexico; In Mexico Citigroup's bank operations are branded as Banamex is the country's second largest bank and a Citigroup subsidiary.

Citigroup's most famous office building is the Citigroup Center, a diagonal-roof skyscraper located in East Midtown, Manhattan, New York City, which despite popular belief is not the company's headquarters building. Citigroup has its headquarters across the street in an anonymous-looking building at 399 Park Avenue (the site of the original location of the City National Bank). The headquarters is outfitted with nine luxury dining rooms, with a team of private chefs preparing a different menu for each day. The management team is on the third and fourth floors above a Citibank branch. Citigroup also leases a building in the TriBeCa neighborhood in Manhattan at 388 Greenwich St, that serves as headquarters for its Investment and Corporate Banking operations and was the former headquarters of the Travelers Group.

Strategically, all of Citigroup's New York City real estate, excluding the company's Smith Barney division and Wall Street trading division, lies along the New York City Subway's IND Queens Boulevard Line, served by the E M trains. Consequently, the company's Midtown buildings—including 787 Seventh Avenue, 666 Fifth Avenue, 399 Park Avenue, 485 Lexington, 153 East 53rd Street (Citigroup Center), and Citigroup Building in Long Island City, Queens, are all no more than two stops away from each other. In fact, every company building lies above or right across the street from a subway station served by the E M trains.

Chicago also plays home to an architectural beauty operated by Citigroup. Citicorp Center has a series of curved archways at its peak, and sits across the street from major competitor ABN AMRO's ABN AMRO Plaza. It has a host of retail and dining facilities serving thousands of Metra customers daily via the Ogilvie Transportation Center.

Citigroup has obtained naming rights to Citi Field, the home ballpark of the New York Mets Major League Baseball team, who began playing their home games there in 2009.

Bank of America | History and definition of the Bank of America | Shape of the Bank of America logo

Bank of America

Bank of America Corporation (NYSE: BAC, TYO: 8648) is an American global financial services company, the largest bank holding company in the United States, by assets, and the second largest bank by market capitalization. Bank of America serves clients in more than 150 countries and has a relationship with 99% of the U.S. Fortune 500 companies and 83% of the Fortune Global 500. The company is a member of the Federal Deposit Insurance Corporation (FDIC) and a component of both the S&P 500 Index and the Dow Jones Industrial Average.

As of 2010, Bank of America is the 5th largest company in the United States by total revenue, as well as the second largest non-oil company in the U.S. (after Wal-Mart). In 2010, Forbes listed Bank of America as the 3rd "best" large company in the world.

The bank's 2008 acquisition of Merrill Lynch made Bank of America the world's largest wealth manager and a major player in the investment banking industry.

The company holds 12.2% of all U.S. deposits, as of August 2009, and is one of the Big Four banks of the United States, along with Citigroup, JPMorgan Chase and Wells Fargo—its main competitors. According to its 2010 annual report, Bank of America operates "in all 50 states, the District of Columbia and more than 40 non-U.S. countries." It has a "retail banking footprint" that "covers approximately 80 percent of the U.S. population and in the U.S." it serves "approximately 57 million consumer and small business relationships" at "5,900 banking centers" and "18,000 ATMs."

In 1997, BankAmerica lent D. E. Shaw & Co., a large hedge fund, $1.4 billion so that the hedge fund would run various businesses for the bank. However, D.E. Shaw suffered significant loss after the 1998 Russia bond default. BankAmerica was acquired by NationsBank in October 1998.

The purchase of BankAmerica Corp. by NationsBank Corporation was the largest bank acquisition in history at that time. While the deal was technically a purchase of BankAmerica Corporation by NationsBank, the deal was structured as merger with NationsBank renamed to Bank of America Corporation, and Bank of America NT&SA changing its name to Bank of America, N.A. as the remaining legal bank entity. The bank still operates under Federal Charter 13044, which was granted to Giannini's Bank of Italy on March 1, 1927. However, SEC filings before 1998 are listed under NationsBank, not BankAmerica.

Following the US$64.8 billion acquisition of BankAmerica by NationsBank, the resulting Bank of America had combined assets of US$570 billion, as well as 4,800 branches in 22 states. Despite the mammoth size of the two companies, federal regulators insisted only upon the divestiture of 13 branches in New Mexico, in towns that would be left with only a single bank following the combination. This is because branch divestitures are only required if the combined company will have a larger than 25% FDIC deposit market share in a particular state or 10% deposit market share overall. In addition, the combined broker-dealer, created from the integration of BancAmerica Robertson Stephens and NationsBanc Montgomery Securities, was renamed Banc of America Securities in 1998.

In 2001, Bank of America CEO and chairman Hugh McColl stepped down and named Ken Lewis as his successor.

In 2004, Bank of America announced it would purchase Boston-based bank FleetBoston Financial for $47 billion in cash and stock. By merging with Bank of America, all of its banks and branches were given the Bank of America logo. At the time of merger, FleetBoston was the seventh largest bank in United States with $197 billion in assets, over 20 million customers and revenue of $12 billion. Hundreds of FleetBoston workers lost their jobs or were demoted, according to the Boston Globe.

On June 30, 2005, Bank of America announced it would purchase credit card giant MBNA for $35 billion in cash and stock. The Federal Reserve Board gave final approval to the merger on December 15, 2005, and the merger closed on January 1, 2006. The acquisition of MBNA provided Bank of America a leading credit card issuer at home and abroad. The combined Bank of America Card Services organization, including the former MBNA, had more than 40 million U.S. accounts and nearly $140 billion in outstanding balances. Under Bank of America the operation was renamed FIA Card Services.

In May 2006, Bank of America and Banco Itaú (Investimentos Itaú S.A.) entered into an acquisition agreement through which Itaú agreed to acquire BankBoston's operations in Brazil and was granted an exclusive right to purchase Bank of America's operations in Chile and Uruguay. A deal was signed in August 2006 under which Itaú agreed to purchase Bank of America's operations in Chile and Uruguay. Prior to the transaction, BankBoston's Brazilian operations included asset management, private banking, a credit card portfolio, and small, middle-market, and large corporate segments. It had 66 branches and 203,000 clients in Brazil. BankBoston in Chile had 44 branches and 58,000 clients and in Uruguay it had 15 branches. In addition, there was a credit card company, OCA, in Uruguay, which had 23 branches. BankBoston N.A. in Uruguay, together with OCA, jointly served 372,000 clients. While the BankBoston name and trademarks were not part of the transaction, as part of the sale agreement, they cannot be used by Bank of America in Brazil, Chile or Uruguay following the transactions. Hence, the BankBoston name has disappeared from Brazil, Chile and Uruguay. The Itaú stock received by Bank of America in the transactions has allowed Bank of America's stake in Itaú to reach 11.51%. Banco de Boston de Brazil had been founded in 1947.

On November 20, 2006, Bank of America announced the purchase of The United States Trust Company for $3.3 billion, from the Charles Schwab Corporation. US Trust had about $100 billion of assets under management and over 150 years of experience. The deal closed July 1, 2007.

On September 14, 2007, Bank of America won approval from the Federal Reserve to acquire LaSalle Bank Corporation from Netherlands's ABN AMRO for $21 billion. With this combination Bank of America will have 1.7 trillion in assets. A Dutch court blocked the sale until it was later approved in July. The acquisition was completed on October 1, 2007.

The deal increased Bank of America's presence in Illinois, Michigan, and Indiana by 411 branches, 17,000 commercial bank clients, 1.4 million retail customers, and 1,500 ATMs. Bank of America has become the largest bank in the Chicago market with 197 offices and 14% of the deposit share, surpassing JPMorgan Chase.

LaSalle Bank and LaSalle Bank Midwest branches adopted the Bank of America name on May 5, 2008.

Ken Lewis resigned as of December 31, 2009, in part due to controversy and legal investigations concerning the purchase of Merrill Lynch, and Brian Moynihan became President and CEO effective January 1, 2010. After Moynihan assumed control, credit card charge offs and delinquencies declined in January. Bank of America also repaid the US$45 billion it had received from the Troubled Assets Relief Program.

On August 23, 2007 the company announced a $2 billion repurchase agreement for Countrywide Financial. This purchase of preferred stock was arranged to provide a return on investment of 7.25% per annum and provided the option to purchase common stock at a price of $18 per share.

On January 11, 2008, Bank of America announced they would buy Countrywide Financial for $4.1 billion. In March 2008, it was reported that the FBI was investigating Countrywide for possible fraud relating to home loans and mortgages. This news did not stop the acquisition, which was completed in July 2008, giving the bank a substantial market share of the mortgage business, and access to Countrywide's resources for servicing mortgages. The acquisition was seen as preventing a potential bankruptcy for Countrywide. Countrywide, however, denied that it was close to bankruptcy. Countrywide provided mortgage servicing for nine million mortgages valued at US$1.4 trillion as of December 31, 2007.

This purchase made Bank of America Corporation the leading mortgage originator and servicer in the U.S. , controlling 20–25% of the home loan market. The deal was structured to merge Countrywide with the Red Oak Merger Corporation, which Bank of America created as an independent subsidiary. It has been suggested that the deal was structured this way to prevent a potential bankruptcy stemming from large losses in Countrywide hurting the parent organization by keeping Countrywide bankruptcy remote. Countrywide Financial has changed its name to Bank of America Home Loans.

On September 14, 2008, Bank of America announced its intentions to purchase Merrill Lynch & Co., Inc. in an all-stock deal worth approximately $50 billion. Merrill Lynch was at the time within days of collapse, and the acquisition effectively saved Merrill from bankruptcy. Around the same time Bank of America was reportedly also in talks to purchase Lehman Brothers, however a lack of government guarantees caused the bank to abandon talks with Lehman. Lehman Brothers filed for bankruptcy the same day Bank of America announced its plans to acquire Merrill Lynch. This acquisition made Bank of America the largest financial services company in the world. Temasek Holdings, the largest shareholder of Merrill Lynch & Co., Inc., briefly became one of the largest shareholders of Bank of America, with a 3% stake. However, taking a loss Reuters estimated at $3 billion, the Singapore sovereign wealth fund sold its whole stake in Bank of America in the first quarter of 2009.

Shareholders of both companies approved the acquisition on December 5, 2008, and the deal closed January 1, 2009. Bank of America had planned to retain various members of Thain's management team after the merger. However, after Thain was removed from his position, most of his allies left. The departure of Nelson Chai, who had been named Asia-Pacific president, left just one of Thain's hires in place, Tom Montag as head of sales and trading.

The Bank, in its January 16, 2009 earnings release, revealed massive losses at Merrill Lynch in the fourth quarter, which necessitated an infusion of money that had previously been negotiated with the government as part of the government-persuaded deal for the Bank to acquire Merrill. Merrill recorded an operating loss of $21.5 billion in the quarter, mainly in its sales and trading operations, led by Tom Montag. The Bank also disclosed it tried to abandon the deal in December after the extent of Merrill's trading losses surfaced, but was compelled to complete the merger by the U.S. government. The Bank's stock price sank to $7.18, its lowest level in 17 years, after announcing earnings and the Merrill mishap. The market capitalization of Bank of America, including Merrill Lynch, was then $45 billion, less than the $50 billion it offered for Merrill just four months earlier, and down $108 billion from the merger announcement.

Bank of America CEO Kenneth Lewis testified before Congress that he had some misgivings about the acquisition of Merrill Lynch, and that federal officials pressured him to proceed with the deal or face losing his job and endangering the bank's relationship with federal regulators.

Lewis' statement is backed up in internal emails subpoenaed by Republican lawmakers on the House Oversight Committee. In one of the emails, Richmond Federal Reserve President Jeffrey Lacker threatened that if the acquisition did not go through, and later Bank of America were forced to request federal assistance, the management of Bank of America would be "gone". Other emails, read by Congressman Dennis Kucinich during the course of Lewis' testimony, state that Mr. Lewis had foreseen the outrage from his shareholders that the purchase of Merrill would cause, and asked government regulators to issue a letter stating that the government had ordered him to complete the deal to acquire Merrill. Lewis, for his part, states he didn't recall requesting such a letter.

The acquisition made Bank of America the number one underwriter of global high-yield debt, the third largest underwriter of global equity and the ninth largest adviser on global mergers and acquisitions. As the credit crisis eased, losses at Merrill Lynch subsided, and the subsidiary generated 3.7 billion of Bank of America's 4.2 billion in profit by the end of Q1 2009, and over 25% in the Q3 2009.

Bank of America generates 90% of its revenues in its domestic market and continues to buy businesses in the US. The core of Bank of America's strategy is to be the number one bank in its domestic market. It has achieved this through key acquisitions.

Global Consumer and Small Business Banking (GC&SBB) is the largest division in the company, and deals primarily with consumer banking and credit card issuance. The acquisition of FleetBoston and MBNA significantly expanded its size and range of services, resulting in about 51% of the company's total revenue in 2005. It competes primarily with the retail banking arms of America's three other megabanks: Citigroup, JPMorgan Chase, and Wells Fargo. The GC&SBB organization includes over 6,100 retail branches and over 18,700 ATMs across the United States.

Bank of America is a member of the Global ATM Alliance, a joint venture of several major international banks that allows customers of the banks to use their ATM card or check card at another bank within the Global ATM Alliance with no ATM access fees when traveling internationally. Other participating banks are Barclays (United Kingdom), BNP Paribas (France), Ukrsibbank (Ukraine), China Construction Bank (China), Deutsche Bank (Germany), Santander Serfin (Mexico), Scotiabank (Canada) and Westpac (Australia and New Zealand). This feature is restricted to withdrawals using a debit card, though credit card withdrawals are still subject to cash advance fees and foreign currency conversion fees. Additionally, some foreign ATMs use Smart Card technology and may not accept non-Smart Cards.

Bank of America offers banking and brokerage products as a result of the acquisition of Merrill Lynch. Savings programs such as "Add it Up" and "Keep the Change" have been well received and are a reflection of the product development banks have taken during the 2008 recession.

Bank of America, N.A is a nationally chartered bank, regulated by the Office of the Comptroller of the Currency, Department of the Treasury.

Before Bank of America's acquisition of Merrill Lynch, the Global Corporate and Investment Banking (GCIB) business operated as Banc of America Securities LLC. The bank's investment banking activities operate under the Merrill Lynch subsidiary and provided mergers and acquisitions advisory, underwriting, capital markets, as well as sales & trading in fixed income and equities markets. Its strongest groups include Leveraged Finance, Syndicated Loans, and mortgage-backed securities. It also has one of the largest research teams on Wall Street. Bank of America Merrill Lynch is headquartered in New York City.

Global Wealth and Investment Management manages assets of institutions and individuals. It is among the 10 largest U.S. wealth managers (ranked by private banking assets under management in accounts of $1 million or more as of June 30, 2005). In July 2006, Chairman Ken Lewis announced that GWIM's total assets under management exceeded $500 billion. GWIM has five primary lines of business: Premier Banking & Investments (including Bank of America Investment Services, Inc.), The Private Bank, Family Wealth Advisors, and Bank of America Specialist.

Bank of America has recently spent $675 million building its U.S. investment banking business and is looking to become one of the top five investment banks worldwide. "Bank of America already has excellent relationships with the corporate and financial institutions world. Its clients include 98% of the Fortune 500 companies in the US and 79% of the Global Fortune 500. These relationships, as well as a balance sheet that most banks would kill for, are the foundations for a lofty ambition."

Bank of America has a massive new headquarters for its New York City operations. The skyscaper is located on 42nd Street and Avenue of the Americas, at Bryant Park, and features state-of-the-art, environmentally friendly technology throughout its 2.1 million square feet (195,096 m²) of office space. The building is the headquarters for the company's investment banking division, and also hosts most of Bank of America's New York-based staff.

In 2005, Bank of America acquired a 9% stake in China Construction Bank, China's second largest bank, for $3 billion. It represented the company's largest foray into China's growing banking sector. Bank of America currently has offices in Hong Kong, Shanghai, and Guangzhou and is looking to greatly expand its Chinese business as a result of this deal. In 2008, Bank of America was awarded Deal of the Year - Project Finance Deal of the Year at the 2008 ALB Hong Kong Law Awards.

In India, Bank of America maintains branches in Mumbai, Chennai, Calcutta, New Delhi, and Bangalore. For the fiscal year ending March 31, 2006, Bank of America reported an 80% increase in net profit.

Bank of America operated under the name BankBoston in many other Latin American countries, including Brazil. In 2006, Bank of America sold all BankBoston's operations to Brazilian bank Banco Itaú, in exchange for Itaú shares. The BankBoston name and trademarks were not part of the transaction and, as part of the sale agreement, cannot be used by Bank of America. (That meant the extinction of the BankBoston brand.)

Bank of America's Global Corporate and Investment Banking spans the Globe with divisions in United States, Europe, and Asia. The U.S. headquarters are located in New York, European headquarters are based in London, and Asia's headquarters are based in Hong Kong.

In addition to its new eco-friendly office tower in Manhattan, Bank of America has pledged to spend billions on commercial lending and investment banking for projects that it considers "green". The corporation supplied all of its employees with cash incentives to buy hybrid vehicles, and began providing mortgage loan breaks for customers whose homes qualified as energy efficient. In 2007, Bank of America partnered with Brighter Planet to offer an eco-friendly credit card, and later a debit card, which help build renewable energy projects with each purchase. The corporation recently completed the new 1 Bank of America Center in Uptown Charlotte. The tower, and the accompanying hotel, will be a LEED-certified building.

Bank of America has also donated money to help health centers in Massachusetts and made donations to help homeless shelters in Miami.

In 2004, the bank pledged $750 billion over a ten-year period for community development lending and investment. The company had delivered more than $230 billion against a ten-year commitment of $350 billion made in 1998 to provide affordable mortgage, build affordable housing, support small business and create jobs in disadvantaged neighborhoods.