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
Large universal banks are like battleships — powerful but not very manoeuvrable. In financial innovation, manoeuvrability and specialization are needed. Bureaucracy and institutional rigidity are counterproductive.
Roy Smith, Comeback, Harvard Business School Press, Boston, MA, 1993, p. 184
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Notes and references
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.
David Rogers, The Future of American Banking, McGraw Hill, New York, 1993.
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.
I am indebted to Andrew Campbell for this insight, based on his research and his executive development programmes with managers of multiproduct firms.
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.
Andrew Campbell and Kathleen Sommers Luchs (eds), op.cit., p. 3.
Ibid., p. 4.
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.
American Banker, 11 June 1998, p. 20.
Robert G. Eccles and Dwight B. Crane, Doing Deals, Harvard Business School Press, Boston MA, 1988.
Ibid., Ch. 6.
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.
Lowell L. Bryan, Breaking up the Bank, Dow Jones-Irwin, Homewood IL, 1988.
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.
Explaining the Decline of the British Economy, op. cit., p. 14.
Ibid., pp. 15–16.
Interview with George Smith.
J. Weiner, op.cit., p. 167.
Professor Roy Smith, whose information comes from Securities Data Corporation. See Tables 5 and 6 in the Appendix for data on 1996 and 1998.
Ibid.
Ibid.
The Economist, 28 November 1998, p.73.
Ibid.
Ibid.
The Economist, 26 July 1997, p. 67.
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© 1999 David Rogers
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Rogers, D. (1999). Universal Banking: Benchmarks from Britain. In: The Big Four British Banks. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-27760-5_10
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