Financial conglomerates exploit its hierarchical structure to sell assets internally from bank to more capitalized financial company. This allows to shift the best assets from the bank in downturn by maximizing its expected loss and providing more capitalized financial company with higher quality bank assets. However, in the market for securitized assets, standalone banks sell worse assets out of the pool, keeping safe assets on its balance sheet, independent of the state of the economy. Risk taking incentives at origination stage are also more pronounced for banks in financial conglomerates than for standalone banks. The reason is that standalone banks need to signal asset quality to the market by keeping the large fraction of the originated asset even in downturn, whereas banks in financial conglomerate may originate worse assets, since they are allowed to fail in downturn.