The number of new arrivals in the 2019 Top 1000 World Banks ranking has reached the lowest level in more than a decade. Only 18 banks from 10 countries have made their first appearance in the global ranking, compared to 27 banks in the 2018 ranking and 52 in 2014.
US institutions are the most numerous in the new arrivals table, with a total of five banks, outpacing the Chinese banks, which have only two new players, down from five in 2018. Japan also contributes two banks to the table, while the UK registers three. Of the other six new entrants, two originate from Africa, two from central and eastern Europe, one from western Europe and one from Latin America.
While Japan has only added two new banks, they are among the largest of the arrivals. Topping the table is Daishi Hokuetsu Financial Group, with Tier 1 capital of $3.4bn and ranked 329 in the Top 1000 World Banks. The group is a result of a merger between Daishi Bank and Hokuetsu Bank, two small regional lenders, which was finalised in October 2018.
Its compatriot, San ju San Financial Group, is the fourth largest new entrant, with Tier 1 capital of $1.9bn, and jumps in at 494th position in the Top 1000 ranking. Mie Bank and Daisan Bank merged to create the group.
Both groups illustrate the ongoing consolidation in the Japanese domestic market attributed to a decline in population and the Bank of Japan’s negative interest rate policy, which is affecting the banking industry’s lending margins, profitability and savings base. This merger and acquisition (M&A) trend looks set to continue, particularly considering signs of another economic downturn; however, rumours of a tie-up between struggling regional lender Suruga Bank and Shinsei Bank were recently quashed by the latter’s CEO, Hideyuki Kudo.
Outside Japan, however, there is a persistent lack of large M&A deals in the advanced markets, a trend identified in 2018. This has led to an ongoing decline in the average Tier 1 capital size of new arrivals. The collective Tier 1 capital position of the top three new arrivals in the 2019 edition is about $8.9bn, compared with $12.4bn in 2018 and $29.5bn in 2017.
The UK’s biggest new entrant is CYBG, which includes Clydesdale Bank, Yorkshire Bank, B and Virgin Money UK, acquired in October 2018. It comes in second in the new arrivals table, with Tier 1 capital of $3.3bn and a position of 333 in the global ranking, following its demerger from National Australia Bank when the latter exited the UK market. (As The Banker went to press, CYBG announced it will be rebranding its entire portfolio as Virgin Money.)
In third place in the new arrivals table, African Export Import Bank (Afreximbank), a pan-African multilateral financial institution headquartered in Cairo, leaps into the global ranking at 442nd place; this is due to the data not being made available in time in previous years. One other African bank makes it into the global rankings for the first time: Diamond Trust Bank (DTB) Kenya. DTB acquired the Kenyan operations of Pakistan’s Habib Bank in August 2017 to expand its operations.
Rounding out the top five new entrants is China's Jiangmen Rural Commercial Bank, with $1.7bn in Tier 1 capital and ranked 546th globally. This new arrival is a result of the merger between Jiangmen Xinhui Rural Commercial Bank and Jiangmen Ronghe Rural Commercial Bank, completed in September 2018.
Its compatriot MYbank, in 11th place in the new arrivals table, enters the 2019 Top 1000 World Banks ranking in 881st position, with Tier 1 capital of $685m. The online private commercial bank, which is owned by Ant Financial Services Group, launched in May 2015 and gives some indication of the potential of challenger banks to ramp up quickly – especially when backed by a huge ecommerce platform player such as Ant.
Although the US has the highest number of new arrivals, all sit at the lower end of the global rankings, with Tier 1 capital of less than $750m. For example, OceanFirst Bank, the largest US bank to feature in the new arrivals table, has Tier 1 capital of $710m; Heritage Financial Corporation has $531m Tier 1 capital; and Origin Bancorp has Tier 1 capital of $529m. NexBank and State Bankshares scrape into the Top 1000 World Banks ranking, at positions 989 and 993, respectively, with just over $500m in Tier 1 capital each.
A Japanese lender also takes the top spot in the ‘welcome back’ table, which highlights banks making a reappearance in the Top 1000 World Banks ranking. Shinsei Bank is the largest of the 24 banks that return in 2019, with Tier 1 capital of almost $7.2bn and a world ranking of 190. Its entrance in the main Top 1000 World Banks ranking is a result of being reclassified as a bank holding company, whereas previously it was considered a foreign-owned subsidiary.
Eight Asian banks have returned to the rankings in 2019, four of which are Chinese lenders. Many banks dropped out of the 2018 rankings due largely to their late disclosure of information, such as state-owned LandBank Philippines. Other institutions’ sound performance and strong capital provisioning has helped them to get back into the Top 1000 club.
Ukraine’s largest lender, PrivatBank, is back in the rankings after being put under state control in 2016 and suffering negative equity in the 2017 review period. However, the state injected more than $5bn to recapitalise the bank and it now has Tier 1 capital of $1.1bn. The International Bank of Azerbaijan has also returned, having not graced the ranking since 2016.
US banks have fared relatively well due to a buoyant economy and president Donald Trump’s corporate tax cuts. Four smaller US institutions – FB Corp, Byline Bank, Trustco Bank Corp and City Holding Co – have re-entered the ranking due to a strong growth in Tier 1 capital that has pushed them above the 2019 bottom threshold of $492m.
One African lender graces the welcome back table this year, Banque du Caire. The bank – among other Egyptian lenders – has recovered from the massive currency devaluation in late 2016 when the central bank unpegged the Egyptian pound from the dollar.
The Banker reserves a special mention for Multibank from Panama, which has rejoined the Top 1000 World Banks in 2019, boosting its Tier 1 capital by 7.6% and squeezing into the rankings at 1000th position.
New Arrivals
Rank | World Rank | Bank Name | Country | Tier 1 Capital $m |
1 | 329 | Daishi Hokuetsu Financial Group | Japan | 3,378 |
2 | 333 | CYBG | UK | 3,329 |
3 | 442 | Afreximbank | Egypt | 2,241 |
4 | 494 | San ju San Financial Group | Japan | 1,898 |
5 | 546 | Jiangmen Rural Commercial Bank | China | 1,686 |
6 | 690 | Russian Regional Development Bank | Russia | 1,167 |
7 | 693 | Oldenburgische Landesbank | Germany | 1,159 |
8 | 695 | Paragon Banking Group | UK | 1,157 |
9 | 854 | Banco Falabella | Chile | 743 |
10 | 870 | OceanFirst Bank | US | 710 |
11 | 881 | MYBank | China | 685 |
12 | 973 | Charter Savings Bank | UK | 536 |
13 | 976 | Heritage Financial Corporation | US | 531 |
14 | 979 | Origin Bancorp | US | 529 |
15 | 981 | Diamond Trust Bank Kenya | Kenya | 527 |
16 | 986 | PPF banka | Czech Republic | 519 |
17 | 989 | NexBank | US | 506 |
18 | 993 | State Bankshares | US | 502 |
Welcome Back
Rank | World rank | Bank Name | Country | Tier 1 Capital ($m) |
1 | 190 | Shinsei Bank | Japan | 7,170 |
2 | 475 | Land Bank Philippines | Philippines | 2,037 |
3 | 517 | ICCREA Holdings | Italy | 1,816 |
4 | 575 | Frankfurter Volksbank | Germany | 1,558 |
5 | 578 | Bandhan Bank | India | 1,544 |
6 | 612 | BankMed | Lebanon | 1,423 |
7 | 622 | Berliner Volksbank | Germany | 1,383 |
8 | 626 | Bank of Ganzhou | China | 1,351 |
9 | 651 | Bank of Qinghai | China | 1,278 |
10 | 697 | Kunshan Rural Commercial Bank | China | 1,148 |
11 | 708 | PrivatBank | Ukraine | 1,107 |
12 | 753 | Sainsbury's Bank | UK | 980 |
13 | 783 | International Bank of Azerbaijan (IBA) | Azerbaijan | 906 |
14 | 892 | Bank of Jiaxing | China | 667 |
15 | 894 | G&T Continental | Guatemala | 663 |
16 | 956 | Bank Muamalat Malaysia | Malaysia | 566 |
17 | 978 | First Banks | US | 529 |
18 | 983 | Byline Bank | US | 524 |
19 | 987 | Bank of Georgia | Georgia | 515 |
20 | 995 | Banque du Caire | Egypt | 501 |
21 | 996 | Trustco Bank Corp | US | 500 |
22 | 997 | Bank Al Etihad | Jordan | 498 |
23 | 998 | City Holding Co | US | 497 |
24 | 1000 | Multibank | Panama | 492 |