The organizational structure of bank holding company system is the most popular in the United States, which is the result of evading the management of branches set up by the government. At present, this form of organization has become the most attractive banking organization in the United States and some other developed countries. By the 1990s, Bank of America Holding Company controlled 8,700 banks, accounting for 90% of the total assets of American banking industry.
There are two forms of bank holding company system, namely, non-bank holding company and bank holding company.
1, non-bank holding company
Non-bank holding companies are organized by enterprise groups controlling the major shares of a bank. This form of holding company can hold shares of a number of non-bank enterprises while holding shares of a bank.
2. Bank holding company
Banking holding company means that a large bank directly controls a holding company and holds shares of several small banks.
The effective control of the bank by the bank holding company is to hold more than 25% of the shares of the bank. Specifically divided into:
1) Single bank holding company: refers to a holding company that owns or controls only one commercial bank.
2) Multi-bank holding company: refers to a holding company that owns or controls more than two banks.
Bank holding companies own 66% of banks and nearly 90% of deposits in the United States.
Reasons for the rapid development of bank holding companies;
1) This organizational form is the result of financial innovation, which can effectively get rid of various legal restrictions imposed by the national government on the establishment of branches and business scope.
2) The business scope can be expanded, regional decentralization and business diversification can be realized, which is conducive to strengthening the management of risks and benefits.
3) The stock of the bank holding company sells better, which can reduce the financing cost.
4) Centralized service facilities of bank holding companies can save money.
The disadvantage of bank holding company is that it is easy to form monopoly, which is not conducive to competition.