This year’s Top 1000 World Banks new arrivals ranking provides a good insight into the fortunes of the world’s regional economies over the past 18 months. Chinese and Russian lenders have failed to make an impact on this year’s new arrivals category, despite the fact that Chinese institutions have further strengthened their grip on the main Top 1000 ranking.
Just five Chinese banks make the new arrivals category in 2015, compared with 19 in the 2014 edition. Moreover, not a single bank from Russia makes it into the top 44 new arrivals this year, compared with the eight that were present last year.
The absence of these lenders from the category is partly linked to local operating conditions. While China’s economy continued to cool during the review period for this year’s ranking, Russia has also been subject to various political and economic challenges. This environment may have dampened the growth prospects of smaller financial institutions.
The dominance of Chinese and Russian lenders in terms of new arrivals in last year’s ranking – they collectively accounted for 27 banks – has been replaced by a much broader range of players in terms of geographical breakdown. The single largest contributor this year is the US, with seven banks, followed by China’s five and Kazakhstan with three. In total, 24 jurisdictions are represented in the 2015 new arrivals ranking, compared with 19 the year before.
Building on the trend from the Top 1000 World Banks 2014, lenders from western Europe have made a particularly strong showing, with 10 banks making this year’s new arrivals ranking. Germany’s NRW Bank, the state development bank for North-Rhine Westphalia, has stormed to the top of the category with Tier 1 capital of $22.2bn. This is followed by France’s Banque Postale in second position as it continues to strengthen its capital position as part of a broader 2013 to 2018 development strategy.
In third place is Portugal’s Novo Banco, a new institution established in August 2014 as part of the rescue of Banco Espírito Santo (BES). Under the terms of the agreement, Novo Banco, the so-called good bank including BES’s healthy assets, was recapitalised with €4.9bn of public funds. Though this was a significant setback for Portugal, just as it emerged from a three-year EU and International Monetary Fund-backed bailout package, the rescue has proved highly successful. Rounding out the top five in this year’s new arrivals rankings is China’s Zhongyuan Bank and Belgium’s Argenta Bank.
Further recapitalisation initiatives in Europe, including Austria’s Hypo Group Alpe Adria and Cyprus’ Cooperative Central Bank, feature in the top 10 new arrivals. They are accompanied by Tokyo TY Financial Group and Hekikai Shinkin Bank from Japan, as well as Vietnam’s Agribank.
Beyond the top 10, Kazakhstan’s ForteBank secures 17th place in this year’s new arrivals ranking – and 715th position in the global ranking – with $838m in Tier 1 capital. This follows its three-way amalgamation with troubled Alliance Bank and Temirbank. Since the 2008 financial crisis, Kazakhstan’s banking sector has faced a number of challenges, with some of the country’s largest lenders struggling to cope with excessively high non-performing loan ratios. While the government, in partnership with the private sector, works to strengthen the country’s financial system, a number of banks are now being merged or privatised as part of the broader recovery.
Lower down the listing, US banks are more prevalent. Eagle Bancorp, a community-focused bank with a presence across Maryland, Virginia and Washington, DC, enters the Top 1000 World Banks ranking at number 915 while landing in the new arrivals category at 27. The Banc of California, meanwhile, enters this year’s Top 1000 rankings at 957 and the new arrivals ranking at 33, following a number of years of stellar balance sheet growth.
Other US lenders include Berkshire Hills Bancorp, which enters the Top 1000 ranking at 971, while ServisFirst Bancshares and Trico Bancshares enter at 988 and 989, respectively. Cumulatively, the preponderance of US lenders points to the strength of the country’s economic recovery and the success of new regulations designed to buttress the banking sector’s capital strength.
Reflecting Africa’s economic vibrancy, as well as the strong year enjoyed by many of its lenders in 2014, this year’s new arrivals rankings boast the presence of five banks from across the continent, compared with none from last year. From north Africa, Crédit Agricole du Maroc comes in at 18 on the new arrivals ranking and 850 globally. This success is mirrored to the east, where Egypt’s Banque du Caire enters the Top 1000 rankings at 985, and the new arrivals ranking at 40.
For Banque du Caire in particular, this is a striking result. After a new management team was introduced in recent years, the state-owned lender has effectively reduced its non-performing loans ratio, as well as a sky-high cost-to-income ratio, to become one of Egypt’s best performing financial institutions.
In sub-Saharan Africa, Nigeria’s Stirling Bank has defied the challenging local operating environment to enter this year’s new arrival ranking at 32, with a global position of 956. In east Africa, the Cooperative Bank of Kenya and the Commercial Bank of Ethiopia come in at 981 and 887 in the global Top 1000, respectively. The breadth of African lenders in this year’s new arrivals category is encouraging, as it points to the growing maturation of banking sectors outside of the dominant hubs of South Africa and Nigeria.
Lenders from Latin America maintain their lower level presence from the 2014 new arrivals rankings, with just four lenders from the region to be found this year. This is in stark contrast to the success Latin American banks enjoyed in the 2012 ranking, when 10 banks made the new arrivals category. Mexico’s Banco Compartamos enters at 19 in terms of new arrivals, while securing position 877 in the global ranking. Meanwhile, Guatemala’s Banrural falls just shy of the top 20 new arrivals, coming in at 23 and taking a global ranking of 891. The other two new Latin American lenders, Banco Fondo Comun from Venezuela, and Banco del Pacifico from Ecuador, secure position 31 and 34 in the new arrivals category, respectively.
While the new arrivals ranking may have been missing the significant numbers of Chinese lenders seen in previous years, this is not the case for lenders making a return to The Banker’s Top 1000 World Banks ranking in 2015. Eight out of the 26 returning institutions hail from China, narrowly beating the US, which sees six lenders return. The stronger performance of returning Chinese institutions may be attributable to these already sizeable lenders beefing up their capital reserves ahead of looming Basel III requirements.
Meanwhile, the Philippines is well represented in the category of returning banks with three lenders, including Land Bank Philippines, which comes in at number six on the returners’ list and 566 globally. Vietnam’s HD Bank is the only other lender hailing from south-east Asia on this year’s list of returning institutions.
The Middle East and north Africa region is represented by entries from Oman, Egypt, Libya and Kuwait. Egyptian entry Arab African International Bank, which re-enters the Top 1000 ranking at 706, is reaping the benefits of a recent drive to bolster its capital strength. Meanwhile, Oman’s Bank Sohar re-enters the Top 1000 ranking following a number of capital raising initiatives executed over the past 18 months.
From Latin America, two Venezuelan lenders have returned to the Top 1000 World Banks in 2015. Banco Bicentanario, at 636 in the global ranking, is joined by Venezolano de Credito at 928.
