Lehman falls, Merrill sold, AIG nationalised. What next? Remember reading one such headline on a September morning in 2008?
And the collapse did not stop there. From the United States to Iceland to Kazakhstan, banks and insurance companies were either acquired or merged or went belly-up thanks to a fatal combination of pure greed, bizarre financial instruments, and the sub-prime crisis that swept America. The shocking results left the world gasping.
There was a time when experts, analysts, rating agencies found it very easy to describe the best banks. The bank with the largest asset under management was the ‘best’ bank. But now in banking parlance, large often means ‘bad’.
In a recent study, Economy Watch and the Economist came to a conclusion that instead of depending on the ‘fatally flawed assumption that all assets are created equally, and that they won’t decline in value en masse’, it is better to focus on quality of assets, cash flows and management.
This very unique study threw up an interesting list of which could be the world’s top 10 banks.
JP Morgan Chase & Co
JP Morgan Chase & Co is a leading global financial services firm with operations in more than 50 countries and has its corporate headquarters in New York City. Under the JPMorgan and Chase brands, it serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients.
One of the world’s oldest, largest and best-known financial institutions, the firm is a leader in investment banking; financial services for consumers, small business and commercial banking; financial transaction processing; asset management; and private equity.
JP Morgan Chase & Co is built on the foundation of more than 1,000 predecessor institutions that have come together over the years to form today’s company. The many well-known heritage banks include JP Morgan & Co, The Chase Manhattan Bank, Bank One, Manufacturers Hanover Trust Co, Chemical Bank, The First National Bank of Chicago and National Bank of Detroit.
JPMorgan Chase & Co reported first-quarter 2009 net income of $2.1 billion, compared with net income of $2.4 billion in the first quarter of 2008.
Jamie Dimon is the bank’s chairman and chief executive officer.
Acquired: Bear Stearns, Washington Mutual (WaMu).
Credit Suisse can look back on a history stretching over 150 years.
On July 5, 1856, prominent Swiss politician, business leader, and pioneer Alfred Escher founded ‘Schweizerische Kreditanstalt’. The original purpose of the new bank was to finance the expansion of a railroad network as well as further industrialisation in Switzerland. The founding of the company was a huge success.
What was once just a Swiss investment bank gradually developed into a globally active and integrated universal bank.
Credit Suisse provides companies, institutional clients and high-net-worth private clients worldwide, as well as retail clients in Switzerland, with advisory services, comprehensive solutions, and innovative products.
Headquartered in Zurich, Switzerland, Credit Suisse is active in over 50 countries and employs more than 46,000 people from approximately 100 different nations.
Brady W Dougan is its chief executive officer.
Credit Suisse Group reported net income of *CHF 2.0 billion in the first quarter of 2009
Credit Suisse was an early victim of toxic assets, but it moved quicker than competitors to get those off its books or write off completely.
*CHF = Swiss Franc
Goldman Sachs Group Inc
Goldman Sachs Group Inc is a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
It was founded in 1869 by German Jewish immigrant Marcus Goldman. And when Goldman’s son-in-law Samuel Sachs joined the firm’s name was changed to Goldman Sachs.
It was invited to join the New York Stock Exchange in 1896. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centres around the world.
Lloyd C Blankfein is the chairman and chief executive officer.
The company reported a better-than-expected Q1 earnings of $3.23/share.
Goldman Sachs got help from Berkshire Hathaway, which bought $5 billion in Goldman’s preferred stock, and got also warrants to buy another $5 billion in Goldman’s common stock.
Goldman also received $10 billion of capital from the American government in October 2008, under the Troubled Asset Relief Program (TARP).
In 1985, Stephen A Schwarzman and Peter G Peterson, who retired from the firm in 2008, co-founded the Blackstone Group with a shared secretary and a balance sheet of $400,000.
Today Blackstone is a leading global alternative asset manager and provider of financial advisory services listed on the New York Stock Exchange with total fee-earnings assets under management of $92.2 billion as of March 31, 2009.
Since inception, the New York-based Blackstone has completed investments in such notable companies as Hilton Hotels Corporation, Equity Office Properties, Allied Waste, AlliedBarton, United Biscuits, Freescale Semiconductor, Nielsen Company, Biomet, Michaels Stores and Travelport.
Stephen A Schwarzman is the chairman and chief executive officer.
Economic net income was a loss of $93 million for the first quarter of 2009, significantly better than the loss of $827 million in the fourth quarter of 2008
Blackstone Group may be the key mega entrant of the Financial Crisis.
Banco Santander’s history began on May 15, 1857, when Queen Isabel II (of Spain) signed a royal decree authorising the incorporation of the founding of bank.
Right from the start it was a bank open to the outside world, being initially linked to trade between the port of Santander in the north of Spain and Latin America.
In 2007, Santander held its 150th anniversary as the world’s 12th largest bank by market cap, the 7th in terms of profit and the bank with the largest retail network in the western world, with 10,852 branches.
Emilio Botin is the chairman of the board and Alfredo Saenz Abad is the chief executive officer.
Banco Santander’s net attributable profit in the first quarter of 2009 was euro 2.1 billion, a decrease of 5 per cent from last year, but an increase of 8 per cent compared to the fourth quarter of 2008.
- British retail and mortgage bank Alliance and Leicester of Great Britain
- British Diversified financial services firm Bradford and Bingley Wyomissing, Pennsylvania (USA) based Sovereign Bank.
Industrial and Commercial Bank of China
Industrial and Commercial Bank of China is the largest bank in the world. It is one of China’s ‘Big Four’ state-owned commercial banks (the other three being the Bank of China, Agricultural Bank of China, and China Construction Bank).
It is the largest bank in the world in terms of market value and one of the world’s top ten banks by assets.
It was founded as a limited company on January 1, 1984. As of 2006, it had assets of RMB 7,055 billion ($893 billion), with over 18,000 outlets including 106 overseas branches.
ICBC was simultaneously listed on both the Hong Kong Stock Exchange and Shanghai Stock Exchange on 27 October 2006. It was the world’s largest IPO to date.
Jiang Jianqing, is chairman and executive director.
Goldman Sachs recently sold about $1.9 billion worth of shares in ICBC at a discount of 4 to 6 per cent.
Standard Chartered Bank
Headquartered in London, Standard Chartered Bank operations in more than seventy countries and has a network of over 1,700 branches and outlets (including subsidiaries, associates and joint ventures) and employs 73,000 people.
Despite its British base, it has few customers in the United Kingdom and 90 per cent of its profits come from Asia, Africa, and the Middle East.
Standard Chartered is listed on the London Stock Exchange and the Hong Kong Stock Exchange and is a constituent of the FTSE 100 Index. Its largest shareholder is Singapore’s Temasek Holdings.
The name Standard Chartered comes from the two original banks from which it was founded and which merged in 1969 — The Chartered Bank of India, Australia and China, and The Standard Bank of British South Africa.
The Chartered Bank was founded by Scotsman James Wilson following the grant of a Royal Charter by Queen Victoria in 1853, while The Standard Bank was founded in the Cape Province of South Africa in 1862 by another Scotsman John Paterson.
Peter Sands is the current chief executive officer.
On February 29 2008, Standard Chartered PLC announced it has received all the required approvals leading to the completion of its acquisition of American Express Bank Ltd from the American Express Company. The total cash consideration for the acquisition is $823 million.
Rabobank’s roots lie in agriculture. In 1898 two separate cooperative banks – the Cooperatieve Centrale Raiffeisen-Bank in Utrecht and the Cooperatieve Centrale Boerenleenbank in Eindhoven – were founded by enterprising rural folk, who, with little access to the capital market, decided to help one another.
The two banks served their rural communities independently for three-quarters till they merged in 1972.
Rabobank opened branch offices in Europe, North America, Asia and South America and entered into strategic alliances with European partners.
In terms of Tier-1 capital, the organisation is among the world’s fifteen largest financial institutions.
Previously considered a laggard, this Dutch bank is now hailed as far-sighted for his conservation mode of operation.
The Bank of New York Mellon
Established in 2007 from the merger of Mellon Financial Corporation and The Bank of New York Company, Inc, The Bank of New York Mellon is a leading asset management and securities services company. Headquartered in New York, the bank has $19.5 trillion in assets under custody or administration and $881 billion under management.
It helps organisations build assets, enhance performance, improve operating efficiency and reduce risk through a wide range of asset management and securities services solutions.
For individuals, it offers sophisticated financial solutions, including investment and wealth management, private banking and shareowner services.
Robert P Kelly is the chairman and chief executive officer.
On June 9, 2009, The Bank of New York Mellon celebrated its 225th anniversary.
The bank boasts of negative toxic assets, as unlike regular banks it provides custodian services and do not put its own capital at risk.
BNP Paribas is the European leader in banking and financial services, with a significant and growing presence in the United States and leading positions in Asia. The Group has one of the largest international banking networks, a presence in over 85 countries and 172,300 employees.
BNP Paribas is the largest bank in the Eurozone by total assets and second largest by market capitalization according to The Banker magazine.
Baudouin Prot is the chief executive officer.
In the first quarter of 2009 BNP Paribas posted a very solid performance enabling it to generate a net profit of euro 1,558 million.
Once BNP Paribas buys a majority stake in Fortis Bank of Belgium it will become eurozone’s largest deposit holder through its positions in Belgium and Luxembourg.