A comparative analysis of the US and EU retail banking markets - Wsbi

3. INSTITUTIONAL COMPARISON
3.1 Section introduction
This section presents the profiles of the different types of
credit institutions that are present in the US and the EU.
For every type of credit institution present in each market,
a definition and historical background is first given. This is
followed by an outline of the ownership structure, or
prevailing ownership structure(s), common to each type of
credit institution. Details are then given on how such
institutions are insured and on the bodies which insure
them. The activities which the various types of institutions in
question are legally allowed to carry out are then listed.
Finally, information about the taxation regime which each
type of institution is subject to is provided.
Looking at the different types of institutions in the US and
the EU, the distinction is made between, on the one hand,
the legal forms of credit institutions present in each market,
and the different types of actors also present in each market.
Very briefly, as this is covered in more detail in the regulation
and supervision comparison chapter, US credit institutions
can decide to obtain their charter either at the state or the
federal level, which in turn will determine whether they are
regulated and supervised at the state or the federal level.
For this reason, the regulatory system in the US is referred to
as a ‘dual’ system, symbolised by the simultaneous existence
of different regulatory options that are not alike in terms
of statutory provisions, regulatory implementation and
administrative policy.
In the EU on the other hand, credit institutions are supervised
at the country level, but mainly regulated at the EU level
as a number of areas of banking have been harmonised
throughout the EU via directives which are applicable to all
credit institutions.
3.2 Types of banking institutions
This distinction is necessary, given that in the US commercial
banks, thrifts 5 , credit unions and mortgage banks each have
their own specific charter (or license to operate) according
to bank type, and thus each of these denominations represent
distinct and specific legal forms. Further, credit institutions
in the US are regulated and supervised by distinct bodies,
according to their charter type.
This is not so in the EU, where commercial, cooperative and
savings banks represent different types of actors which are
not tied to any particular charter at the EU level. Also, unlike
US banks, they are bound by the same laws and regulations,
and supervised by the same bodies.
Another important distinction which exists between credit
institutions in the US and the EU retail banking markets is
in terms of the differences in the system of regulation.
3.2.1 United States
3.2.1.1 Legal forms in the US market
3.2.1.1.1 Introduction
In the United States, three different types of financial
institutions can be distinguished:
■
■
Depository institutions, commonly referred to as
banks, are defined as financial intermediaries that
accept savings and/or demand deposits from the
general public;
Non-depository institutions, on the other hand,
generate funds from sources other than deposits
and include:
i. Securities market institutions: investment banks,
brokerage firms, and organised exchanges;
ii. Contractual savings associations such as
insurance companies and pension funds;
5 Savings banks and savings and loans institutions.
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