To measure how rich a bank is, analysts usually measure the bank’s net asset value, which means deducting outstanding debt and borrowing from the assets owned. In this method, the top 5 richest banks in the world, leaving off the same four Chinese banks, list three from Japan and one each from USA and France. This is largely because Japanese banks are highly structured and very conservative.
Before the start of the COVID-19 pandemic, there were indications that the world economy was going to grow by around 2.5%, and banks generally would be growing at that rate or slightly faster. However, the drastic effects of the pandemic have made it extremely unlikely that there will be any growth at all, and have also made it very difficult to predict which banks will survive the downgrading better than others.
The only way to attempt is to consider which countries were performing best, like Taiwan, Japan and Australia, compared to the worst affected, like most of Europe, USA, Brazil and Mexico. It is expected that the medium and long-term effects of the pandemic will show up over the next 18 months and share prices generally will show the results.
In one of the best analyses of the likely outcome of the pandemic on the top banks in the world, Forbes analysis Anton Guera has written a comprehensive report. His bottom line is that “Potential threats to all banks on the Forbes Global 2000 come from the looming crunch in business activity and spiking distress worldwide.”
Investment banks operate in a special sector of the finance industry, offering management of client’s money rather than commercial activities. Due to the massive size of the US economy, all five of the top 5 investment banks in the world are American. If the rest of the world is ranked without the USA, then Switzerland with three is the largest followed by Japan, France, UK and Canada with two each.
Commercial banks offer private and corporate customers the full range of services, such as checking accounts, mortgages and loans, deposit accounts and so on. The top 5 commercial banks in North America include four in the USA and one Canadian. In Europe, the UK, Germany and France share the top 5 commercial banks for now, but Brexit may change this as several larger banks are considering moving into the EU from London.
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