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Universal Banking: Benchmarks from Britain

  • David Rogers
Chapter
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Abstract

A central issue of this book relates to how well universal banking succeeded in Britain, as one nation whose commercial banks pursued a version of that strategy. In the British variant, these banks diversified into a variety of financial services, particularly investment banking and insurance, grouping them in a loosely coupled fashion into one common holding company. In contrast to the German and Swiss versions of universal banking, the British version has not included significant holdings and voting power in big, non-banking corporations.1

Keywords

Financial Service Commercial Bank Investment Banking Harvard Business School European Bank 
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Notes and references

  1. 1.
    See Roy Smith, Comeback, Harvard Business School Press, Boston MA, 1993, Ch. 5; Jordi Canals, Universal Banking, Clarendon Press, Oxford, 1997; and Anthony Saunders and Ingo Walter, Universal Banking in The United States, Oxford University Press, New York, 1994, Ch. 4.Google Scholar
  2. 2.
    David Rogers, The Future of American Banking, McGraw Hill, New York, 1993.Google Scholar
  3. 3.
    See Robert Grant, ‘Diversification in the Financial Services Industries’, in Andrew Campbell and Kathleen Sommers Luchs (eds), Strategic Synergies, Butterworth Heinemann, 1992, pp. 203–42, for one of the only empirical studies documenting the limits of the financial supermarket.Google Scholar
  4. 4.
    I am indebted to Andrew Campbell for this insight, based on his research and his executive development programmes with managers of multiproduct firms.Google Scholar
  5. 5.
    Jon Friedman, House of Cards: Inside the Troubled Empire of American Express, New York, Pitman, 1992; and Richard Freedman and Jill Vohr, American Express, Stern School of Business, NYU, 1991. Now, Sandy Weill, former CEO of Travelers Saloman, and John Reed, former CEO of Citicorp, have, as co-CEOs of the newly merged Citigroup, extended the ‘supermarket’ or universal banking model to include not just commercial and investment banking but retail brokerage and insurance as well. This is reported in The New York Times, 7 April 1998, pp. A1 and D10.Google Scholar
  6. 6.
    Andrew Campbell and Kathleen Sommers Luchs (eds), op.cit., p. 3.Google Scholar
  7. 7.
    Ibid., p. 4.Google Scholar
  8. 8.
    See Robert Grant, ‘Diversification in the Financial Services Industry’ in Andrew Campbell and Kathleen Sommers Luchs (eds), Strategic Synergy, Butterworth Heinemann, Oxford, 1992, pp. 210–11.Google Scholar
  9. 9.
    American Banker, 11 June 1998, p. 20.Google Scholar
  10. 10.
    Robert G. Eccles and Dwight B. Crane, Doing Deals, Harvard Business School Press, Boston MA, 1988.Google Scholar
  11. 11.
    Ibid., Ch. 6.Google Scholar
  12. 12.
    I am indebted to Professor Richard Freedman of the Stern School of Business, New York University, for his insights regarding contradictions built into the universal banking strategy.Google Scholar
  13. 13.
    Lowell L. Bryan, Breaking up the Bank, Dow Jones-Irwin, Homewood IL, 1988.Google Scholar
  14. 14.
    Explaining the Decline of the British Economy, Harvard Business School, 9-391-254. See also W.D. Rubinstein, Capitalism, Culture, and Decline in Britain, Routledge, London, 1993; Martin J. Wiener, English Culture and the Decline of the Industrial Spirit, 1850–1980, Cambridge University Press, London, 1981; and Bruce Collins and Keith Robbins (eds), British Culture and Economic Decline, St Martins, New York, 1990.Google Scholar
  15. 15.
    Explaining the Decline of the British Economy, op. cit., p. 14.Google Scholar
  16. 16.
    Ibid., pp. 15–16.Google Scholar
  17. 17.
    Interview with George Smith.Google Scholar
  18. 18.
    J. Weiner, op.cit., p. 167.Google Scholar
  19. 19.
    Professor Roy Smith, whose information comes from Securities Data Corporation. See Tables 5 and 6 in the Appendix for data on 1996 and 1998.Google Scholar
  20. 20.
  21. 21.
  22. 22.
    The Economist, 28 November 1998, p.73.Google Scholar
  23. 23.
  24. 24.
  25. 25.
    The Economist, 26 July 1997, p. 67.Google Scholar

Copyright information

© David Rogers 1999

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  • David Rogers

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