Hi guys,
you often hear the media / employees state BAML's competitive advantage as being strongly competent in traditional banking and IB products along with its $2.2 trillion balance sheet and I am wondering whether other BB's share similar characteristics? Deutsche, UBS, CS come to mind but I'm not sure.
If someone could let me know I'd appreciate it.
Cheers
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BAML has Captain America and Spiderman
I think BAML's main competitor would be JP Morgan.
Thanks but I want to know what companies share BAML's supposed competitive advantage.
Anyone???
JP Morgan, Wells Fargo, and Citi also have the balance sheet advantage
dat big ass balance sheet and atms at every corner
Bank of America -- Higher Standards®
BAC, JPM and WFC are widely considered the top 3 universal banks at this point. Citi still has a top investment bank, but continuing government involvement and their weakness is traditional banking (retail deposits, large branch footprint, commercial lending) is probably enough to keep it out of the other 3 I mentioned.
The competitive advantage of a top universal bank generally includes: - massive balance sheet means they lead credit relationships, which more often than not result in capital markets fee events - broad distribution of fixed income/equity products through the retail brokerage network - strong deposit gathering franchise that lowers overall cost of funds - strong cross-selling of products for non large cap clients (commercial lending, investment banking, wealth management, treasury management, etc.)
There are many others, but hope this helps for now.
Why is Goldman Sachs not in this. Universal meaning the diversity of products offered I guess?
Universal banks typically rely on deposit fundings via a branch network and have a substantial commercial banking presence. The whole concept was basically pioneered by Citi with the notion that customer could have one banking relationship for all needs (lending, capital markets, insurance, etc.) and that universal banks would have less earnings volatility because of the diversity of business lines.
While the model has clearly outlasted the traditional standalone investment bank model, it has proven extremely difficult for executives to manage and difficult for investors to understand w/ any degree of clarity/certainty.
I guess GS is technically a BHC now, but they don't appear to have any intention of building out a retail/deposit franchise.
Thanks guys - very helpful.
Surely CS and Deutsche would fall into the universal banking category though? Even if we just look at it from a European angle?!
Also guys, when BAML quotes a $2.2 trillion BS figure. Where exactly does this figure correspond to in the balance sheet? Is it total assets?
Thanks again. Really appreciate your thoughts!
BAML's competitive advantage - 1styearbanker
Please explain
An old poster on this website who used to tout BAML all the time.
I'd check out the balance sheet from the 10-K to figure out what comprises the $2.2 trillion. I believe that is total assets including goodwill, securities and other non-loan assets.
Their investor presentation probably has a thorough breakdown of the loan book and security book.
Ok thanks a lot!
all bulge brackets are universal. c, bac, wfc, jpm have the biggest balance sheets and historically aren't as prestigious in advisory so their commercial deposit bases help them bring in business
That's just wrong.
We can argue about how to define BB all day long, but BB almost always includes GS, MS and used to include BS, LEH and MER. You can debate whether CS, DB, etc. should be in there with JPM, BAC, whatever.
Not all BBs are universal banks. Please direct me to the closest GS or MS ATM or branch.
A universal bank almost always refers to the specific type of "supermarket financial services firm" that Sandy Weill and Chuck Prince tried to build at Citi.
In fact, if you define BB literally (as in the original defintion based on font size in the 1st half of the 20th century) ZERO BBs were universal banks.
Although you're right re: BBs, I think the original question is wrapped around the concept of having a large balance sheet to finance transactions (which has the obvious advantage of bringing in more advisory business).
To answer the OP's question, the primary balance sheet-focused IB platforms are JPM, BAML and C.
banana of course your are technically correct. i was loosely using the terms bulge bracket and "universal". i think it's pretty well accepted that bbs offer a full [universal] array of financial services for corporate clients and govs
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