What It Takes to Build One of the World's Biggest Banks
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What is the main topic discussed in this episode?
Hi, I'm Barry Rittholz, inviting you to join me for the Masters in Business podcast. Every week, we bring you conversations with the people who shape markets, investing, and business. I speak with CEOs, Nobel laureates, market innovators, and legendary investors. Whether you own stocks, bonds, real estate commodities, even crypto, these are discussions you absolutely need to hear. Subscribe to the Masters in Business Podcast on Apple, Spotify, or anywhere you listen.
Mm. Bloomberg Audio Studios, Podcasts, Radio News.
Hello and welcome to another episode of the Oddlots Podcast. I'm Joe Weisenthal.
And I'm Tracy Alloway.
So, Tracy, one of the uh motifs, I guess, of some of our recent conversations. Motif is a good word. Yeah, it's a good word, isn't it? Thank you. One of the motifs of some of our recent conversations. Um, and also I guess one of the mega trends of our time is this idea of just like scale as a competitive advantage. Size, returns to size, returns to scale, the ability of someone to like pick up a phone and say, I need a lot of money right now, and the advantage that accrues to financial players. It's we see it across a lot of sectors, but it really it stands out a lot in our th finance conversations.
It feels good to be big in business, right? Like once you get big, you have all this competitive advantage that allows you to get bigger. The place where this is most noticeable, I would argue, and It's been this way for a while, is the banking industry, right? Like the long run trend among US banks is the big get bigger. And we've all seen those charts of like all the little banks that compose Bank of America or JP Morgan. I love those charts, but I do
too.
And that's the direction the industry seems to be heading, right?
Right. It's so interesting to me too, like to think about like these and an analogs with tech, because it's the same in tech, right? If you look at big tech, and we talk about the mag seven, et cetera, they've really outperformed middle tech or small tech. It is truly incredible. And we have intuitive reasons for understanding of that network effects, lock-in, and so forth. And it's so fascinating that some of our story that we tell in tech must be a little bit insufficient because we see the same story replication. as as we're talking about with banks. And with banks, it seems to be a couplefold. As like one is balance sheet capacity, right? And the ability to do big deals and so forth. And then of course there's the other thing, which is just like
The sort of the menu of services that you can offer a client if you're a big bank.
Right. And also just the fact that you have well, balance sheet, you have a lot of money. So if a juicy deal comes up, you can deploy it quite quickly and you get like first dibs on issuance, which has been good in the recent credit market.
So we haven't done like a ton of pure banking episodes, although we've done some, but the, you know, we did the most probably right in the wake of uh Silicon Valley Bank, obviously. And we talked about like the challenges of some of the community banks or the sort of smaller regional banks, et cetera. And then we know like the huge scale of like the JP Morgan's of the world, but also like, what about the banks like just sort of like sub JP Morgan scale? Not necess not so Super
regionals, I believe they're called.
Super regionals, interesting perspectives of their own. And so and I've always said I love talking to bankers, people who understand how banking works, just like they're I think they're usually some of our uh our most interesting guests.
Have you looked at the uh KBW bank index, by the way?
Not today. Actually, not in a few days, or maybe not in a few years. Not in a few days. Yeah, what how's it been doing?
Um, it's up quite a lot. In fact, I think over the past twelve months it's outperformed the S P five hundred. So that kinda tells you how people feel about banks and bank regulation at the moment.
Absolutely right. One of the things when Trump won was the sort of like the deregulation trade.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–4:35
2
Why do big banks keep getting bigger and what advantages does scale provide?
4:35–16:58
3
How does PNC define its market position and what services does it offer as a “national bank”?
16:58–24:20
4
What is PNC’s strategy for building new branches and selecting locations?
24:20–1:04:46
Speakers
7 identifiedMore from Odd Lots
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