Greenspan Comments on US Banking
Federal Reserve Chairman Alan Greenspan addressed the annual convention of the American Bankers Association today. In his speech, he highlighted the health of the US banking industry as well as the contributions that technology and banking consolidation have made to lowering risks.
The recent consolidation of the banking system has been dramatic. Excluding intra-bank holding company mergers, and including the approximate 100 announced but not yet completed mergers, about 2,400 banking organizations have been absorbed by other banking entities since 1995. If all the mergers that have been announced are completed, the ten largest banking organizations in the United States will account for about 51 percent of all domestic banking assets, almost double their share in 1995.Consolidation has not been a phenomenon involving only large banks. Roughly 45 percent of the mergers involved an acquirer and a target each of which had less than one billion dollars in assets.
I must emphasize that, despite these merger trends, market and other pressures have kept measures of local market banking concentration virtually unchanged. An important factor has been the almost 1,400 new commercial bank formations since 1995.
Greenspan went on to comment " better risk management may be the only truly necessary element of success in banking."
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