China, the United States, and the United Kingdom are the largest banking countries in the world. The banks in these countries are the biggest based on tier 1 capital. In its ranking of the top 1,000 world banks for 2019, The Banker ranked Chinese banks in the top four spots.
China's two largest banks, ICBC and China Construction Bank, have a combined $625 billion worth of tier 1 capital. Next on the list is the Agricultural Bank of China, which has $243 billion of tier 1 capital, followed by the Bank of China, which comes in at $230 billion. Each of these four banks represents a branch of the People's Bank of China (PBC), the centralized, state-sponsored bank in China.
- China, the United States, and the United Kingdom have the biggest banks in the world according to a 2019 survey that ranked global banks by tier 1 capital.
- The Chinese banks holding the top four spots were ICBC, China Construction Bank, Agricultural Bank of China, and the Bank of China.
- In the list of the top 10 biggest banks in the world, four of them were in the United States: JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup.
The Largest Banking Countries in Europe and North America
In Europe, the United Kingdom controls sizable portions of the banking sector. In particular, the U.K.'s HSBC enjoys power over many global banking sectors. Despite Brexit uncertainty, HSBC rose in the ranks of the world's top banks from the tenth spot (which it held in 2018) to the ninth in 2019. HSBC's tier 1 capital came in at $147 billion for the year.
Though several banks in the U.S. have gotten quite large in North America, JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup dominate the landscape due to their ability to produce large financial returns. In 2019, the four banks represented a combined $724 billion in tier 1 capital.
Measuring a bank's financial health using tier 1 capital is considered a reliable yardstick by bank regulators because it represents the money the bank has reserved as protection should it experience unexpected losses on its loans.
Japan and Germany
Though typically not considered a major player in the global market, Japan has been a growing financial power during the last decade and reaps the benefits of a strong banking industry. The Mitsubishi UFJ Financial Group is Japan's largest bank with assets worth $2.8 trillion and tier 1 capital of $146 billion in 2019.
Germany also exhibits influence over a portion of the banking industry. The country's largest player by far is Deutsche Bank, which generated $27.5 billion in net revenues in 2018. German financial influence is limited outside of Europe, though it can be felt in some parts of North America and Asia. Within Europe, however, the German banking industry is one of the most powerful in the entire continent.
China's Emerging Influence
Determining the exact percentage of influence a country holds over the global banking sector is a challenging task. The country with the most power constantly shifts as exchange rates and political influence fluctuates. However, most financiers agree that China's influence over the global banking sector is greater than the majority of countries. This is partially due to the country's massive population.
Furthermore, much of the country's financial sector is based around the profits from manufacturing and export. This gives the Chinese financial market a unique advantage due to its control over product supply chains. Furthermore, the Chinese financial sector is tied firmly to its government, which has done an admirable job in providing stability and promoting strategic growth since the 1970s.
The Role of Developing Countries in Global Banking
As a whole, developing countries have very little influence on the state of the global financial sector. One World Bank study estimates that all the developing nations together only control 30% of the world's cash flow. This disparity is one of the biggest challenges faced by developing nations in their quest to grow and industrialize.