Currency effect makes China's banks world's largest: SNL Financial

THE list of the world's largest banks by assets is dominated by China due to currency effect. And US banks have been booted out of the top five due to different accounting standards.

The three Singapore banks have improved their ranking, with OCBC making the biggest jump, financial data provider SNL Financial said on Tuesday in its 2015 ranking of the world's 100 largest banks.

China now has four of the five largest banks in the world after weakening currencies pushed French and Japanese companies out of the top five this year. There is now only one bank in the top-five list that is not headquartered in China. It is London-based HSBC Holdings plc, said SNL.

HSBC ranks No 4 with US$2.67 trillion in assets, down from No 2 in 2014 with US$2.76 trillion in assets.

The largest bank in the world continues to be Industrial & Commercial Bank of China, with assets calculated at US$3.45 trillion. Replacing HSBC at No 2 is China Construction Bank Corp, which moved up from third place last year, holding US$2.819 trillion in assets. The third-largest is Agricultural Bank of China, which shot up from seventh place in 2014, and the fifth-largest bank is Bank of China, which was previously ranked eighth.

SNL ranks the largest banks in the world by converting their total assets into US dollars using the exchange rate as at the end of the period measured. Most banks were ranked by total assets for the quarter ended March 31, 2015. Changes in the rankings since 2014 are partly due to fluctuations in the companies' reported currencies against the US dollar.

Paris-based BNP Paribas SA fell to No 7 from No 4 in SNL's 2014 ranking, as its assets declined to an equivalent of US$2.568 trillion as at March 31, 2015, from US$2.595 trillion a year ago.

"Currency conversion helped drive the decline, as the company's assets actually rose when measuring in euros, to 2.39 trillion euros (S$3.6 trillion) from 1.88 trillion euros," said SNL. Also exiting the top five, Tokyo-based Mitsubishi UFJ Financial Group fell to No 8 from No 5, partly based on a lower valuation of its assets in US dollars.

The largest US bank, New York-headquartered JPMorgan Chase & Co, remains as the sixth-largest in the world, but it would rank No 1 if it followed the same accounting principles as the Chinese banks, SNL's analysis shows.

US banks report their financials under US GAAP (Generally Accepted Accounting Principles), while the largest Chinese banks report under the IFRS (International Financial Reporting Standards) accounting principle. Under US GAAP, banks report the net amount of derivative assets on their balance sheets, while IFRS companies must report the gross amount of derivative assets.

If JPMorgan filed under IFRS, SNL estimates it would add assets of US$1.249 trillion, bringing its total assets to US$3.827 trillion and making it the largest bank in the world. SNL did not perform the same analysis on banks that report under Japanese GAAP or other types of GAAP.

Bank of America Corp would rank third instead of ninth if it filed under IFRS, said SNL.

DBS Group Holdings, South-east Asia's largest bank, improved its position, to No 75 from No 78 with US$332.91 billion assets. OCBC had the biggest jump, going to No 79, up 13 places from No 92 previously, with US$294.64 billion assets. United Overseas Bank, which has US$228.62 billion assets, rose to No 96 from No 100.

The Singapore banks filed under Singapore Financial Reporting Standards.