UK banks continue to fall in global ranking, as Chinese dominance increases

[Edison Chen]

The post financial crisis environment has seen UK banks plummet in world rankings, leaving China to dominate international finance, according to The Banker’s Top 1000 World Banks ranking.

The top two banks in the world, ICBC and China Construction Bank, are Chinese with two further Chinese banks ranked in the top ten. China also now accounts for one third of all banking profits, driving global banking profits to an all-time high of $920 billion.

In the face of greater regulation, economic challenges and competition, UK banks now account for only 2.37% of global profits (and one thirteenth of China’s profits), down from 11% before the 2008 financial crisis. The only British bank left in the top 10, HSBC, slipped further from 4th place to 5th place this year. Back in 2008 HSBC topped the ranking with RBS in third place.

However, the UK’s economic recovery has seen its banking sector outperform much of Europe, which continues to struggle. Italian banks lost $35bn, more than any other country, with Portuguese and Irish banks also seeing heavy losses.

Scottish Independence

The Banker’s Top 1000 World Banks ranking also demonstrates how a Yes vote in the September referendum could see an independent Scotland’s economy in danger of being destabilised by its own banking sector.

Currently UK banks have a total of $9.9 trillion in assets, roughly four times UK GDP. However, if Scotland left and became responsible for Scottish headquartered banks such as RBS, HBOS and Clydesdale, it would have banking assets of 12 times Scottish GDP.

This would be even larger than the 10:1 ratio that proved so ruinous for Iceland, and presents a significant risk for the country’s economic stability.

Editor of The Banker, Brian Caplen, said: “Had it been independent during the financial crisis, there is little doubt that an independent Scotland would have been devastated and forced to turn to the IMF for help. The temptation in future under independence would be to give Edinburgh light touch regulation to make it more competitive as a financial centre. This might have serious consequences.”

Top 10 global banks ranked by Tier 1 Capital

Top 10 banking profits by Country

The Banker Top 1000 World Banks 2014 rankings - UK Press release: For immediate release - Top 1000 World Banks -

 

[Aepsilons]

Good development !

 

[Chinese-Dragon]

Profitable state-owned enterprises.

@LeveragedBuyout

Of course the question is, how much capital was needed to create that profit? And the answer is a lot. So as usual, there is the question of efficiency when it comes to SOEs.

Expanding our private banking sector is still necessary (as will be done in our upcoming reforms), because the fixed interest rate policy has led to an ENORMOUS "shadow banking" sector, that can offer higher interest rates on deposits.

That's a big vulnerability, something that can only be properly fixed if we allow more private players who can offer higher deposit interest rates. So private companies like Tencent and Alibaba will be allowed to enter the private banking sector, I believe they have already received official approval to set up their new private banks.

Tencent Holdings Gets Approval For New Private Bank - Forbes

Additionally, the expansion of the private banking sector will increase the amount of competition in our banking industry, forcing the SOEs to become more efficient in order to match the competitiveness and efficiency of the private players.

 

[ChineseTiger1986]

Profitable state-owned enterprises.

@LeveragedBuyout

Of course the question is, how much capital was needed to create that profit? And the answer is a lot. So as usual, there is the question of efficiency when it comes to SOEs.

Expanding our private banking sector is still necessary (as will be done in our upcoming reforms), because the fixed interest rate policy has led to an ENORMOUS "shadow banking" sector, that can offer higher interest rates on deposits.

That's a big vulnerability, something that can only be properly fixed if we allow more private players who can offer higher deposit interest rates. So private companies like Tencent and Alibaba will be allowed to enter the private banking sector, I believe they have already received official approval to set up their new private banks.

Tencent Holdings Gets Approval For New Private Bank - Forbes

We support the POEs to gain more power, but it doesn't mean to forsake our SOEs.

The primary goal is to strengthen the competition capability of our SOEs.

Since SOEs are still the backbone of our economy, which is the only thing we can truly rely during the critical moment.

 

[Chinese-Dragon]

We support the POEs to gain more power, but it doesn't mean to forsake our SOEs.

The primary goal is to strengthen the competition capability of our SOEs.

Since SOEs are still the backbone of our economy, which is the only thing we can truly rely during the critical moment.

Very true, SOEs will still dominate our vital/sensitive sectors, such as banking and oil. That's necessary to ensure that our national security interests do not become compromised.

Allowing Tencent and Alibaba to open private banks is a good move though, it will force the SOEs to become more competitive/efficient, and it will help to fix the shadow banking problem, by allowing alternate methods of getting loans and higher interest rates on deposits in a more open and safe manner.

It will reduce our vulnerability, and increase our efficiency in one go. Without compromising the majority domination of SOEs in the sector.

 

[ChineseTiger1986]

Very true, SOEs will still dominate our vital/sensitive sectors, such as banking and oil. That's necessary to ensure that our national security interests do not become compromised.

Allowing Tencent and Alibaba to open private banks is a good move though, it will force the SOEs to become more competitive/efficient, and it will help to fix the shadow banking problem, by allowing alternate methods of getting loans and higher interest rates on deposits in a more open and safe manner.

The POE is like a double-edged sword, you need it to vitalize your economy, yet you can't fully rely on it.

The only problems for SOE are the corruption and bureaucracy, but removing these things, they are all perfect and 100% matches our national interests.

Xi Jinping's goal is to first remove the corruption of the SOE, then making a more competitive environment for both SOE and POE, so this will provide more driven force for our economic wheel.

 

[Chinese-Dragon]

The POE is like a double-edged sword, you need it to vitalize your economy, yet you can't fully rely on it.

The only problems for SOE are the corruption and bureaucracy, but removing these things, they are all perfect and 100% matches our national interests.

Xi Jinping's goal is first remove the corruption of the SOE, then making a more competitive environment for both SOE and POE, so this will provide driven force for our economic wheel.

Exactly. It's a good strategy, I like it a lot.

 

[ChineseTiger1986]

Exactly. It's a good strategy, I like it a lot.

Some corrupt czars have made the SOE a big playground for their own family. These scums have to be removed, but it doesn't mean to deny the essential of the SOE.

The SOE itself has no sin.

Only the healthy competitive environment will keep the SOE healthy, meanwhile also to control the greedy/monopolistic nature of the POE. A monopolistic SOE still bears more social responsible than a monopolistic POE. Thus a monopolistic POE is even worse than a monopolistic SOE.

 

[LeveragedBuyout]

Profitable state-owned enterprises.

@LeveragedBuyout

Of course the question is, how much capital was needed to create that profit? And the answer is a lot. So as usual, there is the question of efficiency when it comes to SOEs.

Expanding our private banking sector is still necessary (as will be done in our upcoming reforms), because the fixed interest rate policy has led to an ENORMOUS "shadow banking" sector, that can offer higher interest rates on deposits.

That's a big vulnerability, something that can only be properly fixed if we allow more private players who can offer higher deposit interest rates. So private companies like Tencent and Alibaba will be allowed to enter the private banking sector, I believe they have already received official approval to set up their new private banks.

Tencent Holdings Gets Approval For New Private Bank - Forbes

Additionally, the expansion of the private banking sector will increase the amount of competition in our banking industry, forcing the SOEs to become more efficient in order to match the competitiveness and efficiency of the private players.

You are making my presence in this forum redundant. Maybe from now on, when asked about China's economy, I will just say "see Chinese-Dragon's and Edison Chen's posts." I am in complete agreement with your points.

 

[Aepsilons]

One thing that I will admit and recognize, the Chinese are well known for their banking systems. There is a joke in Japan that goes like this, "once you borrow from a Chinese bank, you either pay in full with percentage, or you lose your hand". Chinese-Japanese are known for their financial responsibility. So, I think this attribute is a trait that most Chinese share.

 

[qamar1990]

The post financial crisis environment has seen UK banks plummet in world rankings, leaving China to dominate international finance, according to The Banker’s Top 1000 World Banks ranking.

The top two banks in the world, ICBC and China Construction Bank, are Chinese with two further Chinese banks ranked in the top ten. China also now accounts for one third of all banking profits, driving global banking profits to an all-time high of $920 billion.

In the face of greater regulation, economic challenges and competition, UK banks now account for only 2.37% of global profits (and one thirteenth of China’s profits), down from 11% before the 2008 financial crisis. The only British bank left in the top 10, HSBC, slipped further from 4th place to 5th place this year. Back in 2008 HSBC topped the ranking with RBS in third place.

However, the UK’s economic recovery has seen its banking sector outperform much of Europe, which continues to struggle. Italian banks lost $35bn, more than any other country, with Portuguese and Irish banks also seeing heavy losses.

Scottish Independence

The Banker’s Top 1000 World Banks ranking also demonstrates how a Yes vote in the September referendum could see an independent Scotland’s economy in danger of being destabilised by its own banking sector.

Currently UK banks have a total of $9.9 trillion in assets, roughly four times UK GDP. However, if Scotland left and became responsible for Scottish headquartered banks such as RBS, HBOS and Clydesdale, it would have banking assets of 12 times Scottish GDP.

This would be even larger than the 10:1 ratio that proved so ruinous for Iceland, and presents a significant risk for the country’s economic stability.

Editor of The Banker, Brian Caplen, said: “Had it been independent during the financial crisis, there is little doubt that an independent Scotland would have been devastated and forced to turn to the IMF for help. The temptation in future under independence would be to give Edinburgh light touch regulation to make it more competitive as a financial centre. This might have serious consequences.”

Top 10 global banks ranked by Tier 1 Capital

Top 10 banking profits by Country

The Banker Top 1000 World Banks 2014 rankings - UK Press release: For immediate release - Top 1000 World Banks -

thank god…. anything bad for uk is good news.

 

[Aepsilons]

thank god…. anything bad for uk is good news.

Why so hostile against the British ? I have a hunch, but please elaborate.

 

[qamar1990]

Why so hostile against the British ?

i just hate them….

 

[Aepsilons]

i just hate them….

There has to be a reason for the animosity. Is the etiology of your hate -- historical based?

 

[Chinese-Dragon]

One thing that I will admit and recognize, the Chinese are well known for their banking systems. There is a joke in Japan that goes like this, "once you borrow from a Chinese bank, you either pay in full with percentage, or you lose your hand". Chinese-Japanese are known for their financial responsibility. So, I think this attribute is a trait that most Chinese share.

That's right.

East Asian countries also have very high savings rates, which gives banks more deposits to hold as reserves, so depending on the reserve requirement ratio, allows them to lend out more money too.

And the people in East Asia are also less likely to buy things on credit/loans as well, I guess we are more risk-averse when it comes to money issues. Which could be both an advantage and a disadvantage, depending on the situation.