Concentration of Banks

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Concentration of Banks


a concentration of the main volume of bank operations in an ever smaller number of large and very large banks. It is based on the concentration of production and capital under capitalism and in its turn intensifies these processes. In the era of imperialism, the concentration of banks leads to the emergence of gigantic bank monopolies merging with industrial monopolies. It is an important factor in the formation of financial capital and the financial oligarchy. “As banking develops and becomes concentrated in a small number of establishments,” V. I. Lenin observed, “the banks grow from modest middlemen into powerful monopolies” (V. I. Lenin, Poln. sobr. soch., 5th ed., vol. 27, p. 326).

The concentration of banks occurs both as a result of an accelerated growth of activities and of the capital of the larger banks, caused by the accumulation of profits (concentration per se), and as an annexation of smaller banks by the larger ones and by the merger of banks to form bank groups (centralization). These processes are closely interrelated: the merger of the banks usually accelerates the growth of their capital and profits, whereas the rapid growth of the scale of financial operations makes possible the suppression and subjugation of competitors.

An indicator of the degree of bank concentration is the role that the largest banks of a country play in the operations and profits of the overall bank system. For example, the USA in the mid-1960’s had more than 13,600 banks: 2.4 percent of this number had 62 percent of the assets of all the banks, 64.3 percent of all loan operations, 54.8 percent of the employees, 62.7 percent of net profits (after taxes), and 70.4 percent of dividends paid. In 1969, out of the total US deposits of $444.9 billion, the 100 largest banks concentrated $229.3 billion, more than 50 percent, and ten of the banks accounted for $113.4 billion of this. In Great Britain the predominant position has been held by the “Big Five” London banks since the early 20th century. In the mid-1960’s the Big Five concentrated about 90 percent of all bank deposits of British banks. At the end of 1960’s the number of banking giants was reduced to four. In Germany at the beginning of World War I, the eight largest banks held half the deposits of commercial banks of the country. After the economic crisis of 1929–33, only three monopolies— Grossbanken—were left: the Deutsche Bank, the Commerz Bank, and the Dresdner Bank. The concentration of banks has also reached a high level in France, Italy, Japan, Canada, Switzerland, and other economically developed capitalist countries.

The size of the network of branches, which is a significant factor in credit expansion by large bank monopolies, is another indicator of bank concentration. At the beginning of the 20th century in Western Europe (Great Britain, France, Germany, and Italy), giant banks with hundreds and even thousands of branches were formed. In the mid-1960’s in Great Britain, the Barclay group, headed by Barclays Bank, had more than 5,000 branches, the largest network in the capitalist world; the Deutsche Bank in West Germany had over 680 branches. After World War II, the network of subsidiaries and branch offices grew rapidly in the USA; from 1950 to 1970 the number of banks of the branch network quadrupled. At the end of 1970 there were 21,600 branches in the USA.

The giant banks use various methods to bring medium-sized and small banks, which are formally independent, under their control. One such method is the establishment of correspondent relations between banks, through which the major banks attract additional resources and use thousands of small credit institutions. At the end of the 1960’s, the Banca Nazionale del Lavoro in Italy had about 2,000 correspondent banks, and the Chase Manhattan Bank in America had 3,900. Bank holding companies in the USA buy up controlling interests in small and middle-sized banks and put them under the control of the head bank. In the beginning of 1970, the 97 largest holding companies in the USA controlled more than 720 banks, with 2,600 subsidiaries and deposits of $62.6 billion.

The concentration of banks intensifies the contradiction between the social character of production and the private capitalist form of the appropriation of the results of production. At the same time, the process of concentration forms a material prerequisite of socialism—the creation of the accounting and control machinery that is to be used for the building of socialism by the victorious proletariat.


Anikin, A. Kreditnaia sistema sovremennogo kapitalisma. Moscow, 1964.
Usoskin, V. Monopolisticheskii bankovskii kapital SShA: deistvitel’nost’ i mify. Moscow, 1964.
Shenaev, V. Banki i kredit v sisteme finansovogo kapitala FRG. Moscow, 1967.
Krupneishie monopolii mira: Kratkii spravochnik. Moscow, 1968.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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