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Balance of power shifts from western Europe

The global structure of the Top 1000 displays some positive results on the surface. But a closer inspection reveals a dramatic shift in the balance of power depending on the geographical location, with western Europe losing out.
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Overall results may have been positive, but regional differences abound in the 2011 Top 1000. These geographical distinctions were particularly apparent when examining where the constituents in the ranking are from.

The number of western European banks in the ranking is, rather predictably, falling swiftly. In 2009, 311 banks from the region were included in the overall ranking, but this figure had fallen to 278 by last year and now stands at 247 – although part of this fall is due to the exclusion of some of the German sparkassen from this year’s ranking, due to results not being published in time to be included.

By way of contrast, the number of Asia-Pacific banks included in the Top 1000 climbed from 281 in 2009 to 321 in 2010, and now stands at 345.

Elsewhere the trends are less dramatic. African numbers are holding steady at 30, while eastern Europe and Latin America have boosted their count to 51 and 53, respectively, after falling (dramatically in eastern Europe’s case) in 2010. At 83, the number of Middle Eastern institutions in the Top 1000 has now fallen below 2009's count.

Interestingly, the number of North American banks in the overall ranking has continued to climb and now stands at 190. This may be a result of banks bolstering Tier 1 capital following US Federal Deposit Insurance Corporation proposals, which would require banks to maintain capital equalling 10% of their assets – up from the 7%, which will be mandated by 2019 under the Basel III accord.

A shift in the balance of power is also obvious when looking at the share of global Tier 1 bank capital. Western Europe shows the greatest decline once again, dropping to 38.1% from 42.5% last year. On the other hand, the Asia-Pacific region’s share climbed from 25.5% in 2010 to 30.8%. Elsewhere movement was less dramatic, although North America’s total share declined by 1.1% despite an increased number of banks in the Top 1000.

The average capital-to-assets ratio saw an increase, but there were marked regional differences. African, eastern European, Middle Eastern and North American banks all averaged more than 10% in 2011. Asia-Pacific institutions are significantly less well capitalised, averaging just 6.41%, though this varies significantly from country to country. European banks fared little better at 7.17%, while Latin American banks averaged 8.82%.

Top 1000 global structure
Total Tier 1 capital
Total pre-tax profit

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