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Money and Capital Markets: Financial Institutions and Instruments in a Global Marketplace, 8/e

Peter Rose, Texas A & M University

The Commercial Banking Industry

Standard & Poor's Questions

Chapter 15 in Money and Capital Markets: The Commercial Banking Industry

Question 1

Which banks in the S&P Market Insight list of firms are known to be heavily consumer-oriented (that is, significantly focused on individuals and families as customers) in the services they provide and which are more widely recognized as wholesale, commercial, or business-oriented banks? How can you tell?

Question 2

What was the largest commercial banking organization on the S&P Market Insight list in 2000 in terms of total operating revenues?

Question 3

Is Citigroup, the largest banking firm in the U.S. and one of the largest in the world, more profitable or less profitable than the average level of profitability in the banking industry? When did Travelers and Citicorp merge? How much in total assets and equity capital did this banking firm hold in the most recent year? What about its net income? Earnings per share?

Question 4

Let’s test your knowledge of bank financial statements by answering the questions below concerning the financial statements of Wachovia Corp., one of the banks listed on S&P’s Market Insight database:

a. In the most recent year how much in primary reserves were reported by Wachovia Corp.?
b. How much in total assets were held by Wachovia Corp. in the most recent year?
c. How much equity capital did Wachovia report in the most recent period?
d. Based on the most recent information available from Market Insight what was the ratio of Wachovia's revenue from sales of its services relative to its equity capital?
e. What is the bank’s assets to common equity ratio in the most recent reporting period? Why is this ratio important?
f. What is the bank’s ratio of net earnings or income to total assets (ROA)? to total equity capital (ROE)? Why are these two numbers important?

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