Swot Analysis Of Banking Industry

BANKING INDUSTRY OVERVIEW

The banking industry in the U.S includes about 7,100 commercial banks, 8,000 credit unions and 1,200 savings banks. These institutions generate a combined income of $630 billion. The five largest banks in the U.S are J.P Morgan Chase, Bank of America, Wells Fargo, Citigroup and Goldman Sachs. Some of the key attributes of the banking industry are as follows:

1. Innovation
2. Quality of products
3. People Management
4. Social Responsibility
5. Long term investment
6. Quality of Management
7. Use of Corporate Asset
8. Financial Soundness
9. Global Competitiveness.

Unlike the other countries the banking industry in the U.S is highly regulated and fragmented. The industry is regulated both by state and the federal

The company’s stock listed as CFC was called the 23,000% return stock, which exceeded the returns given by its companies such as Washington Mutual, Wal-Mart and even Berkshire Hathaway. The company became a $500 billion home loan machine with 900 offices and 62,000 employees across the nation. The countrywide Bank was primarily involved in issuing mortgage loans and home equity line of credit for investment purpose. The Countrywide Warehouse lending provides line of credit to mortgage bankers, who in turn use the loan the funds generated to source loans. During 2007-08, Countrywide encouraged its sales force to attract customers over the phone by giving a very seductive sales pitch. Potential borrower was often led to high costs and unfavorable loans. This ensured a higher commission for the sales executives of the company and also led to an increase in the stock price of the company. Countrywide had an aggressive profit maximization strategy during the mortgage-lending boom, no matter what it costs the borrower. Regulatory filing had shown that about 45% of Countrywide loans carried adjustable rates. This created a huge anxiety among investors and

But however, the Bank has not faced any big cultural issues as such. The bank follows its good old culture and hopes to its processes through formal training of new joinees, enhanced checklist and improved communication systems, which will reinforce the banks culture.

CONCLUSION

We see that Bank of America has been saddled with the financial burden of this deal. It is rightly said ”Bank of America’s acquisition of Countrywide Financial Corporation is the worst financial deal in the history of Banking”. But, However the bank has taken responsibility and has been cleaning up all the issues, which have come up with the federal bodies, investors, borrowers and third parties. Though this liability has taken a toll on the bank’s earnings, it is moving constantly in the path of recovery.
Bank of America has the worst customer reputation in the industry and has to find new ways to gain customer confidence through improved service quality as well as find ways to boost profits to get its bonuses. The bank has to build a strong business culture and restructure its business model in order to keep its competitive advantage alive. Without building sound business practices it is impossible for the bank to overcome its legal problems and generate enough income to pay of its various