Number of Banks in the UK

I don’t share many Americans’ weird fascination with the United Kingdom, but I get it. Its royal family is hilariously out of touch with reality, its political system makes ours look functional by comparison, and the slow decline of its popular culture in the age of streaming TV is at once sad and satisfying to observe. (Paul, Prue: Please, you don’t need to do this.)

Also, it’s called soccer.

Anyway, because I talk about banking for a living and because I’m curious where Paul Hollywood stashes all the cash he’s minted off “The Great British Bake Off/Baking Show,” my fascination with the UK focuses on its financial system, which has a lot in common with our own. To start, Money Crashers data analyst Jonathon Watterson and I set out to answer a basic question about said system: How many banks does the United Kingdom have?

Here’s what we found.

Number of Banks in the UK – How Many Are There?

The United Kingdom has 357 Monetary Financial Institutions (MFIs), or banks authorized to accept deposits in the UK Of these, 130 are headquartered in the United Kingdom.

The United Kingdom’s population was 67.33 million in 2021. That means there’s one MFI for every 188,599 people living in the United Kingdom.

For comparison, the United States had 4,844 commercial banks at the end of 2021, according to the Federal Deposit Insurance Corporation. That equates to one bank for every 68,518 people living in the United States, going off the 2021 Census estimate of 331.9 million Americans.

So, adjusting for population, the United States has about 2.75 times more banks than the United Kingdom. Despite a multidecade decline in the number of banks operating in the US, our financial system is more fragmented than our friends across the pond.

Where Did We Get This Data?

We got this data from the Bank of England (BoE), the United Kingdom’s central bank and its equivalent of the Federal Reserve Bank of the United States. Name notwithstanding, the BoE is the central bank for the entire United Kingdom: England plus Scotland, Wales, and Northern Ireland.

The BoE keeps a list of all banks and building societies (member-owned institutions similar to American credit unions) authorized to accept deposits in the United Kingdom. It calls these institutions Monetary Financial Institutions.

What Exactly Is a Monetary Financial Institution?

Monetary Financial Institution” is just a shorter way of saying “banks and building societies authorized to operate in the United Kingdom.” To be included in the BoE’s count of MFIs in the UK, a financial institution must meet two tests:

  1. Have some sort of operational presence in the UK
  2. Accept deposits from people in the UK

Financial institutions that have offices in the UK but do not accept deposits from people in the UK may not count as MFIs. Specialized businesses like hedge funds don’t count as MFIs either. Nor do fintech apps that aren’t chartered as banks, even if they’re associated with UK-based financial institutions and even if UK-based people can download and use them.

Otherwise, the BoE’s list of MFIs is comprehensive. If you ever need to open an account at a bank in the United Kingdom, you’ll do so with an MFI on that list.

Why Does the US Have So Many More Banks Than the UK?

The United States’ financial system is more fragmented than the United Kingdom’s in part because it covers a huge geographical area that it spent the first century-plus of its existence (three centuries if you go back to early Colonial times) expanding and populating.

Even after railroads and telegraphs and the telephone revolutionized travel and communication, it made sense for far-flung rural towns and villages to have their own banks. Farmers, who until relatively recently made up a plurality of the country’s workforce, needed constant capital infusions to remain solvent. So did the rapidly growing, diversifying business community fueling the expansion of American manufacturing and overseas trade.

The result was a complex patchwork of small financial institutions that fed into (and gradually consolidated with) larger institutions in established and emerging regional financial centers like Boston, New York City, Philadelphia, Atlanta, Chicago, St. Louis, and San Francisco. Since the 1970s, this network has slowly pruned itself back through consolidation and a lack of new bank formation, but it remains dense by global standards.

By contrast, the UK has a much smaller land area and a much different economic history. Although its population did grow rapidly during the Industrial Revolution, spurring a wave of new financial institutions in the country’s industrial north, the UK had no need for a huge cohort of tiny banks that appear redundant by today’s standards. And whereas the US has several major financial centers, the UK has only London.


Where Are These Banks Headquartered?

The majority of MFIs operating in the UK aren’t headquartered there.

About one in three, or 130 institutions, do have UK headquarters. The next largest country-of-origin category is “Other,” which covers all non-European countries not included in the Bank of England’s definition of “developed economies.” Major countries in this category include:

  • China
  • India
  • Brazil
  • Egypt
  • Saudi Arabia
  • United Arab Emirates

“Other” is closely followed by the European Union, with 69 institutions. Some of the European Union-headquartered banks doing business in the UK also appear on our list of the biggest banks in the world.

Then comes the “Other Developed” category, with 42 banks. This covers non-European Union countries the Bank of England considers “developed,” such as Canada, Australia, New Zealand, and South Korea.

Next is “America,” which is British for “the United States.” There are 24 US-based banks doing business in the UK right now.

Last but not least, Japan gets its own category. There are 10 Japanese banks operating in the UK

The very biggest banks operating in the UK are mostly headquartered in China and the United States.

For starters, each of China’s “big four” state-owned banks — which also happen to be the four biggest banks in the world — has an operating license in the UK:

  • Bank of China
  • Agricultural Bank of China
  • China Construction Bank
  • Industrial & Commercial Bank of China

The “big four” US-based banks, all of which are also in the top 20 biggest banks in the world, have a presence in the UK as well:

  • JPMorgan Chase (Chase Bank)
  • Bank of America
  • Citibank
  • Wells Fargo

All but Wells Fargo have multiple subsidiaries operating in the United Kingdom.

A few UK-based banks are worth writing home about, size-wise. The biggest by some distance is London-based HSBC Holdings, followed by Barclays Bank. If either or both sound familiar, it’s because both have significant US operations.

Six UK-based banks had at least €100 billion in assets as of December 31, 2021, according to S&P Global:

Rank Bank Name Assets in trillions (€)
1 HSBC Holdings 2,517.14
2 Barclays Bank 1,648.16
3 Lloyds Banking Group 1,055.52
4 NatWest Group 931.06
5 Standard Chartered 727.90
6 Nationwide Building Society 332.52

Final Word

The United Kingdom has about 130 homegrown banks. Approximately 230 others have permission to accept deposits from people in the United Kingdom.

That sounds like a lot of banks, but it’s a far cry from the nearly 5,000 commercial banks licensed to do business in the United States. Even after accounting for the United States’ larger population, the US has many more banks per capita — a legacy of a fragmented frontier financial system.

That doesn’t mean the UK financial system is superior. In fact, fierce bank-on-bank competition in the US means we Americans have tons of generous new bank account promotions and rewards credit cards to choose from.

Maybe that whole revolution thing was a good idea after all.

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