The changing dynamics of worlds Banking Industry

Recently I came across an interesting little piece of stati.stic and I figured it is worth pondering over.

The statistic that I came across is the “The World's Top 20 Banks 1994-2010” list. Here is a good snapshot of how the banking industry has metamorphosed over the course of the last 2 decades.

A lot has changed in these two decades. In the early part of the 90’s the Japanese ruled the world, a fact well corroborated by the fact that in 1994 top 6 banks were all from Japan and no less than 11 banks from Japan figured in the top 20 (Phew! That’s more than half of the list). But soon the Japanese economy broke down and their banking system fell apart. The Japanese presence on the world’s banking sector has never been same since then, the very fact that in 2010 only one Japanese bank figures in the top 20 sums up their sorry plight.

The growth story of America banking institutions to become the dominant force today is equally remarkable. Back in 94 only two American banks belonged to the top 20 but since 1999 they have always had a strong presence with at least 4 banks in the top 20. The transition from 2008 to 2010 is the most fascinating part of the statistic above. Since the Japanese economic turmoil had led to the ultimate downfall of its banks one would have expected the recent economic downturn (which initiated in America and had the most adverse impact there) to have the same effect on American banks. Apparently, that hasn’t quite happened. On the contrary from 2008 to 2010 the American banking industry only got stronger. It seems that the heavy government intervention did indeed save these American banks and maybe even gave them a competitive edge.

Another noteworthy fact that this statistic presents is the rise of China. Anyone notice that? Just for the record, I won’t hesitate to place my bet on seeing 5 Chinese banks in this list 4 years from now. On a different note, I would have loved to see the SBI on this list some day!

Source : Chris Skinner, the Financial Services Club and The Banker Magazine (with permission)