Amoney center bank (also writtenmoney-center bank) is abank orbank holding company that is a particular kind of high-endcommercial bank: located in a majorfinancial center such as New York or San Francisco, its lending operations are financed by borrowings from other banks or by issuing bonds.[1] Money center banks tend to engage in a number of different or related businesses, such ascorporate banking,investment banking,foreign exchange services,currency trading,securities trading,derivatives trading, issuingcredit cards, and making loans toprivate equity firms and to foreign governments.[1][2]Money center banks have extremely largebalance sheets,and are large enough and embedded enough withininternational finance that they are often considered to be in the "too big to fail" category.[2]
Being a money center bank does not have a firm definition,[3]and in some cases, observers may disagree on exactly where the boundary is between money center banks and very largeregional banks.[1]As a general tendency, money center banks get more of their funds viamoney markets compared to getting funds from thedeposit accounts of consumers.[3] While money center banks can and do accept deposits from consumers and otherwise behave like aretail bank in certain of their locations,[2] that is not their major source of income.[1]There is some overlap between the idea of a money center bank and that of auniversal bank.[4]
The term 'money center bank' seems to have first started gaining appearances in the 1960s[5] and 1970s[6] although the phrase has been found occurring earlier.According to one breakdown, during the 1980s there were as many as eleven money center banks in the United States.[7]
As of 2024[update], the prime examples of American money center banks areJPMorgan Chase andCitigroup.[1][2][4] Two others are often included as well,Bank of America andWells Fargo.[2][4] Some ancestor companies of these were considered, in their time, as money center banks; in the case of JPMorgan Chase, these includeManufacturers Hanover Corporation andChemical Banking Corporation,[8] as well as the denotedChase Manhattan Bank andJ.P. Morgan & Co.[7]
Besides their headquarters, money center banks have offices in major financial centers around the world,[2] such as in London and Hong Kong.[4] Money center banks can be foreign-owned, for instanceBankers Trust has been owned byDeutsche Bank andHSBC Bank USA byHSBC.[1]
 | This articleis missing information about whether the term mostly used for U.S. banks or is the term used in other countries as well. Please expand the article to include this information. Further details may exist on thetalk page.(October 2024) |
