In the wake of a chaotic period for the banking industry – a
period which has seen a procession of big-ticket mergers and
acquisitions, banking failures and government bail-outs – the
number of banking groups with over 5,000 branches and outlets has,
according to new RBI research, continued to rise.

Banking groups with other 10,000 branchesOver 40 banking
groups now boasts branch networks of over 2,000 units, with around
25 controlling over 5,000 and beyond. And while state-owned giants
in emerging economies such as China, Brazil and India feature
prominently, there are an increasing number of Western banking
groups now running vast branch networks.

Top of the list is Spain’s Santander, with
14,137 branches worldwide. It is followed by Crédit Agricole,
UniCredit, HSBC and, further down the list, the likes of BBVA, BNP
Paribas and La Caixa (see table below).

In many single markets – including the US, the
UK, France and Germany – retail banking has become concentrated on
fewer, bigger players with enormous branch-based distribution
power. As the industry, particularly with regards to retail
banking, has consolidated in the wake of the global financial
crisis, issues over competition and market power may continue to
arise for regulators and governments, and become more acute.

In the US, the top three retail banks – Wells
Fargo (which has 10,455 ‘stores’ since its merger with Wachovia,
though of this figure, 6,686 are defined as traditional bank
branches), Bank of America (6,139) and Chase (5,474), now control
over 30 percent of US deposits. In the UK, the newly formed Lloyds
Banking Group boasts around 3,100 branches, over 500 more than its
nearest rival (RBS/NatWest).

In India, State Bank of India (SBI) already
has more branches (11,448) than its three nearest rivals put
together – and that is before it finalises an on-going proposed
merger with its six associates banks that would increase yet
further its physical distribution points.

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Unsurprisingly, many banks with large networks
across all markets are investing in their branches in an effort to
maximise their competitive advantage in a world that is now valuing
branch-based banking more than ever.

SBI for one says that a new operating
architecture has enabled “rapid and cost-effective growth” in its
network, with nearly 800 new branches added during the past fiscal
year. Moreover, all 11,448 branches are now linked on one corporate
internet banking platform.

In the US, Chase has pushed through the
rebranding of old Washington Mutual branches “in record time”. At
the end of May, eight months after initially acquiring the bankrupt
WaMu franchise, Chase reported that it had finished the first of
three stages to bring all of WaMu’s customers and branches onto the
Chase platform. By the end of this year, all customers will have
“full access” to Chase’s 5,500 strong franchise and 14,568

Branches as easy as ABC

According to the list compiled by
RBI, Agricultural Bank of China (ABC), the least developed
of the country’s Big 4 banking groups, controls the world’s largest
branch network outside of the major postal banks with just over
24,000 branches (China Post, in contrast, has 46,000 outlets –
see RBI 611).

Other major ‘superbanks’ – defined as banks
with branch networks over 2,000 units – include Bank of China and
Russia’s Sberbank, which has 20,409 outlets including its

But while Chinese and other BRIC economy
banking groups retain large branch networks due mainly to their
state-owned legacies, a number of financial institutions based in
Europe and the US have significantly increased their branch
footprint over the past 12-18 months, forming a new breed of
financial groups with 5,000 branches and up.

Spain’s Santander, after having picked up two
UK franchises last year (Bradford & Bingley and Alliance &
Leicester), moves into the global top five with over 14.000
branches in all. The figures include its now fully owned US
subsidiary, Sovereign Bancorp, which it acquired outright at the
start of the year. Sovereign has 750 banking offices and over 2,300

The worst of times

A number of recent market reports
from the likes of Boston Consulting Group (see RBI 611)
and JD Power (RBI 613) continue to espouse the benefits of
branches in times of stiff competition. A recently updated report
from VRL – entitled Branch Banking – Best Practices in the
Worst of Times
– focuses entirely on the benefits branches
offer in terms of selling (see page 10).

And bankers themselves continue to stress the
advantages that branches offer them. At the end of April, Spain’s
Bankinter, which has long championed a multi-channel service-driven
strategy, topped the RBI list for the world’s most
successful cross-sell banking institution with 6.34 products per
retail banking customer (see RBI 611).

Ignacio Lozano, director of individual clients
at the Madrid-based bank, told RBI that his bank’s main
focus is not to over-sell to its customer base; the high cross-sell
ratio is borne from a strong customer service ethos supported by a
smooth multi-channel distribution platform across branches, online
and mobile phones.

“It is about quality of relationships above
everything else and the quality of service,” he said. But he
stressed that branches are vital to establish the initial customer

“If you want to establish a relationship you
need a branch,” Lozano stated.

Worldwide – 20 selected ‘superbanks’,
banking groups with over 5,500 branches, 2008
  Worldwide branches  Worldwide ATMs Retail customers (m)              
Agricultural Bank of China 24,064 30,089 350              
Sberbank 20,409 17,500 n/a              
ICBC 15,676 35,741 190              
Santander 14,137 26,267 90              
China Construction Bank 13,374 35,491 156              
Crédit Agricole 11,850 10,400E 32              
State Bank of India 11,448 8,581 100E              
Bank of China 10,789 19,000E 130              
Wells Fargo + Wachovia 10,455 12,361 26              
UniCredit 10,251 15,252 26              
HSBC 9,500 16,500E 100              
Intesa Sanpaolo 8,496 11,000E 20              
Banque Populaire + Caisse d’Epargne 8,191 12,500E 34              
BBVA 7,787 17,136 48              
Citi 7,730 17,000E 75              
BNP Paribas 7,100 10,000E 20              
Société Générale 6,700E 8,282 24              
Bank of America 6,139 18,685 59              
la Caixa 5,422 8,113 10              
Bradesco 5,574 29,913 n/a              

Source: RBI

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