Chain Banking

DEFINITION of 'Chain Banking'

Conceptually a form of bank governance that occurs when a small group of people control at least three banks that are independently chartered. Usually, the controlling parties are majority shareholders or the heads of interlocking directorates. Chain banking as an entity has declined with the surge in interstate banking.

BREAKING DOWN 'Chain Banking'

Chain banking is not like branch banking, where one bank has several different locations. It also differs from group banking, which has several affiliate banks within a single bank holding company. The liberalization of banking laws has also contributed to the obsolescence of this type of bank control.