United States

In 1791, the Congress chartered the first bank. Initially, only states were allowed to float banks. But in 1837, when the industry was opened to all, their numbers shot up from 24 to 712. About half of them failed, prompting the government to create a system of national banks, with more stringent norms. There were more instances of banking panics because of over-lending, inadequate reserves, which led to the creation of the Federal Reserve. In the 1930s, commercial banks were banned from the securities and the insurance business.

Deregulation started in the 1980s. Interstate banking was allowed in 1985; in 1999, banks were allowed back in the securities and insurance business; interest rates plunged; global banking and capital market services proliferated. All this, and the rush for size, sparked of a spree of M&As, leading to the big getting bigger. The biggest of them in the US: Citigroup, with $1,494 of assets.

United Kingdom

The present industry structure was mostly in place by the 1930s, with the Bank of England, then privately owned, at the apex, and 11 London clearing banks below it. The Bank of England was nationalised in 1946; and in 1968 a merger among the largest five clearing banks left the industry in the hands of four banks: Barclays, Lloyds (now Lloyds TSB Group), Midland (now part of HSBC Holdings), and National Westminster (taken over by the Royal Bank of Scotland in 2000). The larger clearing banks, with their national networks and subsidiaries, dominate British banking.

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