Complexity in Large U.S. Banks

Abstract

While both size and complexity are important for the largest U.S. bank holding companies (BHCs), specific types of complexity and their patterns across banks are not well understood. We introduce a range of measures of organizational, business, and geographic complexity. Comparing 2007 with 2017, we show that large U.S. BHCs remain very complex, with some declines along organizational and geographical complexity dimensions. The numbers of legal entities within some large BHCs have fallen. By contrast, the multiple industries spanned by legal entities within the BHCs have shifted more than they have declined, especially within the financial sector. Nonfinancial entities within U.S. BHCs still tilt heavily toward real-estate-related businesses and span numerous other industries. Fewer large BHCs have global affiliates, and the geographic span of the most complex has declined. Favorable tax treatment locations still attract a significant share of the foreign bank and nonbank entities, while fewer legal entities are present in informationally opaque locations.