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Top 1000 World Banks - Asian lenders make presence felt in new arrivals table

The Top 1000 2018 new arrivals table show less diversity and a general drop in Tier 1 capital but it is China that brings the most new entrants. James King reports.
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The 2018 Top 1000 World Banks new arrivals table includes 27 banks from a total of 15 different markets. While the 2018 list of new players is both smaller and less diverse than the same table featured in the 2016 and 2017 world rankings, it nevertheless offers a good snapshot of the trends shaping the global banking landscape.

Chinese banks have replaced their US peers as the most numerous in the new arrivals table, with a total of five institutions making the cut. This is followed by Japanese banks, which account for four positions. Italy and the US both contribute three institutions each, while Indian banks secure two positions in the table. The remaining markets, which cover Africa, Asia-Pacific, Latin America and Europe, all account for one bank each.

A lack of headline merger and acquisition activity in the advanced markets, relative to the 2017 ranking, has contributed to a conspicuous reduction in the average Tier 1 capital size of new arrivals in this year’s table. The cumulative Tier 1 capital position of the top three new arrivals is about $12.4bn, compared with $29.5bn in the 2017 edition. But in the place of merger and acquisition activity, other notable trends have emerged. They include a strong indication of the extent to which some global banks have been retreating from frontier and emerging markets to focus on their core or domestic business operations.

Absa Group, the largest new arrival in the 2018 rankings with $7.75bn in Tier 1 capital, is a case in point. Following the 2008 financial crisis, several major global banks began to scale down their international operations in response to tougher regulatory requirements on these activities.

For its part, Barclays chose to lower its shareholding in Barclays Africa Group (to about 14.9% in December 2017 from 62% at its peak) in order to focus on core business lines in the UK and the US. With a more diversified shareholder base, Barclays Africa Group has rebranded to Absa Group (subject to regulatory approval), the name of the institution in which Barclays initially acquired a majority stake in 2005.

Absa Group’s emergence as the foremost new arrival in the 2018 ranking is a reminder that the repercussions of global banks withdrawing from key geographies are still playing out. In this case, the Barclays exit has left only two international lenders operating a universal banking model – and with a meaningful footprint across the continent – in Africa. It also adds a new regional player (Absa Group) to Africa’s banking mix in what is becoming an increasingly competitive environment. Absa has recently announced plans to double its market share of Africa’s banking revenues to 12% in the coming years.

Meanwhile, another African lender, Banco de Fomento Angola (BFA) has also made it to the top 10 banks in the new arrivals table, with $886m in Tier 1 capital. Previously listed as a foreign-owned subsidiary under the control of Portugal’s Banco BPI, BFA has since emerged as a holding company in its own right, after BPI relinquished its majority ownership stake in the bank.

The inclusion of two African banks in the top 10 new arrivals is something of an aberration. It is worth noting that in the 2017 edition, not a single African bank featured in the 36-institution new arrivals table. The other change is that banks from Asia have dominated the largest of the new arrivals in the 2018 edition. Of the 15 largest new arrivals in the 2017 ranking, only four hailed from Asia. This year eight Asian lenders feature in this same segment of the new arrivals table – largely a result of the contributions of Japanese and Chinese banks.

The largest Asian bank to feature in the new arrivals table is Japan’s Aeon Bank, coming in third, with $2.25bn in Tier 1 capital, followed by another Japanese lender, Seven Bank, in fourth place with $1.76bn. Notably, Hong Leong Finance, a Singaporean institution, secures fifth spot with $1.23bn in Tier 1 capital. This is the first time a Singaporean entity has featured in the new arrivals table for a number of years. Other contributions come from India, with RBL Bank taking eighth spot on the table, and Indonesia, with Bank Mayapada Internasional coming in in 21st.

At the lower end of the new arrivals table it is a geographically diverse affair. This includes Argentina’s Banco Supervielle with $519m in Tier 1 capital, coming in at position 20. This is the only financial institution from the South American mainland to feature in either the new arrivals or 'welcome back' table in the 2018 ranking, marking a notable departure from 2017’s edition in which banks from Peru, Colombia and Venezuela featured prominently across both tables.

Meanwhile, two banks from central and eastern Europe have made the 2018 table. Poland’s Bank Ochrony Srodowiska comes in at 24 on the table with $488m in Tier 1 capital, while Hungary’s MKB is in 27th place with $479m. From the wider region, they are joined by Denmark’s Saxo Bank, which enters the Top 1000 world banks with a global rank of 985 and position 24 on the new arrivals table with $490m in Tier 1 capital. Meanwhile, Russia’s SMP Bank enters the table with $500m in Tier 1 capital and 22nd place.

The 2018 'welcome back' table, which highlights lenders making a return to the Top 1000 World Banks ranking, is highly geographically diverse. A total of 18 markets feature in this year’s table, up from 14 in the 2017 ranking. Though Chinese banks dominate the table’s composition, with nine lenders making the cut, only one other jurisdiction provides more than one lender, which is the US with three banks. The remaining markets contribute just a single bank each.

It is worth noting that the preponderance of Chinese institutions in the 2018 tables is down largely to their late disclosure of information for the 2017 ranking. The only exception to this is the highest ranked Chinese lender, Bank of Gansu, which boasts $2.54bn in Tier 1 capital, coming in at number two on the new arrivals table. This is the first year in which the lender’s data has been made available to The Banker.

Beyond the contributions of Chinese banks, Poland’s Bank Pekao tops the welcome back table in 2018 with $5.53bn in Tier 1 capital. Its return to the Top 1000 World Banks ranking comes following a number of years as a foreign-owned subsidiary of Italy’s UniCredit. The Italian lender’s sale of its stake in Bank Pekao has since seen the Polish lender emerge as a holding company, spurring its return to The Banker’s annual ranking.

Another notable addition to the welcome back table is Cuba’s Banco Internacional de Comercio, with $755m in Tier 1 capital. This marks the first time in several years that a Cuban bank has joined the Top 1000 World Banks ranking. It is also the only institution from Latin America and the Caribbean to feature in the welcome back table in 2018.

New arrivals

Rank World Rank Bank Name Country Tier 1 capital $m
1 184 ABSA Group South Africa 7,752
2 397 BancoPosta Italy 2,481
3 435 Aeon Bank Japan 2,249
4 518 Seven Bank Japan 1,758
5 651 Hong Leong Finance Singapore 1,233
6 671 Daiwa Next Bank Japan 1,172
7 696 Banca IFIS Italy 1,082
8 722 RBL Bank India 1,006
9 781 Banco de Fomento Angola (BFA) Angola 886
10 783 Rakuten Bank Japan 881
11 790 Bank of Huludao China 866
12 810 Banca Agricola di Ragusa Italy 826
13 841 Pacific Premier Bancorp US 744
14 843 Bank of Chaoyang China 733
15 850 Independent Bank Group US 718
16 857 Bank of Shizuishan China 709
17 897 City Union Bank India 634
18 908 Ma'anshan Rural Commercial Bank China 622
19 926 Seacoast Banking Corporation of Florida US 593
20 963 Banco Supervielle Argentina 519
21 968 Bank Mayapada Internasional Indonesia 509
22 976 SMP Bank Russia 500
23 985 Saxo Bank Group Denmark 490
24 989 Bank Ochrony Srodowiska Poland 488
25 990 Bank Alfalah Pakistan 488
26 995 Taian Bank China 480
27 996 MKB Hungary 479

Welcome back

Rank World rank Bank Name Country Tier 1 capital ($m)
1 223 Bank Pekao Poland 5,532
2 391 Bank of Gansu China 2,545
3 445 Longjiang Bank China 2,207
4 453 Sichuan Tianfu Bank China 2,172
5 503 Bank of Fuxin China 1,817
6 568 Bank of Inner Mongolia China 1,545
7 662 Bank of Handan China 1,205
8 723 Haikou Rural Commercial Bank China 1,002
9 794 Yantai Bank China 855
10 836 Banco Internacional de Comercio Cuba 755
11 883 Nantong Rural Commercial Bank China 656
12 923 Banco Cooperativo Espanol Spain 594
13 937 Banca Generali Italy 573
14 938 HD Bank Vietnam 571
15 947 TBC Bank Georgia 555
16 954 CEC Bank Romania 545
17 958 Woodforest Financial Group US 537
18 962 Ringkjobing Landbobank Denmark 523
19 964 Komercijalna Banka Beograd Serbia 516
20 967 Banco Finantia Portugal 511
21 970 First Bancorp US 509
22 974 Zenit Banking Group Russia 502
23 975 Banque Raiffeisen Luxembourg 502
24 977 Kaspi Bank Kazakhstan 499
25 978 Raiffeisen Landesbank Tirol Austria 498
26 981 Enterprise Financial Services Corp US 496
27 991 Banque Nationale Agricole Tunisia 486
28 998 Budapest Bank Hungary 479

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Read more about:  Rankings & data , Top 1000 World Banks