http://skorcareer.com.my/blog/worlds-large...sia/2008/07/23/

World’s Largest Bank is Now From Asia

For the first time in history, a bank from Asia has been ranked as the world’s largest bank by market capitalization.

The Industrial & Commercial Bank of China, ICBC first disposed off Citibank, which for more than a decade, has ruled the banking world, in mid of 2007 to second place.

6 months later, in January 2008, while ICBC retained its place on top of the table, Citibank continued its free fall, resulting the bank to slump to 7th place. Apart from losing its status as America’s largest banking group to Bank of America and JP Morgan, it also trailed UK’s HSBC and 2 other Chinese banks - China Construction Bank and Bank of China.

China’s boom in stock market and strong performance have contributed to the healthy growth of Asian banks, while Citibank’s major downfall has been attributed by the subprime meltdown and non-performing loans.

Many other groups on the other hand, predicted that the situation will be reversed back to normal with other major banks in the US, particularly Citibank, Bank of America and JP Morgan Chase expected to bounce back the worsening economic situation.

Graduates in the United States now are less keen to consider jobs in banking after a series of major job slashing in the industry saw more than 70,000 jobs were cut in both United States and in Europe.

http://skorcareer.com.my/blog/10-worlds-la...008/2008/06/18/

10 World’s Largest Banks in 2008


Following is the list of 10 largest banks in the world in terms of market capitalization size, as released by Bloomberg on February 2008. Market capitalization (aka market cap) is a way of measuring the corporate or economic size of a public listed company.

In other words, capitalization could also represent the net worth of a company according to public opinion.

The latest table reveals some major surprises, and this 2008 list is considered one of the most unlikely ranking. The most noticeable change is the breaking up of US domination, spearheaded mainly by the Asian banks, notably from China, which are making the banks in the western world sweat.

Citibank, which recently has been embroiled in financial crisis, became the biggest casualty, slumping from top position to 7th. Full list below.

1. Industrial & Commercial Bank of China, ICBC (China)

The Beijing based ICBC Bank underwent one of the most remarkable faces of growth barely 2 years after going public, which gives a clear indication of investors’ preference in the emerging China market. ICBC offers a wide range of personal and corporate banking services which include loan, deposit, credit card, underwriting, trading and currency settlement.

ICBC was listed simultaneously on two exchanges - the Shanghai Stock Exchange and Hong Kong Stock Exchange in 2006, making it the first and only company to do so. ICBC has won numerous accolades and awards from various international magazines including Bankers, Global Finance, The Assets and Finance Asia.

Market capitalization - US277.514 billion. Previous ranking (as of Jan 2007) - 4.

2. Bank of America (US)

Bank of America (BoA) has now taken over Citibank as the biggest commercial bank in the United States by market cap and deposits. Started in California, BoA then grew its operation to Washington, and soon began a rapid expansion nationally and internationally.

In the process of getting where they are today, the bank has gone through good and bad times. In late 1980s BoA suffered huge loss as a result of non-performing loan, which saw the then CEO, Sam Armacost fired and replaced. It almost fell into a hostile takeover but came back with a bang and became one of the biggest gainers in a decade. The bank retains its position in the second spot.

Market capitalization - US195.933b. Previous ranking - 2.

3. HSBC Holdings (UK)

Earlier this year, HSBC was named as the world’s most valuable banking brand by The Banker Magazine. The bank was incorporated in England and Wales, with its main office located in London. In 1992, HSBC was involved in one of the world’s largest banking acquisition, after assuming full ownership of Midland Bank.

The merger also saw the beginning of HSBC setting up strong market presence, particularly in Europe. Apart from United Kingdom HSBC now also has significant operation in France, Czech Republic, Germany, Ireland, Switzerland, Turkey as well as Malta. Just like Bank of America, HSBC maintains its ranking.

Market capitalization - US176.788b. Previous ranking - 3.

4. China Construction (China)

The bank was first established as the People’s Construction Bank of China and was changed to the current name in 1996. The bank’s rise to prominence is also helped with the involvement of Bank of America which injected some significant amount of investment for the past few years. In 2005, the China Construction bank landed into a scandal that involved the Chairman of the company, Zhang Enzhao.

Zhang was alleged to have received one million dollars bribe from an American company, which in return asked for an award of contract. Zhang eventually resigned from his post. The bank has more than 13,000 branches across its native country China, as well as active operation in Singapore, Hong Kong, German, Africa, Japan and Korea.

Market capitalization - US165.234b. Previous ranking - 7.

5. Bank of China (China)

The third and final bank from China to make it to the top 10. In China, there is the term referred as the ‘Big Four’ banks and Bank of China is one of them.

Bank of China is the first bank established in the land of the dynasties. In the earlier years, the bank acted as the Central Bank but then its role was replaced and then converted into a full-fledge commercial bank. While the bank has overseas operation in Australia, United Kindom, Canada, United States, Brazil, Japan, Philippines, Malaysia and Korea, the overseas business only accounts for less than 5 percent of the company’s overall revenues.

Market capitalization - US165.087b. Previous ranking - 6.

6. JPMorgan Chase (US)

JPMorgan Chase offers investment banking, financial services, wealth and asset management, and private equity. The current entity is a result of a series of mergers, with its original name did not sound anything like the current, which was the Chemical Banking Corporation.

JPMorgan is based in the downtown of New York, Manhattan. Additionally, the investment wing of the bank operates a number of offices around the world, with major presence in the United States, London, Tokyo, Singapore and Hong Kong. BusinessWeek ranked JPMorgan in the Top 10 Best Places to Launch a Career in 2006.

Market capitalization - US159.615b. Previous ranking - 5.

7. Citigroup (US)

A year ago, Citibank was the largest bank in the world but how different it is today. From a world champion, the group slumped to 7th, only in a space of few months. The bank was established almost 200 years ago by a number of merchants in New York.

After going through changes in ownership, the bank stamped its presence as the country’s largest bank in 1865, and soon became the first US bank to set up operation in overseas. Mergers and acquisition followed and the bank could only grow larger and larger. The group faced one of the toughest test for the last 12 months with the weakening US economy and the collapse of the subprime mortgage market.

Market capitalization - US140.698b. Previous ranking - 1.

8. Wells Fargo (US)

Formed by the founders of American Express company, Wells Fargo has its headquarter in California and the bank offers specialized financial services such as asset management, real estate business, debt products, advisory, securities investment and capital management. The group itself, however, is involved in more than 80 distinguished business areas.

Wells Fargo became the first bank to have introduced internet banking after introducing web access to its customers in 1995. The bank also works closely with small and medium sized companies, giving small business owners access to business loans and lending.

Market capitalization - US112.365b. Previous ranking - 11.

9. Banco Santander (Spain)

Banco Santander is the largest bank in Spain, and the second largest in Europe. The bank, which involves in retail banking, asset management and insurance, and global wholesale banking, employs more than 120,000 people worldwide, serving 68 million customers, a figure higher than the whole population of Spain.

Altogether, the group operates in more than 10,000 branches worldwide. The group is also one of the premium sponsors for McLaren-Mercedes F1 team. Banco has strong market presence in Portugal, United Kingdom and in Latin America including Brazil, Mexico, Chile, Argentina, Venezuela, Uruguay, Colombia, Peru and Puerto Rico.

Market capitalization - US109.862b. Previous ranking - 12.

10. Mitsubishi UFJ Financial, MUFG (Japan)

Mitsubishi UFJ Financial groups runs The Bank of Tokyo-Mitsubishi UFJ, which is a result of a merger between The Bank of Tokyo-Mitsubishi and UFJ Bank Limited in 2006. The group, which is listed in five stock exchanges - Tokyo, Osaka, Nagoya, New York and London, is presently the largest financial services company in Japan in terms of size of assets.

Headquartered in Tokyo, Japan, the company holds a total asset of US1.2 trillion and is one of the biggest companies in the Mitsubishi Group. MUFG is now headed by the the President and CEO, Nobuo Kuroyanagi, an MIT business graduate.

Market capitalization - US105.412 b. Previous ranking - 9.

ICBC Becomes World's Most Profitable Bank on Loans (Update3)
By Luo Jun

Aug. 21 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. earned a record 64.5 billion yuan ($9.42 billion) in the first half to become the world's most profitable bank as a focus on domestic lending helped it avoid the global credit crisis.

Net income rose 57 percent, the Beijing-based bank said in a statement today, topping the $7.72 billion earned by closest rival HSBC Holdings Plc. Earnings per share rose to 0.19 yuan.

Chairman Jiang Jianqing has more than doubled ICBC's profit since 2005 as annual economic growth of more than 10 percent bolstered corporate loans and services to the nation's growing number of wealthy people. ICBC's domestic bias shielded it from the U.S. subprime crisis that has led to more than $500 billion of writedowns and losses at financial institutions globally.

``This shows the rise of economic power in China,'' said Yuk Kei Lee, an analyst at Core Pacific-Yamaichi International in Hong Kong. ``ICBC's earnings power has already overtaken other global giants but we need time to see if this achievement can be sustained.''

The shares closed 2.9 percent lower in Hong Kong today. ICBC's Hong Kong shares trade at about 2.5 times analysts' consensus estimates for book value, compared with 0.84 times for Citigroup Inc. and 1.46 times for HSBC's Hong Kong-traded shares. The state-controlled bank's net income may swell to $17.5 billion this year, according to analyst estimates.

Lending Grows

After a government bailout three years ago, ICBC is now the world's biggest bank by market value. It has 16,476 branches nationwide and 112 branches outside China, and 170 million personal customers -- equivalent to the populations of Russia and Canada combined -- offering the potential for growth in services.

Profit matched the 64.8 billion yuan average estimate of eight analysts surveyed by Bloomberg News. ICBC increased lending by 7.1 percent in the first half to 4.36 trillion yuan. Non- performing loans accounted for 2.41 percent of total advances as of June 30, down from 2.74 percent at the end of 2007.

The bank's net interest margin, a measure of lending profitability, widened to 3.01 percent from 2.8 percent in full year 2007, according to today's statement.

The expansion comes after government efforts to cool credit growth by imposing loan quotas, raising interest rates and telling banks to set aside record amounts of deposits as reserves. These measures may start to bite in the second half.

``The biggest risk to the banking industry is the macro economic uncertainty, no banks -- no matter how well managed -- can be immune from a slowdown,'' said Zhang Xiaojun, who manages the equivalent of $1.8 billion at Shenzhen-based Bosera Fund Management Co., including ICBC shares. ``Big banks like ICBC will do better than smaller ones because of their more diversified loan portfolio.''

Financial Services

ICBC's profit rose 41 percent to 31.4 billion yuan in the second quarter from a year earlier. The figure was calculated by subtracting first-quarter earnings from first-half profit. The growth slowed from 77 percent in the first quarter.

``There's still the second half and we'll continue to work hard,'' Jiang Jianqing, Chairman of ICBC, said at a press conference today. ``We're confident to be the most profitable for the full year but we'll have to wait till the end to see who gets the gold medal.''

ICBC's net interest income gained 29 percent to 131.8 billion yuan in the first half as income from loans outpaced interest paid on deposits. Net fee and commission income from services such as credit cards, wealth management and insurance sales rose 48 percent to 24.5 billion yuan.

ICBC was the largest national distributor of insurance policies, mutual funds, government bonds and wealth management products in 2007. The bank has diversified into fund management, financial leasing and is now seeking an insurance license. The bank also owns over 1,100 premier wealth management centers to serve high-net worth customers.

Global Rivals Struggle

ICBC's return on equity is 22.8 percent, higher than HSBC's 13 percent and JPMorgan Chase & Co.'s 8.7 percent. The bank has $1.4 trillion of assets and held $1.21 billion of U.S. subprime- related securities at the end of June. ICBC had written off $702 million on the investments by the end of the second quarter.

It has $2.7 billion of debt issued by Fannie Mae and Freddie Mac, the two biggest U.S. home loan companies, and $651 million of Alt-A residential mortgage-backed securities after cutting such investments by $8 billion in the first half, Jiang said.

By comparison, mortgage-related writedowns totaled $55.1 billion at Citigroup and $44.2 billion at UBS since the start of 2007, according to Bloomberg data, as the worst U.S. housing market since the Great Depression fanned out into credit markets.

Profit at London-based rival HSBC, Europe's biggest bank by market value, fell 29 percent in the first half on record subprime mortgage defaults in the U.S.

The Chinese lender last year overtook Citigroup Inc. as the world's biggest bank by market value. Its Hong Kong-traded shares are the best performer in the Hang Seng Finance Index. ICBC's Shanghai-traded shares have fallen 41 percent.

Goldman Sachs Group, Allianz AG and American Express, which bought a combined 7.2 percent in ICBC in January 2006, nine months before its initial public offering, have seen the value of their investments increase more than fourfold.

To contact the reporters on this story: Luo Jun in Shanghai at at jluo6@bloomberg.net



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