Chinese banks overtake global big banks

It is the sign of the times. In the 1990’s Japanese banks occupied most of the top 10 slots, then they were replaced by the Americans. Since 2000, mostly US banks occupied the top 10 slots in banking globally besides a few odd European banks and then they are now replaced by the Chinese. Now, it is the turn of the Chinese banks. Effective 2009, the Chinese banks occupy the majority of the top 10 slots.

The amazing chart below indicates that 4 banks out of the top 5 are Chinese according to market capitalization. And 6 out of top 13 also are Chinese. Some other notables are 3 banks from Brazil and one from Russia. Except for Standard Chartered, no other European bank shows up in the top 15 and only 1 from the USA!! The strength of the Canadians shows up with 2 banks in the top 15, out of which Scotia has inched up while RBC remains as strong as it was 10 years ago.


Interestingly, no German or Swiss bank is there and of course, none of the Japanese have the strength they commanded 20 years ago, mainly due to their decades long decline in the general economy.

Although many people would claim that Chinese would fall down, however, my opinion differs for the next few years. Chinese have the population size that neither US, nor Japan and neither Europe ever had. China also has sizeable trade surpluses due to their strong exports. Most of all, what China has today, none of the above countries ever had: a surplus saving of over USD 2 trillion, to steer their economy confidently, in the event of any trouble.

What the Chinese also have today, mostly due to lessons learnt (hopefully) due to the ongoing crisis is that they can monitor and alter their monetary policies to change interest rates, amend cash reserve requirements of banks and help the citizens to gain access to loans in order to stimulate economic growth etc.

While it is quite possible and likely that Chinese banks may form a bubble, but until now, the Chinese Government has indeed done a commendable job and the banks are under no pressure to fall, and I expect the rise of Chinese banks both in their domination and rise in share prices to continue to more commanding heights.

The FT has an excellent article on the matter which is a must read whether you wish to enhance your wealth by investing or if you are a banker.

From the Financial Times:
China banks eclipse US rivals

By Patrick Jenkins in London
Published: January 10 2010 22:32 | Last updated: January 10 2010 22:32

This trend is expected to continue and grow.

Stay tuned for the world's largest IPO by a Chinese bank ABC in the coming months...