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Top 1000 World Banks - Russia's Otkritie highest mover after big turnaround

Russian bank Otkritie leads the highest movers table, a year after topping the biggest losses table.  Kat Van Hoof reports.
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Russian bank Otkritie – the number one bank in our highest movers table – has had quite the rollercoaster ride over the past couple of years. In The Banker's 2018 Top 1000 World Banks ranking, it topped the biggest losses chart, posting figures that saw it plummet to an eye-watering $7.5bn in the red after requiring a bail-out from the Russian central bank’s Banking Sector Consolidation Fund in 2017. In the space of a year Otkritie has done a lot of clean-up work, and has put its toxic assets into a ‘bad bank’. As a result, its Tier 1 capital went up by 169.05% over the course of 2018.

Prior to its liquidity issues, Otkritie was one of Russia’s fastest growing banks and a darling of the financial market. Its woes may not yet be over, however, as it was announced in February 2019 that Russian authorities had begun criminal proceedings against its former chief executive, Igor Krasnov.

Second place in the highest movers table goes to Vietnam’s Techcombank, up until mid-2018 the country’s largest private bank, which increased Tier 1 capital by 107.71% over the course of the review period. In June 2018, it listed in Ho Chi Minh City in the country’s largest share offering that year. Despite listing at the top of its marketed bookbuilding range, shares slumped very quickly afterwards as sentiment about emerging market equities soured. Vietnam’s largest listed bank, Vietcombank, also appears in the 2019 highest movers list in 21st place, increasing its Tier 1 capital by 33.82%.

The make-up of the 2019 highest movers list is very different from the previous ranking, partly due to a lack of big bank recapitalisations in the 2018 financial year. The 2018 ranking contained Italy’s Banco BPM, Banco Monte dei Paschi di Siena and UniCredit, which all underwent huge clean-up programmes during 2017. There were seven western European lenders and two central and eastern European banks in the list in 2018, compared with only five banks from the whole of Europe in 2019.

Hellenic Bank of Cyprus merits a mention as one of Europe’s success stories. Banks on the Mediterranean island have had a watershed year, climbing their way out of the 2012–13 Cypriot debt crisis. Hellenic Bank upped its Tier 1 Capital by 40.08% in the 2018 review period.

This time around, the top 25 highest movers are heavily weighted towards US and Chinese banks, with a respective seven and eight entries each. This is quite a bit more than the five US banks and two from China that featured in the 2018 ranking. Bank assets in general grew strongly in these two countries, compared to a marked decline in western Europe. China has regularly been a heavy hitter in terms of Tier 1 capital growth over the past decade, but was represented more sparsely in the 2017 and 2018 tables.

China’s biggest riser in the ranking is Bank of Guangzhou, with a 51.55% increase in Tier capital 1. Most Chinese banks in the table are in the bottom half, below Bank of Guangzhou’s 10th place. Conversely, all but one of the biggest risers in terms of Tier 1 capital from the US are 13th place and above.

Many of the US banks completed acquisitions over the course of 2018, which could explain their appearance on the 2019 highest Tier 1 capital growth list. First Financial Bancorp bought MainSource Bank for $1bn; Sandy Spring Bancorp paid $489m for WashingtonFirst Bank; and Grandpoint Capital was scooped up by Pacific Premier Bancorp for about $630m.

In terms of scale, the change in Tier 1 capital is less dramatic than in the 2018 ranking. The 2019 table ranges from Otkritie’s 169.05% Tier 1 capital change down to China Guangfa Bank’s 32.98% in 25th. In 2018, the Tier 1 capital change ranged from 188.02% at the top to 64.57% in 25th position.

Top 25 Highest Movers by Tier 1 Capital (% change)

Rank World Rank Bank Name Country Tier 1 Capital %ch.
1 317 Otkritie Financial Corporation Bank Russia 169.05
2 495 Techcombank Vietnam 107.71
3 854 Banco Falabella Chile 84.75
4 699 Centerstate Banks US 76.09
5 661 First Financial Bancorp US 66.35
6 819 Ringkjobing Landbobank Denmark 59.72
7 323 Yuanta Commercial Bank Taiwan 57.67
8 870 OceanFirst Bank US 52.50
9 859 Sandy Spring Bancorp US 51.89
10 223 Bank of Guangzhou China 51.55
11 248 Russian Agricultural Bank Russia 50.99
12 665 Union Bankshares Corporation US 49.55
13 707 Pacific Premier Bancorp US 49.43
14 313 Bank of Gansu China 43.46
15 449 Bank of Liuzhou China 41.62
16 735 Hellenic Bank Cyprus 40.08
17 753 Sainsbury's Bank UK 39.96
18 651 Bank of Qinghai China 38.74
19 780 Nantong Rural Commercial Bank China 38.55
20 124 Bank of Ningbo China 34.86
21 403 Vietcombank Vietnam 33.82
22 237 Bank of Guiyang China 33.75
23 475 Land Bank Philippines Philippines 33.59
24 983 Byline Bank US 33.45
25 73 China Guangfa Bank China 32.98

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