BRIC banks profit as European and US grip on Top 1000 loosens
The global financial landscape is changing, reflected in US and European dominance of the Top 1000 banks beginning to wane.
If evidence is needed that the global banking landscape is shifting, a glance at The Banker’s 2008 Top 1000 World Banks ranking is illuminating. The US banks are a pale shadow of their former selves on the global stage.
Profits for the 169 US banks in the 2008 listing (fiscal 2007 figures) at $112.8bn accounted for just 14% of the Top 1000 aggregate, compared with 24% the previous year; and going back five years to the 2003 ranking, they provided a whopping 49% of the total. Also the US core bank presence is diminishing, falling to 169 banks from 185 last year and 210 in the 2003 ranking.
As the US grip is slipping, Europe is not faring much better. Profits at the 266 EU banks, down from 279 last year, managed to maintain the EU 27 share of Top 1000 profits at 41% but the bleak economic outlook for Europe does not auger well.
While the US subprime crisis and its aftermath continue to affect developed markets, many emerging economies, especially Brazil, Russia, India and China (the BRIC countries), are motoring on relatively unaffected. And the banks from these countries and other emerging economies are slowly but surely asserting their influence and growing strength.
BRIC rise
The BRIC bloc in the 2008 ranking accounts for 119 banks in the Top 1000, almost more than double the 61 banks in the 2003 ranking. And this year, China’s two biggest, ICBC and Bank of China, are in the Top 10 World Banks, whereas five years ago they were only 16th and 15th, respectively. Also, Chinese banks now account for three of the top four banks in the world by market capitalisation; this is a massive change from 2003, when none of them were even in the Top 25 by market capitalisation.
Global shift
The financial dynamics of the world are shifting and the 184 Asian banks in the Top 1000 now account for 19% of aggregate profits compared with 12% last year. The Middle East and Latin America remain relatively small but their banks are expanding, and banks in the Gulf are destined to increase their global role on the back of massive oil wealth.
Banks from the US and Europe still dominate the Top 1000 World Banks but they are on the wane, a new global financial landscape is emerging and banks from a new range of countries are making their presence felt.
