In 1990, Japanese banks were the dominant force in global banking – the country’s banks held six positions in the top 10 ranked by Tier 1 capital.
Moreover, Japanese banks occupied the top three positions with Sumitomo, first, with Tier 1 capital of $13.4bn, Dai-Ichi Kangyo Bank in second place with $12.3bn, followed by Fuji Bank with $11.9bn.
Further down the table, Sanwa Bank was in fifth position, Mitsubishi sixth and Industrial Bank of Japan 10th. At the time, no American or Chinese lenders were in the top 10. Europe was represented by France’s Crédit Agricole in fourth, Germany’s Deutsche Bank was ninth and two British banks, Barclays Bank and NatWest, were seventh and eighth, respectively. Japanese lenders accounted for almost two-thirds of the top 10’s total capital.
"Japanese lenders accounted for almost two-thirds of the top 10’s total capital"
At the time, the might of Japan’s economy and global influence of its banks led many analysts to assume it would challenge the US’s position as global superpower.
Looking back 30 years later, we can observe with hindsight that much of Japan’s performance was driven by huge asset price bubble. When the bubble burst, Japanese businesses and banks had to restructure and several names in the 1990 ranking disappeared through consolidation.
This upheaval is worth bearing in mind when we look at the current domination of the ranking by Chinese banks. In the 2019 Top 1000 World Banks ranking, the big four Chinese banks ICBC, China Construction Bank, Agricultural Bank of China and Bank of China came first, second, third and fourth, and accounted for half of the top 10’s total capital.
"We can observe with hindsight that much of Japan’s performance was driven by huge asset price bubble"
The dynamic charts displayed here show how Japanese dominance has given way to Chinese supremacy over the past two decades, but our lesson from history reminds us this may not be the case in another 20 years’ time.
The chart of top Asia-Pacific countries by Tier 1 capital, 2000-2019, by rank, shows China and Japan swapping places, with China going top and Japan falling to second, after the global financial crisis. The other significant move in this table is that of India from ninth position in 2000 to either fourth or fifth position since 2009, reflecting how this huge emerging market is beginning to develop a banking sector worthy of its economic size and influence.
By clicking the scores button, we can see that China has outperformed even more spectacularly in terms of absolute growth, compared to other Asian countries. From being among a clutch of evenly sized Asian emerging markets in 2000, it now has capital resources three times the size of Japan’s and 20 times that of Taiwan’s.
To illustrate this leap, click on the top 10 Asia-Pacific banks table, to see how the leading Chinese banks have moved up the ranking pushing Japanese players such as Mizuho Financial down from first place in 2002 to eighth position in 2019.
"From being among a clutch of evenly sized Asian emerging markets in 2000, [China] now has capital resources three times the size of Japan’s and 20 times that of Taiwan’s"
Top 1000 World Banks:
Asia across the decades
Asia’s banks have seen considerable change in demographics, technology and regulation over the past five decades. Japan has watched its banks slide down the rankings following the decline of its economy, while China’s banks have grown to dominate not only regionally but globally.
The Banker’s Asia editor Kimberley Long speaks with David Wong, head of north Asia bank ratings at Fitch, about these trends, and which country’s banks could climb up the rankings in the years to come.
Australian banks hold tight to top spots in 2020
Across the Asia-Pacific (excluding China and Japan) region, the Australian banks have dominated again overall, taking the top four places in the regional ranking. The banks’ ranks in both the regional and the global tables is interesting, as it outlines how close the banks are in terms of the Tier 1 capital they hold. Commonwealth Bank, ANZ, Westpac, and National Australia Bank hold between $34bn and $39bn in Tier 1 capital, and because of this they take 49th, 52nd, 53rd and 55th places, respectively, in the Top 1000 World Banks 2020 ranking.
All four Australian banks, however, have dropped down the global table from their positions in 2019 as a result of a reduction in Tier 1 capital. The biggest declines were seen by Commonwealth Bank, with a fall of 5.37%, and Westpac, which fell 5.61%. The latter slipped to third place in regional ranking, while ANZ leapfrogged into second place.
Singapore’s DBS rounds off the top five, retaining the same spot as last year. Although the bank saw a 4.95% rise in Tier 1 capital, it still slipped two places in the Top 1000 ranking to 56th. Two of DBS’s compatriots made the regional top 25 table again this year: United Overseas Bank retained 10th place, while Oversea Chinese Banking Corporation (OCBC) moved up two spots to 11th.
South Korea has enjoyed a successful year, with seven banks making it into the top 25 Asia-Pacific regional ranking, with KB Financial Group, Shinhan Financial Group and Korea Development Bank all holding on to the same seventh, eighth and ninth places, respectively, as last year.
The region saw just one new bank entrant this year, as Sri Lanka’s Sampath Bank sneaked into the ranking at 955th place. The bank’s inclusion also brought the country’s Top 1000 number up to five banks.
In central Asia, there has been a year of strong growth recorded, with National Bank of Uzbekistan coming in second in the highest mover in the Asia-Pacific region table, having doubled its Tier 1 capital. This increase allowed it to climb to 699th place in the global ranking, from 947th in 2019. It is also the only bank from Uzbekistan to make it into the Top 1000.
Meanwhile, Kazakhstan is also showing strong results. Jysan Bank also made it into the highest mover top three, as it re-entered the Top 1000 in 789th place. It also took the top placing for return on capital in the Asia-Pacific region, with its fellow Kazakh bank Halyk Bank placing fourth.
Top 1000 World Banks 2020:
China still holds steady at the top of the world bank ranking, and its digital banks break into the top 1000.
Meanwhile Japan’s banks struggle with slow growth. Kimberley Long looks at the developments in the 2020 ranking.