Commercial banks in the 21st century have grown to become complex, multi-layered financial organizations. At the top of the list are the mega-banks like Bank of America, CitiGroup, Wells Fargo, and JPMorgan Chase & Co. Below the top-tier banks in the world’s financial centers are regional banks with offices in several states, and below the regionals are the smallest banks—community banks serving customers in their local community.
According to Statista.com, the largest banks in the United States (by number of employees) as of December 31, 2018 were:
Looking at the organizational structure in a bank, most have a holding company structure. The holding company is basically a shell corporation that issues common stock, the bank’s equity capital, financing the bank’s activities. The bank’s equity capital is also a financial cushion against any write-offs from bad loans or investments.
The biggest commercial banks are owned by financial holding companies, a structure allowing them to take on, in addition to a bank’s traditional deposit taking and lending activities, a broad range of closely related functions like securities underwriting and trading, insurance agency and underwriting, and merchant banking. In the years since the 2008 financial crisis a growing number of regional banks have also switched to become financial holding companies, essentially to take advantage of the added flexibility and greater range of services they can offer as financial holding companies.
The typical organizational structure in a commercial bank is the following: a financial holding company (or bank holding company) at the top of the pyramid; below the holding company is the bank itself; finally, the bank may own subsidiary companies involved in credit card lending, commercial finance, and equipment leasing and so forth. Financial holding companies have the ability to take on a more expansive menu of activities, such as securities and commodities trading or real estate leasing.
As a result of deregulation, commercial banks have become more like investment banks and investment banks more like commercial banks. This transformation came about through enabling legislation, the Financial Modernization Act (also called the Gramm-Leach-Bliley Act) of 1999, which gave the legal okay for commercial banks to affiliate with investment banks and insurance companies. Financial holding companies are supervised by the Federal Reserve, the federal agency overseeing activities of bank holding companies and banking subsidiary companies. Non-bank subsidiaries are subject to functional regulation. For example, the Securities and Exchange Commission oversees a baking company’s broker-dealer subsidiary. By regulation, a financial holding company must have at least 85 percent of its assets in financial services; they have to divest all non-financial services within 10 years of the date they switch to a financial holding company. According to the Federal Financial Institutions Examination Council, the largest U.S. bank holding companies as of March 31, 2019, with total assets (billions of U.S.$), were:
The top 15 largest banks in the United States now hold a combined total of $13.7 trillion in assets, according to BankRate.com.
Commercial banks hire both front office workers, who work directly with customers, and back office workers who perform internal duties that support the overall operation of the bank. Customer contact is a high priority in banking. About two-thirds of occupations in the industry are front-office positions servicing customers in branch offices, opening accounts, or originating loans. These workers are employed in a variety of departments, which vary by the size and type of bank. A large bank such as Bank of America has the following departments: