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East or West, Home is Best? —— Are banks becoming more global or local?
发布日期 :2017-09-25
Academy of Internet Finance (AIF), Zhejiang University
in partnership with
International Monetary Institute (IMI), Renmin University of China
 
The past year witnessed the sluggish recovery of world economy and increasing political risks across the globe, during which China has maintained an albeit moderate, evidently stabilizing economic growth. Admirable progress has been made in both the revolution of supply-side policies and the “Belt and Road initiative” along with strengthening cooperation amongst BRICS economies. Celebrating the trend, the third issue of its kind: East or West, Home is Best?—— Are banks becoming more global or local? is released. 
 
The 2017 issue features the construction of a more compact Bank Internationalization Index (BII) as opposed to its preceding issues. Specifically, stock of overseas assets, performance of overseas operations and global layout, all of which are the main indicators of banks’ degree of internationalization, are selected for computing the primary BII. Indicators of less importance are integrated for computing a secondary index and further analysis.
 
While the preceding issues mainly focused on Global Systematically Important Banks (G-SIBs), the current issue also investigates Global Non Systematically Important Banks (G-NSIBs). With a global perspective and benchmarking global leaders, the report provides a comprehensive study of the internationalization of Chinese banks. It also contributes to the extant literature by analyzing the internationalization of banks at a global scale, exploring the causes and significance of bank internationalization, and eventually, offering constructive recommendations for banks’ internationalization strategies. 
 
The 2017 report has drawn on data of 49 international banks, ranging from multinational banks with large scale of assets to medium or small-sized shareholding commercial banks at their initial attempts of overseas expansion. This corresponds to a wide continental coverage encompassing Europe, America, Asia as well as Africa. With such diversity, our dataset serves as a sound representative of global banks, hence the dynamics of BII is a good reflection of the bank internationalization development over the last decade. 
 
Major Findings and Conclusions: 
A snapshot of the BII dynamics:
Notes: The data in the figure is the average BII of 49 banks across the world.
 
The BII has been fluctuating within a 23~26 band over the last decade, trending downwards with the contagious dissemination and aftermath of the financial crisis around 2009 but started picking up since 2013, followed by a slowdown since 2015.
 
In general, the high volatility and stunted growth of BII throughout the period might be attributed to the strategic contraction of globalization and the susceptibility of overseas operations in the event of adverse global shocks such as the global economic recessions over the recent years. 
 
Banks from developed economies have maintained a stable and high level of internationalization. While developing economies have been catching up with remarkable achievements, the gap between the two is expected to remain large within the short horizon. 
 
Comparison between developed and developing economies 
 


The gap between developed and developing economies is evident, with the former almost quadrupling the latter on average, yet the gap has been narrowing year by year. 

Notes: The blue bars in the figure stand for the average BII of banks from developed economies in 2016, the red bars stand for the average BII of banks from developing economies in 2016. The figure following the names of economies/districts/organizations in the vertical coordinates stands for the number of banks investigated in the BII system. China(4)stands for the 4 major state-owned commercial banks in China, China(10) stands for all the Chinese banks investigated in the BII system.
 
Amid the developed economies examined, European banks have performed the best while the disparity is less obvious among the developing economies with BRICS economies receiving a mean score of 10.38. 
 
On the whole, the top 10 banks of 2016 BII ranking are either G-SIBs or those from developed economies, heavily dominated by European banks. Within developing economies, the top 10 banks are split among India and South Africa, both with 3 banks, as well as China and Russia, both with 2 banks.
G-SIBs leading the way in the global internationalization development scenery  
In terms of global leadership, the G-SIBs are proven to be dominating the internationalization development scenery, remaining on top of the BII ranking consistently, and scoring almost 2.5 times that of G-NSIBs. 
 
Notes: The blue bars in the figure stand for the average BII of the G-SIBs, the red bars stand for the average BII of G-NSIBs. The figure following the names of economies/districts/organizations in the vertical coordinates stands for the number of banks investigated in the scoring system. China(4) stands for the 4 major state-owned commercial banks in China, China(6) stands for the average BII of the 6 G-NSIBs in China.
 
Within the G-SIBs, Banco Santander in Spain has performed extraordinarily. G-SIBs from Germany, Switzerland, Sweden and Holland have all outperformed those from the U.K. and the U.S. When it comes to G-NSIBs, banks from Canada and Singapore stood out. 
 
BII Rankings in 2016

BII RankingsAll 49 BanksG-SIBsG-NSIBs
1 Standard Chartered 67.46 Standard Chartered 67.46 Scotiabank 39.01
2 Santander 56.36 Santander 56.36 OCBC 31.82
3 HSBC 55.37 HSBC 55.37 Bank of Montreal 30.35
4 UBS 54.71 UBS 54.71 United Overseas Bank 30.03
5 Deutsche Bank 54.47 Deutsche Bank 54.47 DBS 25.61
6 Nordea 52.16 Nordea 52.16 The Standard Bank of South Africa 20.62
7 Citigroup 51.77 Citigroup 51.77 Bank of Baroda 18.14
8 Credit Suisse 51.38 Credit Suisse 51.38 Vneshtorbank 17.45
9 ING Bank 49.97 ING Bank 49.97 Bank of India 15.18
10 Société Générale 42.93 Société Générale 42.93 Commonwealth Bank of Australia 14.25
BII RankingsBanks from Developed EconomiesBanks from Developing EconomiesChinese Banks
1 Standard Chartered 67.46 BOC 26.62 BOC 26.62
2 Santander 56.36 The Standard Bank of South Africa 20.62 ICBC 15.96
3 HSBC 55.37 Bank of Baroda 18.14 CCB 8.25
4 UBS 54.71 Vneshtorbank 17.45 BOC 8.12
5 Deutsche Bank 54.47 ICBC 15.96 ABC 5.37
6 Nordea 52.16 Bank of India 15.18 China Citic Bank 3.92
7 Citigroup 51.77 Sberbank 13.35 SPD Bank 2.95
8 Credit Suisse 51.38 Nedbank 12.17 China Merchants Bank 2.63
9 ING Bank 49.97 FirstRand 11.51 China Everbright Bank 1.43
10 Société Générale 42.93 State Bank of India 11.46 China Guangfa Bank 1.01
























 


 
Notes: Some data of Citigroup, Morgan Stanley, Bank of New York Mellon, Scitiabank and Vneshtorbank in 2016 is missing. The chart made reasonable predictions for their BII scores.
 
Nearly all the G-SIBs are from developed economies, with Chinese banks as the only exception. They have proven to be more influential and better recognized globally than their peers from developing economies, although their mean score of BII only halves that of the 6 American banks ranking right in front of them.
 
Appendix
 
BII Rankings of all 49 Banks in 2016
BII RankingsBanksCountriesBII
1 Standard Chartered U.K. 67.46
2 Santander Spain 56.36
3 HSBC U.K. 55.37
4 UBS Switzerland 54.71
5 Deutsche Bank Germany 54.47
6 Nordea Sweden 52.16
7 Citigroup U.S. 51.77
8 Credit Suisse Switzerland 51.38
9 ING Bank Netherlands 49.97
10 Société Générale France 42.93
11 BNP Paribas France 40.18
12 Unicredit Group Italy 39.92
13 Scotiabank Canada 39.01
14 Mitsubishi UFJ FG Japan 36.69
15 Oversea-Chinese Banking Corporation Singapore 31.82
16 Goldman Sachs America 31.59
17 Groupe Crédit Agricole France 31.07
18 Bank of Montreal Canada 30.35
19 United Overseas Bank Singapore 30.03
20 Mizuho FG Japan 27.79
21 Bank of China China 26.62
22 JP Morgan Chase U.S. 25.95
23 Development Bank of Singapore Singapore 25.61
24 Morgan Stanley U.S. 23.00
25 Bank of New York Mellon U.S. 20.63
26 The Standard Bank of South Africa South Africa 20.62
27 Groupe BPCE France 20.39
28 Bank of Baroda India 18.14
29 Vneshtorbank Russia 17.45
30 Industrial and Commercial Bank of China China 15.96
31 Bank of India India 15.18
32 Bank of America U.S. 15.08
33 Commonwealth Bank of Australia Australia 14.25
34 Sberbank Russia 13.35
35 Nedbank South Africa 12.17
36 FirstRand South Africa 11.51
37 State Bank of India India 11.46
38 Royal Bank of Scotland U.K. 8.51
39 China Construction Bank China 8.25
40 Bank of Communications China 8.12
41 Punjab National Bank India 7.65
42 Shinhan Bank Korea 6.63
43 Agricultural Bank of China China 5.37
44 China Citic Bank China 3.92
45 Bradesco Brazil 3.75
46 SPD Bank China 2.95
47 China Merchants Bank China 2.63
48 China Everbright Bank China 1.43
49 China Guangfa Bank China 1.01

Notes: Some data of Citigroup, Morgan Stanley, Bank of New York Mellon, Scitiabank, Vneshtorbank and Sberbank in 2016 is missing. The chart made reasonable predictions for their BII scores.