Like all businesses, banks profit by earning more money than what they pay in expenses. The major portion of a bank’s profit comes from the fees that it charges for its services and the interest that it earns on its assets. Its major expense is the interest paid on its liabilities.

The major assets of a bank are its loans to individuals, businesses, and other organizations and the securities that it holds, while its major liabilities are its deposits and the money that it borrows, either from other banks or by selling commercial paper in the money market.

• What is a Foreign Bank?
• What is Domestic Bank?
• Which Banks Make the Most Money?
• Which is the Strongest UK Bank?
• Which is the No 1 Bank in the World?

What is a Foreign Bank?

The term “foreign bank” generally refers to any United States operation of a banking organization headquartered outside of the U.S.The first foreign banks established their presence in the United States in the mid-1800’s, with New York being the first state to license or regulate these institutions.

Read Also: How to Switch Banks Smoothly Without Missing a Single Payment

While state governments took the lead in welcoming foreign banks to the United States, the federal government has also acted to ensure that American markets are open to banks from all nations. 

Today foreign banks are a significant presence in the American financial system, providing many important benefits to individuals, businesses and the general economy.  In fact, foreign banks make almost 40% of all loans to American businesses. As of December 31, 2000, state-licensed foreign banks held $1.132 trillion in assets*.

Foreign banks most often come to the United States to provide services to American subsidiaries of clients in their home countries or to a specific group of individuals. Once here, however, they provide a wide range of wholesale banking services.

They are most active in New York, California, Florida, Illinois and Georgia, but also maintain operations in our own state, Connecticut, as well as several other states.  Foreign banks operating in Connecticut currently include UBS AG (Switzerland), Bank Austria AG, the Bank of Ireland, Société Géneralé (France) and the Royal Bank of Canada.

Foreign banking organizations can acquire or establish freestanding banks or bank holding companies in the United States; these banks are regulated and supervised as domestic institutions.

Generally, however, it is more cost-effective and productive for foreign banking organizations to operate as another of several available structures: branches, agencies, loan production offices, representative offices, Edge Act or agreement corporations. Each of these business structures has a different set of powers and regulatory requirements.

Branches and agencies are the most common structures of foreign banking organizations in the United States. The major difference between these two types of banking offices is that branches may accept deposits, while agencies generally may not.  

Both structures can make and manage loans, conduct foreign exchange activities and trade in securities and commercial paper. These offices may conduct most of the activities a domestic bank performs. The primary exception is that foreign banks and branches may not accept deposits of less than $100,000 unless they had FDIC insurance prior to December 19, 1991. 

State governments and the Office of the Comptroller of the Currency separately license and supervise foreign bank branches and agencies. The Federal Reserve serves as the federal regulator of state-licensed foreign bank branches and agencies, in a system similar to that for domestic banks. More than 85% of the foreign bank branches and agencies in the U.S. are state licensed/chartered.

Foreign banks may also establish representative offices in the United States. Representative offices have more limited powers than branches or agencies. Foreign banks often open representative offices as a first step in establishing a presence in America.

These offices serve as a liaison between the parent bank and its clients and correspondent banks in the U.S. They may develop relationships with prospective clients, but they cannot conduct any banking transactions themselves. Representative offices must register with the Federal Reserve, and may be licensed by states as well.

Edge Act and agreement corporations are foreign bank offices chartered by the Federal Reserve (Edge Act) or states (representative corporations) to provide financing for international trade. Domestic banking organizations may also establish Edge Act or agreement corporations.

These offices have a broader range of powers than other banking organizations, but all of their activities must relate to international trade. Other structures available to foreign banks are commercial lending corporations, licensed by New York State, and export trading companies.

In order to protect American consumers and the overall stability of the U.S. financial system, states and federal banking agencies regulate and supervise foreign banking operations in the United States.

The major Federal laws affecting foreign banks in the United States are the International Banking Act (IBA) of 1978 and the Foreign Bank Supervision Enhancement Act (FBSEA) of 1991. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 and the Gramm-Leach-Bliley Financial Modernization Act of 1999 also address foreign bank operations in the U.S.

State and federal bank supervisors recently unveiled a new system for supervising and examining foreign banks in the United States. Under this system, state and federal bank regulators work together to provide a seamless overview of a foreign bank’s entire U.S. operations which may encompass several states.

Since foreign bank branches and agencies are arms of their parent banks, their supervisory structure must be slightly different from that used for domestic institutions. Supervisors evaluate an office’s risk management, operational controls, compliance with state and federal laws, and asset quality.

The Federal Reserve also looks at the overall support U.S. offices receive from their parent banks. Foreign-owned banks that have deposit insurance must comply with all U.S. consumer laws and pay premiums to the FDIC. All lenders must comply with federal fair lending issues.

Foreign banks in the United State are an important source of new capital for American businesses. Since their parents are not as deeply affected by fluctuations in the U.S. economy as their domestic counterparts, U.S. offices of foreign banks can provide credit even during domestic “credit crunches.” In short, foreign banks in the United States are valuable corporate citizens and an essential part of the American financial system.

What is Domestic Bank?

The term domestic bank shall mean any branch or office within the United States of any of the following which is not a national of a designated foreign country; any bank or trust company incorporated under the banking laws of the United States or any State, territory, or district of the United States, or any private bank or banker subject to supervision and examination under the banking laws of the United States or of any State, territory or district of the United States.

The Secretary of the Treasury may also authorize any other banking institution to be treated as a “domestic bank” for the purpose of this definition or for the purpose of any or all sections of this part.

Which Banks Make the Most Money?

In the years since the Great Recession, the nation’s biggest banks have grown substantially. The top 15 largest banks now hold a combined total of $12.16 trillion in assets as of June 30.

Of course, every year there are changes in this exclusive club. Larger banks trade places with one another, and smaller banks drop out, replaced by faster-growing rivals. Right now, you need at least $179.84 billion in assets to join the club.

Here are the 15 largest banks in the U.S. by assets, according to the latest numbers from the Federal Reserve.

1. JPMorgan Chase & Co.

Chase Bank is the consumer banking division of JPMorgan Chase. Unlike its competitors, Chase is taking steps to expand its branch network in key markets. The bank currently has nearly 5,000 branches and 16,000 ATMs. According to the bank, nearly half of the country’s households are Chase customers.

Assets: $2.82 trillion

Deposits: $2.050 trillion

Headquarters: New York

2. Bank of America Corp.

Bank of America serves about 66 million consumers and small business clients worldwide. Like many of the biggest banks, Bank of America is known for its digital innovation. It has more than 37 million digital clients and is experiencing success after introducing its virtual assistant, Erica, that assists account holders with various tasks.

Assets: $2.16 trillion

Deposits: $1.82 trillion

Headquarters: Charlotte, North Carolina

3. Wells Fargo & Co.

Wells Fargo was founded in 1852. Although the bank has focused on consolidating and eliminating branches, it still has the most branches of any bank in the country. In addition to its main app, Wells Fargo has introduced a savings app and a mobile banking app geared toward millennials. The bank has rebranded and is focusing on repairing its relationship with customers after a series of missteps.

Assets: $1.80 trillion

Deposits: $1.50 trillion

Headquarters: San Francisco

4. Citigroup Inc.

Citigroup is a global financial services corporation. Its retail banking division, Citibank, is based in Sioux Falls, South Dakota. Citibank has approximately 700 branches in the U.S. and more than 1,800 branches outside of the country. U.S. customers can also access more than 65,000 fee-free ATMs.

Assets: $1.63 trillion

Deposits: $1.24 trillion

Headquarters: New York

5. U.S. Bancorp

U.S. Bancorp is the bank holding company and parent company of U.S. Bank. What we’ve come to know as the fifth-largest commercial bank by assets began in 1863 as the First National Bank of Cincinnati. Multiple mergers led to the formation of the bank known today for its extensive branch network and investment in improving its digital offerings.

Assets: $536.29 billion

Deposits: $425.28 billion

Headquarters: Minneapolis

6. Truist Financial Corporation

Truist is the bank formed by the merger of equals of BB&T and SunTrust. Truist provides financial services to around 10 million consumer households. The new company brings BB&T and SunTrust, which were respectively ranked 11th and 12th in bank assets as of Sept. 30, 2019, together to form the sixth-largest bank.

Assets: $494.00 billion

Deposits: $391.22 billion

Headquarters: Charlotte, North Carolina

7. PNC Financial Services Group Inc.

PNC is a regional bank operating in parts of the Northeast, South and Midwest. It was founded as Pittsburgh Trust and Savings Co. and in 2008, it acquired the troubled Cleveland-based National City Corp. That transaction roughly doubled the bank’s size. Today, the bank has around 2,300 branches.

Assets: $455.31 billion

Deposits: $365.22 billion

Headquarters: Pittsburgh

8. TD Group US Holdings LLC

TD Bank is the U.S. commercial banking arm of Canada’s TD Bank Group. Customers have access to mortgages, deposit accounts, credit cards and products for commercial and small business clients. The bank has about 1,300 branches along the East Coast and is known as “America’s Most Convenient Bank” for its flexible hours.

Assets: $383.97 billion

Deposits: $331.86 billion

Headquarters: Cherry Hill, New Jersey

9. Capital One Financial Corp.

Capital One is a Fortune 500 company with subsidiaries, including Capital One Bank. In addition to branches on the East Coast and in Texas and Louisiana, bank customers in select cities have access to Capital One Cafes, coffee shops with free WiFi where visitors can open accounts and attend financial workshops.

Assets: $363.71 billion

Deposits: $304.25 billion

Headquarters: McLean, Virginia

10. Bank of New York Mellon Corp.

When the New York Stock Exchange opened in 1792, the Bank of New York was the first company traded. Today, Bank of New York Mellon is an investments company that serves different corporations and institutions as well as individual investors. Private banking services are available for its wealthy clients.

Assets: $357.96 billion

Deposits: $25.34 billion

Headquarters: New York

11. Goldman Sachs Group Inc.

Goldman Sachs is a global investment banking, management and securities firm. Its clients have access to a variety of financial services, including banking products through Marcus, its online banking arm that made its debut in fall 2016 and began offering personal loans.

Assets: $282.58 billion

Deposits: $220.73 billion

Headquarters: New York

12. State Street Corp.

Founded in 1792, State Street Corp. is a financial services and asset management company with 40,000 employees and a global presence in more than 100 markets. The services it provides include investment research and trading and investment management. Its clients include asset owners, insurance companies and pension funds, among others.

Assets: $276.81 billion

Deposits: $207.97 billion

Headquarters: Boston

13. HSBC North America Holdings Inc.

HSBC North America Holdings Inc., is the holding company for HSBC Holdings in the U.S.

HSBC has branches in the U.S. in cities such as New York, Los Angeles, Chicago, Atlanta, Houston, Miami, San Francisco, Seattle and Washington D.C.

Assets: $211.05 billion

Deposits: $168.80 billion

Headquarters: New York

14. Fifth Third Bancorp

Fifth Third Bancorp is the indirect parent company of Fifth Third Bank, National Association.

Fifth Third has around 1,100 banks in Ohio, Florida, Georgia, Kentucky, Illinois, Indiana, Michigan, North Carolina, Tennessee and West Virginia.

Assets: $201.29 billion

Deposits: $162.64 billion

Headquarters: Cincinnati

15. Citizens Financial Group

Citizens has around 1,000 branches in 11 states in the New England, Mid-Atlantic and Midwest. It also has approximately 2,800 ATMs. Its headquarters is in Providence, Rhode Island.

Assets: $179.84 billion

Deposits: $146.50 billion

Headquarters: Providence, Rhode Island

Which is the Strongest UK Bank?

There are more than 45 building societies and 300 banks in the UK, making it the biggest banking system in Europe and the fourth largest in the world. The different branches of the UK banking system include:

• High Street banks offer services to the general public.
• Business banking services are provided by High Street banks in the UK in addition to ordinary accounts. They often include additional services and fees.
• Investment banking services are usually offered by financial institutions on behalf of High Street banks, investment trusts, and pension funds. They invest money in stock and bond markets.

According to Moody’s, the outlook for banks in the UK is negative, due to uncertainties brought about by the post-Brexit vote.

For anyone considering a career in banking in the UK, this list of the top banks in the UK is a helpful guide on where to start.

The top banks in the UK are:

HSBC Holdings

HSBC was founded in 1880 and is headquartered in London. The bank employs around 85,000 individuals (including subsidiaries). It operates through Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking segments. As of December 31, 2016, it managed 964 branches of banks in the UK and another 13 branches in the Isle of Man and the Channel Islands.

In 2016, HSBC reported total assets of US$2.3 billion and posted a net income of US$7.1 million.

Barclay’s PLC

Barclay’s PLC was established in 1925 and is headquartered in London. The bank provides retail banking, credit cards, wholesale banking, investment banking, wealth management, and investment management services. It employs around 119,300 staff.

As of 2016, total assets of the Barclay’s Group amounted to US$99 billion and net income reached US$2 billion. The net income of Barclay’s UK was US$9 billion.

Royal Bank of Scotland

Royal Bank of Scotland was founded in 1880 and is headquartered in Edinburgh. The bank employs around 77,000 individuals. It operates as one of the banks in the UK through Personal and Business Banking, Ulster Bank RoI, Commercial Banking, Private Banking, RBS International, NatWest Markets, Capital Resolution, Williams & Glyn, and Central Items and Other segments.

As of 2016, the bank’s total assets were US$1 trillion and total income was US$17 million.

Lloyds Banking Group

Lloyds Banking Group was created in 1695 and is headquartered in London. The bank employs around 70,000 individuals. It provides banking and financial services under the Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows brands to individual and business customers in the UK and abroad. It is one of the oldest operating banks in the UK.

In 2016, the bank reported total assets of US$1 trillion and posted a net income of US$2.8 billion.

Standard Chartered PLC

Standard Chartered PLC was founded in 1969 and is headquartered in London. The bank employs around 86,000 staff. It operates through Corporate and Institutional Banking, Retail Banking, Commercial Banking, and Private Banking segments. As of 2016, it operated 964 branches in the United Kingdom and 13 branches in the Isle of Man and the Channel Islands.

Last year, the bank’s total assets amounted to US$647 billion and total income reached US$540 million.

Santander UK

Santander Bank was established in 1988 and is headquartered in London. The bank employs around 19,500 individuals. It operates through Retail Banking, Commercial Banking, and Global Corporate Banking segments. It manages a network of 841 branches and 67 corporate business centers, and also operates through ATMs, telephony, digital, mobile, Internet, and intermediary channels.

As of 2016, the total assets of the bank were US$400 billion and net income was US$1 billion.

Nationwide Building Society

Nationwide Building Society was founded in 1884 and is headquartered in Swindon. The bank employs around 18,000 staff. It operates through its Retail and Commercial segments. It provides current and savings accounts, ISA accounts, residential mortgages, commercial real estate loans, project finance, social housing, personal and car loans, and home improvement loans, as well as loans to housing associations.

It also offers protection and investment products, financial planning services, credit cards, current account overdrafts, and treasury, liquidity, and discretionary services.

In 2016, the bank reported total assets of US$276 billion and posted a net income of US$1.3 billion.

Schroders

Schroders was created in 1804 and is headquartered in London. The bank employs around 4,000 individuals. It operates through Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking segments. It manages 41 offices in 27 countries in Europe, America, Asia, Africa, and the Middle East.

As of 2016, the bank’s total assets amounted to US$28 billion and net income reached US$676 million.

Close Brothers

Close Brothers was established in 1920 and is headquartered in London. The bank employs around 2,000 staff. It operates through its Retail, Commercial, and Property divisions. The Retail division provides intermediate financing, principally to individuals, through motor dealers, insurance brokers, and retailers.

The Commercial division offers secured lending to the SME market. The Property division provides residential development financing to professional developers.

As of 2016, the total assets of the bank were US$11.5 billion and net income was US$245 million.

Coventry Building Society

Coventry Building Society was founded in 1884 and is headquartered in London. The bank employs around 2,000 individuals. The bank provides building and financial services. It offers a wide range of products and services, including financial planning services, mortgages, investment services, savings products, brokerage services, as well as insurance products such as travel insurance.

In 2016, the bank reported total assets of US$51 billion and posted a net income was US$240 million.

Which is the No 1 Bank in the World?

Banks are financial institutions providing a breadth of products and services, including managing deposits, lending, wealth management, currency exchange, and investment banking. These banks’ customers include individual consumers, businesses, and many other types of institutional clients.

The definition of a commercial bank has evolved dramatically in the past several decades. Today, large banks cater to their traditional clients, which includes individual customers and both large and small companies by offering savings and checking accounts, certificates of deposit, loans and similar services.

Many of them also have businesses that operate as investment banks, and work with corporate and institutional clients by providing underwriting of stock offers, brokerage, and M&A advisory.

Below, we’ll take a look at the 10 biggest banks as measured by 12-month trailing revenue. This list is limited to companies which are publicly traded in the U.S. or Canada, either directly or through ADRs.

Some companies outside the U.S. report profits semi-annually instead of quarterly, so the 12-month trailing data may be older than it is for companies that report quarterly. All figures are as of March 30, 2020 and all data is provided by YCharts.

Industrial and Commercial Bank Of China Ltd. (IDCBY)

• Revenue (TTM): $123.6B
• Net Income (TTM): $45.3B
• Market Cap: $231.8B
• 1-Year Trailing Total Return: -6.9%
• Exchange: OTC

The largest bank in the world in terms of total assets under management (AUM) is the Industrial and Commercial Bank Of China Ltd. This institution provides credit cards and loans, financing for businesses, and money management services for companies and high net worth individuals. Though this is a commercial bank, it is state-owned.

JPMorgan Chase & Co. (JPM)

• Revenue (TTM): $114.6B
• Net Income (TTM): $36.4B
• Market Cap: $280.1B
• 1-Year Trailing Total Return: -5.8%
• Exchange: New York Stock Exchange

JPMorgan Chase & Co. is a multinational bank and financial services holding company involved in corporate lending, asset management, wealth management, and investment and consumer banking, among other offerings. In response to COVID-19, JPMorgan Chase recently announced plans to seek up to $10 billion in funds from pension funds and other clients for alternative investments like leveraged loans and certain types of real estate.

Japan Post Holdings Co. Ltd. (JPHLF)

• Revenue (TTM): $112.3B
• Net Income (TTM): $4.7B
• Market Cap: $34.4B
• 1-Year Trailing Total Return: -28.3%
• Exchange: OTC

Unique among many of the companies on this list, Japan Post Holdings Co. Ltd. has operations in banking as well as in life insurance, logistics, and other businesses. The company is also well-known for its Japan Post branch, which is involved in mail delivery and post office management in Japan, as well as Japan Post Bank, the company’s banking branch.

China Construction Bank Corp. (CICHY)

• Revenue (TTM): $102.2B
• Net Income (TTM): $38.7B
• Market Cap: $196.6B
• 1-Year Trailing Total Return: -3.7%
• Exchange: OTC

The second Chinese bank on our 10 biggest list is China Construction Bank Corp. It provides corporate banking services such as e-banking, credit lines, and commercial loans. China Construction Bank also provides personal banking through a separate segment, offering personal loans, deposits, wealth management, and credit cards.

Bank of America Corp. (BAC)

• Revenue (TTM): $91.2B
• Net Income (TTM): $27.4B
• Market Cap: $188.5B
• 1-Year Trailing Total Return: -18.2%
• Exchange New York Stock Exchange

Bank of America is a U.S. bank that offers services for individual clients and businesses of all sizes. Besides deposit and checking accounts through its Consumer Banking branch, Bank of America provides a variety of commercial and wealth management services through its Global branches as well.

Read Also: How to Earn Money Through Banks

The company recently made headlines for offering to consider mortgage deferral requests from customers during the COVID-19 crisis. Some customers said the bank’s deferral offers were misleading.

Agricultural Bank of China Ltd. (ACGBY)

• Revenue (TTM): $89.7B
• Net Income (TTM): $30.9B
• Market Cap: $131.5B
• 1-Year Trailing Total Return: -14.1%
• Exchange: OTC

Agricultural Bank of China is state-owned institution that provides not only personal and corporate banking services, but it also offers a special suite of products for agricultural customers such as small farming operations and larger agricultural wholesale companies.

Credit Agricole SA (CRARY)

• Revenue (TTM): $83.4B
• Net Income (TTM): $5.4B
• Market Cap: $22.3B
• 1-Year Trailing Total Return: -32.4%
• Exchange: OTC

Credit Agricole SA, the only Europe-based bank in the 10 biggest, is the largest cooperative financial institution in the world by AUM. The company has a history of serving agricultural customers but now serves a variety of individual and business clients.

Wells Fargo & Co. (WFC)

• Revenue (TTM): $82.0B
• Net Income (TTM): $19.6B
• Market Cap: $123.8B
• 1-Year Trailing Total Return: -35.4%
• Exchange: New York Stock Exchange

Wells Fargo offers an array of financial services for individual and corporate clients. In recent years, the company has been mired in a fake accounts scandal that hurt a larger number of the banks’ individual customers, with the U.S. government recently fining Wells Fargo $3 billion as part of the ongoing proceedings.

Bank Of China Ltd. (BACHF)

• Revenue (TTM): $79.4B
• Net Income (TTM): $27.2B
• Market Cap: $109.1B
• 1-Year Trailing Total Return: -12.7%
• Exchange: OTC

Bank Of China focuses primarily on commercial banking activities such as deposits and withdrawals, and foreign exchange. The bank also is even licensed to issue banknotes in Hong Kong and Macau.

Citigroup Inc. (C)

• Revenue (TTM): $74.3B
• Net Income (TTM): $19.4B
• Market Cap: $91.9B
• 1-Year Trailing Total Return: -25.9%
• Exchange: New York Stock Exchange

Citigroup is a multinational investment bank and financial services company offering securities services, institutional financial services, global retail banking, and more.

Finally

A study shows that foreign banks are more profitable than domestic banks and did not expose to a greater liquidity or credit risk the results indicate that foreign bank profitability is higher than the average profitability of the domestic banks although importantly, in the post-crisis period, the gap between foreign and domestic profitability become closer.