The Banker has released its list of the Top 1000 Banks around the world. The top banks are all familiar names: JP Morgan, Bank of America, Citigroup, Royal Bank of Scotland, and HSBC make up the top five. Of course, any cursory reading of the front page these last 10 months would help one realize these banks have had a tough stretch. And indeed the The Banker's report reinforces that notion--this is the first time in four decades that the top 25 banks on the list have registered a loss. While the Top 1000 as a group brought in $780 billion in profits for last year's report, they made a combined $115 billion in this year's report. That's a drop of over 85%.
The losses were built up by banks in the West, while banks in Asia primarily propped up the Top 1000's profits. The Banker's Geraldine Lamp writes:
US banks made an aggregate loss of $91bn, the EU 27 an aggregate loss of $16.1bn, and the UK’s banks lost, on aggregate, $51.2bn. In terms of return on capital (ROC), the disparate fortunes of the world’s banks is equally as startling. On aggregate, China’s banks in the Top 1000 chalked up an ROC of 24.38%. This compares with an aggregate ROC of -15.32% for UK banks and -10.32% for US banks. Japan’s banks in the Top 1000 achieved an ROC of 4.43% and Brazil’s 15.98%.
The inexorable rise of Asia, excluding Japan, is also played out in the composition of the Top 1000. The number of banks in the rankings from Asia has risen from 174 two years ago to 193 this year, as the number of banks from the US has dropped from 185 to 159, and from the EU 27 from 279 to 258.
But Lampe adds that this does not mean that the top banks--Western banks--are ready to hand over the reins to banks from emerging economies yet:
With next year’s profits largely determined by the ability of Western economies to emerge from recession and generate growth, it may seem axiomatic that China’s banks – and those from other emerging economies that are weathering the downturn a little more smoothly – will climb even higher up the Top 1000. This cannot be taken for granted. For one thing, the very creativity that got the West’s banks into this mess will be the thing that gets them out of it. Over and over again, Western banks have displayed a remarkable ability to reinvent themselves to keep pace with global change.
You can read the report here. And watch Lampe discuss the Top 1000 with Brian Caplen, editor of The Banker, below: