Australia’s Big Four banks dominate transaction banking services for the country’s top 500 institutions, but when it comes to corporate advisory services they continue to be eclipsed by investment banks according to research from East & Partners’ Institutional Banking Markets.
The banking research and advisory firm reports that the quartet of National Australia Bank (NAB), Commonwealth Bank (CBA), Westpac and Australia & New Zealand Banking Group (ANZ) have a combined market share of only 6.4% of corporate advisory relationships with Australia’s top 500 institutions, while the four leading tier 1 investment banks have a dominating 65.3% market share. Tier I investment banks comprise UBS, JP Morgan, Citigroup and Macquarie.
East’s research also measures Mind Share, a metric showing which banks are at the forefront of a client’s thinking for various services. Mind Share for corporate advisory services is also heavily weighted in favour of the investment banks, which are the first banks recognised for these services by 65.2% of the Top 500.
Lachlan Colquhoun, head of markets analysis at East & Partners, said the research findings continued a historical market trend, but were a major challenge to the Australian Big Four as they sought to grow their businesses and deepen their relationships with their largest customers.
“It begs the question – what does this mean for commercial banks increasingly looking to play in product arenas traditionally the preserve of investment banks, and what advantage do they have in their capacity to leverage balance sheets and their ability to win advisory mandates?” said Colquhoun.
“The message from our research is that the Top 500 views the Big Four as good for transaction banking and lending, but certainly not for corporate advisory.”
“Do the Big Four want to play in this space? A major push in banking at the top level is to cross sell products and services but it seems that the Big Four are starting from a long way back when it comes to advisory services.”
“The fact that the Big Four have the same market share in this space as consultancies underlines how underweight they are in this area.”
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