Top 10 Banks That Became Bankcrupt

‘All good things come to an end’

Well it would be practical enough to say that this statement holds true in a majority of the cases. Albeit it literally might not mean the end, but the many troughs and downfalls experienced with time. Let’s paint the picture of banks going bankrupt in this case. Ever wondered what would happen if your bank went bankrupt? But firstly, what is Bankruptcy? Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by a debtor. The recent financial crisis in Cyprus might give a light into the horror of bankruptcy faced by the banking system. However rescue loans of about 10 billion euro saved the country from an unprecedented collapse having adverse effects in the entire euro zone. Is this the only case of a bankruptcy? Well, how often have you come across banks going bankrupt? Or banks getting dissolved due to outstanding debts? Enlighten yourself here. There are numerous cases of banks going bankrupt across the world but the top 10 banks are listed below

1. Citigroup

Headquartered in Manhattan, New York City in United States it was a product of the world’s largest mergers in history when banking giant Citicorp and financial conglomerate Travelers Group joined hands together on October of 1998. A multinational financial services corporation currently holds the status as the third largest bank holding company in US. Also it has the world’s largest financial network covering around 140 countries and around 16,000 offices all over the world. Faced with huge losses in financial crisis of 2008 and subsequent terror of bankruptcy, it received a helping hand from the US government in November of 2008 in the form of an explosive stimulus package saving it from the worst despite which, it would have teased the financial company to its doom.

2. American International Group

Abbreviated and commonly known as AIG. Based in New York, its roots trace back to Shanghai in the year 1919 when it was founded by Cornelius Vander Starr. Serving in more than 130 countries, it provides life insurance, retirement services and mortgage insurance. Due to severe difficulties faced as result of the financial crisis of 2008, the bank had to sell its share to Federal Reserve Bank at a cost of 85 billion US dollars in face of bankruptcy.

3. Merrill Lynch

Based in New York in United States the bank was founded in the year 1914 by Charles E. Merrill and Edmund C. Lynch. It rose to prominence on the strength of its brokerage network It is currently the wealth management division of Bank of America. With over a 60,000 employees and 15,200 financial advisors, it holds the status as world’s largest brokerage after its acquisition by the Bank of America. In precedence to 2009, it was traded in the New York Stock Exchange under the name as Merrill Lynch & Co., Inc. Due to the financial crisis in 2008, it faced severe problems resulting in its acquisition. Its major losses were attributed to the drop in value of its large mortgage portfolio in the form of collateralised debt obligations.

4. Royal Bank of Scotland Group

Founded in the year 1727, it is a British banking and insurance holding company based in Edinburgh, Scotland. Royal Bank of Scotland is the main subsidiary company along with other such holdings. Preceding the 2008 collapse and financial crisis, it was declared as the largest bank of the world for a brief period and also for a short time was the second largest bank in the United Kingdoms and Europe, and the fifth largest in the world by market capitalisation. The slumping share price and major loss of confidence with time, it resulted in a sharp fall in rankings. However, the bank received significant support from the Government of UK rescuing it from bankruptcy. It has the unique distinction of being the only bank in the United Kingdom still to print a £1 note. The Royal Bank of Scotland Group was divided into seven main divisions, each with several subsidiary business and several other functions.

5. HBOS

Confused if its related to the television channel? Well, hold your thoughts. It is a banking and insurance company in United Kingdom formed due to the 2001 merger of Halifax plc and the Bank of Scotland. The formation was incited as creating the fifth force in British Banking and also as UK’s largest mortgage lender. It became the wholly owned subsidiary of Lloyds Banking after it went bankrupt in the year 2008. HBOS still continues to operate as a separate organisation in the new group. Although it was one of the biggest banks it had its share of ups and downs like its bad loans, mortgage fraud and links to the arms trade. Albeit there is not any official abbreviation for HBOS, it is presumed to stand for Halifax Bank of Scotland.

6. Wachovia

Situated in Charlotte in North Carolina, the bank was started on 16th June, 1897. A very diverse financial service company ranging from asset management, wealth management , corporate and investment banking products and services, it went bankrupt in the year 2008. It was then taken over by Wells Fargo, an American multinational bank and financial services company. Wachovia used to be the fourth biggest bank company in America but also had their time as the biggest company that provide financial aid and services in the entire country. Between 2001 and 2006, Wachovia had a history of purchases of several other financial service companies in an attempt to become a national leading bank.

7. Indy Mac Bank

Presently known as the One West Bank but due to many of its purchases of assets made from the Independent National Mortgage Corporation, it commonly came to be known as Indy Mac. Situated in Los Angeles, the bank known for its federal services was taken amongst the biggest banks for saving and loan services before it became bankrupt. The bank was declared bankrupt in July of 2008 owing to poor strategy as its main culprit. The failure of Indy Mac bank on July 11, 2008 was the fourth largest bank failure in United States history and the second largest failure of regulated thrift.

8. Fortis

Fortis was not only a bank but a company which was active in insurance and investment management. It was basically stated as the 20th largest bank in the world but due to various problems in the financial crisis of 2008, the company was sold in parts and was left only with insurance. Government of Netherlands acquired it after it faced severe consequences due to the financial crisis. After receiving a bailout from the government its Belgian operations were sold to BNP Paribas, a French bank and financial service company. The remaining subsidiaries were nationalised by the Dutch Government and renamed ABN AMRO.

9. Caja de Ahorros Castilla La Mancha

Caja de Ahorros Castilla LA Mancha is a bank situated in Cuenca in Spain. It was opened in the year 1992 to function as a depository and loan services to its customer. It was taken over by the Spain’s central bank in the year 2009 and unprecedently became the first time that the government of Spain helped a bank to come out of the financial crisis. The government backed up the bank with a staggering 11.8 billion US Dollars saving it from insolvency.

10. Commerce Bancorp

A financial service bank, Commerce Bancorp was a Cherry Hill, New Jersey based bank founded by Vernon Hill in the year 1973. A graduate of the Wharton School of the University of Pennsylvania and the owner of a fast food franchise, he sought to bring fast food convenience into the world of banking, expanding Commerce over numerous locations with its many branches in over 435 locations. It went bankrupt in the year 2007 resulting in a takeover by Toronto Dominion Bank which merged Commerce with TD Bank.