The financial world's shift in gravity towards the East was underlined today as China boasts the world's biggest bank for the first time, according to new figures.
The Industrial and Commercial Bank of China is now the biggest bank in the world in terms of balance sheet strength, with $160.6bn (£105.5bn) in tier one capital, according to figures compiled by The Banker magazine.
icBc is one of China's four state-owned behemoths in the top 10.
China's rise contrasts with the fortunes of UK-based banks, which now have just one major player – HSBC – in the top 10. Standard Chartered, which does the lion's share of its business in Asia, was the only UK player to improve its ranking, moving up to 33rd in the global pecking order.
Brian Caplen, editor of The Banker, said: "UK banks always used to outperform in the ranking, but for the past several years they have been slipping back."
The total profit of the world's top 1,000 global banks is now almost back to its 2007 peak of $786bn at $749bn, but the once-dominant UK financial sector is punching far less weight in global markets. UK banks now account for just 2.6 per cent of global profits, compared with 11 per cent in 2007. Royal Bank of Scotland, which held a place in the top 10 before a £65bn taxpayer bailout, has slipped to 12th.
Although the Chinese government has recently clamped down on lenders to cool a credit boom, its march into global banking markets is likely to continue. Mr Caplen added: "The strategy now is for more Chinese companies to go overseas, and the more they do that, the more Chinese financial institutions will follow to do their banking."
But the global banking industry is also far less profitable in terms of return on capital. Banks now hold some $6.2trn in tier one equity capital, compared to $3.4trn in 2007 before the crisis, because financial institutions can no longer employ borrowing to the same degree to boost returns, Mr Caplen added.Reuse content