Each year since 1970, The Banker has published a list of the world's 1000 largest banks, providing a key source of data and analysis for the industry. As the strategist for financial services for Akamai, I look forward to seeing this new list each summer, watching how Akamai's banking customers move up or down, and tracking our market penetration. But beyond that, The Banker provides excellent commentary on the shifts in global banking, the forces behind those movements, and the overall health of the sector.
Below is a summary of major points made in The Banker's most recent publication, along with my own thoughts on China.
China Dominates the Top 10:
A side-by-side comparison of the Top 10 banks from 2010 verses 2015 speaks volumes about the global shift in banking, and about world economics over the last few years. In 2010, only one Chinese bank made the Top 10. Six years later, Chinese banks dominate.
Make no mistake; the banks at the top of this list are absolutely enormous in size. ICBC reports having over 460 million E-banking customers, 150 million mobile banking customers, and over 460,000 employees. It sits atop the Forbes Global 2000 list. Remarkably, the 2nd, 3rd, and 4th companies on the Forbes list are also Chinese banks.
Aside from The Banker list, I recall two news items from the past few months that highlight the shift of world economics from West to East. First, U.S. Ambassador to Japan Carolyn Kennedy's 60 Minutes interview, where she said:
"You guys are missing the story. What is going out here in Asia is, there is so much opportunity for America. There is so much goodwill toward America. There is economic opportunity."
A second and more important example, which has been in the news for much of 2015, is the creation of China's new Asian Infrastructure Investment Bank (AIIB). Many articles and commentaries appear in the news media about the AIIB, with some citing it as a symbol of China's rise as a financial superpower.
Much more could be said about China, but's move along to a roundup from around the globe from this year's "Top 1000 World Banks" report.
Highlights From The Banker 2015 Top 1000:
- Recovery continues, with Western Europe's share of global bank profits now at 14%, up from 11% the year before. Bank profits doubled in this region to $60B.
- Although profits are up, this is due in part to shrinking balance sheets, shrinking global footprints, and slashes in headcounts in many cases.
- Europe lost its place as the largest banking marketing in the world to China and the US, as measured by Tier 1 assets.
- Some banks will continue to sell parts of their business in order increase their capitalization ratios.
- Conflicts in Ukraine, sanctions in Russia, and widespread currency devaluation pushed down the region's share of global bank profits to just 1%.
- Exchange rate impacts pushed additional banks down the Top 1000 list, due to the fact that the ranking is based in $USD.
- Global share of banking profits from this region are down slightly, but still over 50%.
- There are some indicators that Asian banks may be ready to fill the void left in countries as traditional cross border banks from Europe pull out of those countries.
- Growing stability among the top ranked banks in North America.
- Large restructuring within some of the largest banks, with slashed headcounts in many cases.
- No movement within the top 7 ranked banks verses last year.
- Six Canadian banks appear in the regional Top 25 list, as in previous years.
Central and South America:
- Brazil continues to dominate the rankings within the region, taking the top 5 spots.
- Falling oil prices have heavily impacted the economic fortunes of some countries in the region.
- Sluggish local banking industry, due to two decades of deflation, and a squeeze on interest rates.
- Japanese banks are expanding internationally, with a focus on Asia rather than Europe.
- This year, China has overtaken Europe at the largest baking market by Tier 1 assets.
- In contrast to the Europe, the US, and much of the world, staffing and hiring continues to increase in China banks, accounting for eight of the top 10 largest increases in employees from 2011 to 2014.
- The largest banks increased staff over 10%, while the second tier banks saw increases of 30% to 60% in the period of 2011 to 2014.
- No signs of a slowdown for the China banks.
Akamai serves banks in markets all around the globe. Whatever ups and downs the future holds for the world's banks, Akamai's mission is to deliver a fast, reliable, and secure Internet to enable our banking customers to grow their business, to deliver world-class products and services, and to give them a competitive edge.
Rich Bolstridge is Chief Strategist, Financial Services at Akamai Technologies