The Industrial & Commercial Bank of China (ICBC) topped the list of the world's 10 biggest banks, ahead of other U.S. banks and institutions. (Photo : Reuters)
Chinese banks lead the list of the world's biggest banks, while U.S. banks trail behind other global competitors.
According to the most recent rankings from S&P Global Market Intelligence, eight of the 10 leading banks in the world are not based in the U.S.
A report by CNBC said that JPMorgan Chase, the biggest U.S. financial institution, is ranked seventh, after dropping down a notch, while Bank of America is the only other U.S. institution in the list.
The report said that JPMorgan Chase would have been in a higher slot if it used the same accounting rules used by foreign competitors, in which bank assets are computed using accounting principles that are generally used.
Only four U.S. banks are in the top 20 banks, and only six in the top 50, the report said. These include Wells Fargo at No. 11, Citigroup at No. 13, Goldman Sachs at No. 28 and Morgan Stanley at No. 38.
China, on the other hand, has taken the top four spots and 11 slots in the top 50. These banks are Industrial & Commercial Bank of China at No. 1, China Construction Bank at No. 2, Agricultural Bank of China at No. 3 and Bank of China at the No. 4.
This trend came as banks at Wall Street were calling for downsizing or breaking up, although most shareholders do not favor breakups. The U.S. government, however, continues to put pressure on banks regarding downsizing.
"It's public policy. The public policy is working," said Dick Bove, a bank analyst and vice president of equity research at Rafferty Capital Markets. "The U.S. banks are shrinking while the Chinese, the French have no such desire. The net effect is you get a shift in global financial power. It goes away from those countries which are shrinking in size and is picked up by those countries which are expanding in size."
Bove was one of those fighting against the strong political pressure asking big institutions to downsize.
"If you keep trying to shrink the biggest banks in your system, you're going to reduce lending, you're going to reduce the money supply and you're going to harm the economy," Dove added. "It's definitely supported by every element in society. The Congress, the president, the regulators, the public, the press--everybody believes that smaller banks are better for the United States. They just have not thought through the issue."
