Asia corporate banking: Locals move in as globals retreat

Singapore Skyline

The major global banks that have long dominated Asian corporate banking still rank as the industry leaders in the region, but as a group they are much diminished suggests Greenwich Associates.

The US-based provider of market intelligence and advisory services to the financial services industry reports that new regulatory and compliance requirements, mounting costs and serious balance sheet pressures have forced global banks to retrench and, in extreme cases, completely exit Asian corporate banking markets, leaving the industry in flux.

“As these important players reduce or redefine their presence in the region, companies are experiencing a dip in their coverage intensity and service quality, and at times seeking replacements,” Greenwich reports. “In cash management, strategic shifts on the part of global banks are causing some large Asian companies to question the long-term wisdom of relying on these providers for such a mission-critical service.”

Asia’s domestic banks are moving in to capitalise on the opportunity presented by the pullback of their global rivals, says the group – just as they did in the period following the 2008-09 global financial crisis.

“Leading local banks in the 13 Asian country markets we cover are much better positioned to take advantage of the travails of global rivals than they were five years ago,” said Greenwich Associates consultant Paul Tan. “They have been steadily building out their own capabilities and increasing the quality of their own products and service.”

The resulting industry shifts appear to have triggered a rapid de-concentration of the market, which the group expects will lead to more specialisation in bank strategies and in corporate banking relationships.

In its latest rankings for Asian large corporate banking market share, Greenwich places HSBC first with a market penetration score of 60%, followed by Standard Chartered with 50% and Citi at 44%. ANZ Bank and DBS Bank share fourth spot with a market penetration of 33-34%. The group ranks HSBC and ANZ their 2006 quality leaders in Asian corporate banking.

In its rankings for large corporate cash management in Asia, Greenwich reports that HSBC tops the industry with a market penetration score of 37%, followed by Citi at 32%, Standard Chartered at 24%, Bank of China at 16% and Deutsche Bank at 15%. The group’s quality leaders in this category are Bank of America Merrill Lynch, Citi and HSBC.

212 views

Related reading

A European Union (EU) flag flies outside of the headquarters of the European Central Bank (ECB) in Frankfurt, Germany, on Wednesday, Aug. 1, 2012. As Denmark experiments with official interest rates below zero, European Central Bank President Mario Draghi is getting a glimpse of how extreme monetary policy decisions play out in real life. Photographer: Hannelore Foerster/Bloomberg
mmfs-i
euribor
switzerland