Currency effect pushes China's banks to top of global rankings

Singapore

THE list of the world's largest banks by assets is dominated by China's banks as a result of currency effect, in a global ranking drawn up by converting each bank's total assets into US dollars, with the changes in rankings since last year due partly to fluctuations in the banks' reported currencies against the greenback.

China has four of the five largest banks in the world now, leaving the London-based HSBC Holdings Plc as the only institution in the top five not headquartered in China.

French and Japanese companies were pushed out of the top five by weakening currencies, and the US banks, by their practice of using different accounting standards.

In financial data provider SNL Financial's 2015 100 largest banks report released on Tuesday, the three Singapore banks improved in their rankings, with OCBC Bank making the biggest jump among them.

Among the top five banks, HSBC ranks fourth, with US$2.670 trillion in assets; in 2014, it was second, with assets worth US$2.758 trillion.

The largest bank in the world continues to be Industrial & Commercial Bank of China Ltd, with assets calculated at US$3.452 trillion.

Replacing HSBC as runner-up 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 Ltd, which shot up from seventh place in 2014; the fifth-largest bank is Bank of China Ltd, previously ranked eighth.

Paris-based BNP Paribas SA fell to seventh from fourth in SNL's 2014 ranking; its assets declined to an equivalent of US$2.568 trillion as at March 31, from US$2.595 trillion a year ago.

SNL said: "Currency conversion helped drive the decline, as the company's assets actually rose in value when measured in euros - from 1.883 trillion euros (S$2.767 trillion) to 2.392 trillion euros.

Mitsubishi UFJ Financial Group, in fifth spot last year, is eighth this year, partly based on a lower valuation of its assets in US dollars.

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

US banks report their financials in US Generally Accepted Accounting Principles or GAAP, while the largest Chinese banks report under the International Financial Reporting Standards or IFRS accounting principle.

Under US GAAP, banks report the net amount of derivative assets on their balance sheets; IFRS companies report the gross amount of derivative assets.

If JPMorgan had filed under IFRS, SNL estimates it would add assets of US$1.249 trillion, taking its total assets to US$3.827 trillion, sending it to pole position.

SNL did not perform the same analysis on banks that report under Japanese GAAP or other types of GAAP.

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

DBS Group Holdings, South-east Asia's largest bank, improved its position from 78th to 75th with US$332.91 billion in assets.

OCBC Bank made the biggest jump, going to 79th position from 92nd previously, with US$294.64 billion in assets.

United Overseas Bank, which has US$228.62 billion in assets, moved up to 96th from 100th.

The Singapore banks filed under Singapore FRS.