As Despite considerable hype over globalisation and expansion abroad, for most banks around the world, there is no place like home. While many of the world's largest banks are actively acquiring assets outside their borders, The Banker's latest global banking survey shows a surprisingly similar result over recent years - only approximately 30 banks worldwide have more than one-third of their total assets outside their domestic base.
So while, for example, the bulk of banking assets in central Europe are now foreign owned and a large proportion of the Latin American banking market is in Spanish or other foreign hands, the ultimate owners tend to be rooted in their home markets.
Even Citigroup, which is the largest bank in the world in capital terms, with operations in more than 100 countries, cannot disguise the fact that the great bulk of its assets are in the US. This is mainly because its Travelers insurance business is primarily domestic. In fact, despite having a mammoth $328bn in average non-domestic assets, Citigroup comes well down our listing in 28th place, with 36.4% of its business overseas, less than 40.95% in last year's ranking.
The good and the bad
What do these figures mean? There is no particular qualitative analysis to be drawn from the overall listing and there are no good or bad conclusions. A higher listing, for instance, does not necessarily make a bank more profitable. But the figures do help to understand better the strategies and structures of some of the world's major banks. In particular, they give a guide to the diversity of a bank's assets. In some cases, they show the strategy direction of certain institutions as new opportunities are sought. Clearly, some banks can be focused on a very non-domestic agenda.
Any useful analysis, however, depends on the quality of the information given, and while The Banker is constantly seeking greater transparency, some banks still shy away from giving detailed responses in regard to this unique set of data. Many either do not publish specific data or they analyse their domestic markets differently. This applies in particular to the European-based Dexia and Nordic-based Nordea. As euro-zone banks develop, the concept of a domestic bank may become more difficult to define. HSBC Holdings, with 6500 offices in 82 countries, does not consider it has a domestic base, and the 55.6% ratio shown reflects assets outside Europe (not just the UK).
New leader
Nevertheless, this year, increased transparency has produced a new leading global bank, Bahrain-based Arab Banking Corporation (ABC). A new entrant, ABC tops this year's listing with data showing that 86.37% of its assets are held outside its home base. With sizeable subsidiaries in Spain and Hong Kong and much of its Arab-related international business booked through London, ABC has its focus on the Arab world, but its assets spread well outside Bahrain.
Apart from ABC, the top five remains much the same as last year, with American Express Bank, a relatively small US-based bank, in second place on 84.1%, followed by Swiss giants UBS (80.5%) and Credit Suisse Group (78.7%) at third and fifth. Both Swiss banks increased their ratios significantly this year, largely as a result of overseas acquisitions. Credit Suisse lifted its assets held abroad by almost 6% as assets in the US doubled to $228bn. Both banks indicate that the proportion of staff overseas is around 58%. Meanwhile, the UK-based Standard Chartered Bank slipped to fourth place with 80.0% of assets abroad but, with 500 offices worldwide, mainly in Asia, it remains a diverse group.
Germany's Deutsche Bank moved into the 70%+ grouping for the first time this year, reaching 71.9%. The bank's focus on overseas acquisitions can clearly be seen by the fact that our listing two years ago showed Deutsche with only 53.2% of assets outside Germany. The shift overseas also shows that Deutsche now has 57.8% of its income coming from outside Germany with 48.5% of its staff overseas, a vast change from two years earlier when the comparison figures were 31.7% on income and 35.3% on staff.
Looking at this year's list, 14 banks have more than 50% of their assets abroad, two more than last year. Belgium's KBC and France's BNP Paribas have been the big movers in this area. Expansion into central Europe has pushed KBC's ratio from 45.9% to 54.7% this year. Likewise, BNP's international acquisitions, especially in the US, have moved the French bank into 10th place, with assets abroad accounting for 61.6% of their total, compared with 47.2% the previous year.
Further down, the two big Spanish outfits, Santander Central Hispano and Banco Bilbao Vizcaya Argentaria (BBVA), both showed significant growth on the back of South American acquisitions. Santander (52.7%) and BBVA (41.4%) can expect further overseas growth and Santander now notes that 62.4% of its income and 66% of its staff are outside Spain.
Consolidation will continue to change the listing. While Bank Austria was 12th last year, as part of HypoVereinsbank now the ratio has been significantly altered with the German bank entering the list in 30th place on 34.4%. Also, since its merger with the more domestic Chase, JP Morgan has slipped, with the overall group now at 35.3%. In Denmark, Danske Bank's link with a domestic insurance group forced it out of the list.
International growth
The lower part of the list reflects the growing international interests of the Austrian, Irish and Canadian banks. Austria's RZB Group, which continues to expand in Russia and central Europe, has jumped up to 15th place on 47.2%, with 77.5% of staff abroad. All the five major Canadian banks are in the range of 37.3% to 43.3%, which is likely to expand further as these banks build operations in the US and further south.
While our listing contains both large and small banks, the total assets of all those included in this Top 30 amount to $9600bn or approximately 25% of the total assets of our Top 1000 World Banks listing. In turn, the assets held outside domestic domicile account for 13.5% of the Top 1000 total.
How is the list likely to change? Consolidation can bring some curious outcomes but, with cross-border mergers in a quiet period at present, no major shifts are expected in the short term, especially when key cross-border players such as the Italian banks are dominated by domestic assets.
