British banks have fallen down world league tables for lenders so rapidly that there may soon not be a global-ranked bank in this country, the editor of the industry bible has warned.
“At one time several UK banks were among a handful of truly global players,” said Brain Caplen, who has edited The Banker since 2003. “But since the financial crisis they have reduced their scope and are focusing on fewer areas in a bid to restore profitability. We may have seen the end of the UK-based global bank.”
His prediction may come true rapidly if HSBC elects to return to its roots in Hong Kong, with the board set to decide by the end of this year.
HSBC has sold more than 50 peripheral businesses, and is now selling large arms like Brazil and Turkey as well as cutting up to 25,000 jobs.
Bankers will be watching the Budget next week to see if the UK bank levy, which costs them together £2.5bn a year, is reduced or switched from being charged on banks’ global to merely UK assets.
The Banker’s annual Top 1,000 ranking of banks published today sees HSBC fall from 5th to 9th place, Barclays from 12th to 13th, Royal Bank of Scotland from 15th to 18th, and Standard Chartered from 34th to 39th.
UK banks which have concentrated on their domestic market have fared better, with Lloyds Banking Group steady in 22nd position and Nationwide up from 119 to 105.
“Before the financial crisis all the big banks were those international banks which wanted to be everywhere,” said Mr Caplen. “But with the rise in regulation and the need to allocate capital to specific jurisdictions, the disappearance of profitable areas like proprietary trading and more volatile investment banking returns the banks have had to concentrate much more on where they make money.”
He said Standard Chartered and Santander were good examples of banks which meet the new model of country-specific and decent return-seeking lenders.
Mr Caplen added: “The UK has always punched above its weight in banking. That, as we saw in the financial crisis, brings with it risks. But it does look as though just when we have got the right regulation in place in London the industry is disappearing overseas.”
Tens of thousands of banking jobs have been lost in the UK. London employs 145,000 directly in banking, according to CityUK. That is not even a third of the 462,000 employed by the world’s biggest bank, Industrial Commercial Bank of China.
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