banking industry
TRANSCRIPT
The impact of globalization on the development of global banking secoter in
recent decades
Xuyang LiuJie LiuDanladi MaiduguVeronika Sobotova
25.04.2012Global Business Environment
Introduction
Overview of international banking
Comparative study
HSBC
Julius Baer
Conclusion
Overview of International banking
History of International Banking
15 century = physical presence
outside the HC
4000 yrs ago
Ancient card
(Casu, et al., 2006)
History of International Banking
1830sBritish banks branches –
Australia, Caribbean, North America colonies
• “First ½ of the 20th century = limited expansion
• After 1960 started US expansion
• growth MNC
• 1970S – Domination of US banks
• 1980S – Japanese banks
• 1990S– European banks
COLONIAL BANKING
THE BEGINING OF MODERN BANKING
• Bretton Woods 1944 • IMF• Int. Bank for Reconstruction & Development
MODERN INT BANKING
WHO IS THE LEADER?
(Casu, et al., 2006)
Growth in the number of overseas bank affiliates (1960-85)
1960 1970 1980 19850
200
400
600
800
1000
1200
1400
1600
1800
2000
Japanese banksEuropean banksAmerican banks
The role of the state (regulation & deregulation in Financial Services)
Financial services = the most tightly regulated of all
economic activities
deregulatory process = necessary to facilitate further internationalisation
1980Regulation
The accelerating
DEREGULATION of FS is the most important current
development in the GLOBALISATION of the
Financial Services
The international regulatory environment is highly asymmetrical
(Dicken, 2011)
(Sensarma, 2008)
EU = free flow
NAFTA = Mexico open
by 2007
1986 UK = “Big Bang”
1987 France = “Little Bang”
1987 Germany = reciprocity agreement
India = strong protectionist /
1993 first reforms
1987 Japan = relaxed
restriction
China = foreign
participation 1997 Japan = deregulation
(Dicken, 2011)
DEREGULATION
1981 US = major reforms
Influence of Technology Development
(Jayawardhena & Foley, 2000)(Dicken, 2011)
Increased loan activities , respond to
fluctuation in exchange rate
24 h/day trading
Increased the velocity of turnover
Increased productivity
Technology = most – far reaching impact
Absolutely fundamental
Speed of transactions
(Internet – key driver)
Attracted new entrants
Increased customer influence
Product innovation
(new methods, derivatives)
Supported increased
Globalisation of capital flows &
Fin. Org.
Invisible international
trade
CURRENT ISSUES
2008 – traumatic shockCurrently recovering
Financial world changed - who hold power- how banks will be allowed to operate
Rapid growth of emerging
markets
≠ absolute
decline of the mature nations
The pie will grow and the developed world will have smaller share of the
BIGGER pie
(Pennington, 2011)
WEST EAST
SOUTH
NORTH
Concept Concept
(Pennington, 2011)
GLOBAL SHIFT IN BANKING
Banks in emerging markets are now well capitalised and well funded and big enough to directly compete against west
B
S
I
Sberbank
VTB Bank
State Bank of India
ICICI Bank
HDFC Bank
Itau Unibanco
Bradesco
Banco do Brasil
Standard Bank (ICBC holds
there 20% stake)
R
C
ICBC
Bank of China
China Construction Bank
Agricultural Bank of China
GLOBAL Financial Crisis?
HDFC Bank India: “there was no
financial crisis in India”
NedBank South Africa: “Banks here did not get hit by the crisis”
Baker & McKenzie Hong Kong: “Chinese banks were far more insulated than western banks...”
(Pennington, 2011)
GLOBAL Financial Crisis?
1
Banks in emerging
markets = grater
potential to grow
2
Chinese banks
started lending
money to European
companies
3
Some Asian banks are strong and large
and still domestic focused = large role
in intermediating capital flows at the
global level
(Pennington, 2011)
RE-REGULATION?
RE-REGULATION?
New regulatory regime
Imposing strict rules on banks to avoid the west’s mistakes
Hybrid of: - Regulated free market
approach - And so-called “state
capitalism”
HSBC: “Financial markets are increasingly global WHILE the policymakers and regulation remain national...Greater international co-operation required to make the financial system stable”
(Pennington, 2011)
Future of global banking in the POST financial crisis world
XIAO GANGChairman of The Bank of China
TRENDS
Negative Positive
N vs. S
W vs. E
N & S
W & E
“It is not about who should learn from whom. Instead it is about learning from each other, strengthening co-operation and seeking development together.”
Who from whom?
(Pennington, 2011)
Comparative study
Top 100MNC’S BANKING
• COMPARE 2000 AND 2011
8%
92%
TOP 100 MNCS IN 2000
BANKING SECTOROTHERS
15%
85%
TOP 100 MNCS IN 2011
BANKING SECTOR OTHERS
8 BANKING SECTORS IN 2000 TOP 100 MNCS
15 BANKING SECTORS IN 2011 TOP 100 MNCS
Top 200MNC’S BANKING
• COMPARE 2000 AND 2011
12%
88%
TOP 200 MNCS IN 2000
BANKING SECTOR OTHERS
17%
84%
TOP 200 MNCS IN 2011
BANKING SECTOR OTHERS
24 BANKING SECTORS IN 2000 TOP 200 MNCS
33 BANKING SECTORS IN 2011 TOP 200 MNCS
Top 200MNC’S BANKING
• DEVELOPING COUNTRIES BANKING SECTOR IN TOP 200 MNCS
2000 201105
10152025303540
developing countriesdeveloped countries
• Compare 2000 and 2011 , there are 5 banking in top 200 MNCS which from developing countries china 3 brazil 2 and china have one banking in top 100 MNCS, also brazil Santander exceed Santander central Hispano
The contribution of GDP
• Six Largest US Banks Own 63 Percent of GDP• Jordan contribution of GDP
(Euromoney, 1998)
Financial crisis in banking sector
Banking sector in ASIA
Japan only one bank go bankrupt
Banking sector in china going well
Lehman brothers investment bank
Merrill lynch investment bank
Bear Stearns investment bank
Banking sector bankrupt in the USA
The Hong Kong and Shanghai Banking Corporation Limited
7,200 offices in 85 countries and 89 million customers
$2.418 trillion assets (Half in Europe, quarter in America, quarter in Asia) 2010
Remains largest bank in Hong Kong and largest international bank in China
HSBC Holdings plc was founded in London in 1992
Second largest banking and financial services group 2011
Origin Hong Kong 1865
(HSBC, 2012)
Acquisitions
Title in hereOpen to finance the trade
between Europe and China
Acquired a 51% shareholding in Marine Midland Bank, which it
extended to full ownership in
1987
Presence in Europe by
acquisition of Midland Bank
Two acquisitions in South America
Banco Bamerindus of
Brazil and Roberts SA de Inversiones of
Argentina1865
1980s
1992
1997
(HSBC, 2012)
Acquisitions
Title in herePurchase of Republic
National Bank of New York
Expansion into Continental
Europe with the acquisition of
Crédit Commercial de
France
HSBC bought Demirbank, an
insolvent Turkish bank
Acquire Household
Finance Corporation
1999
2000
2001
2002
(HSBC, 2012)
Acquisitions
Title in hereMove HQ to London
HSBC bought Polski Kredyt Bank SA of
Poland
Bought 19.9% of the Bank of
Communications of Shanghai
HSBC acquired Marks & Spencer Retail Financial
Services Holdings Ltd
2003
2003
2004
2004
(HSBC, 2012)
Acquisitions
Title in here70.1% Dar es Salaam
Investment Bank of Iraq
90 branches in Argentina of
Banca Nazionale del Lavoro
HSBC acquired The Chinese
Bank in Taiwan
HSBC acquired IL&FS
Investment, an Indian retail broking firm
2005
2006
2007
2008
(HSBC, 2012)
(HSBC, 2012)
HSBC and Crisis
HM Treasury required all UK banks to increase their capital in October 2007
In March 2009, US$9.3bn of profit was made than in 2008
£12.5bn rights issue to enable it to buy other banks that were struggling to survive.
Uncertainty over the rights' issue's implications for institutional investors caused volatility in the Hong Kong stock market
(HSBC, 2012)
HSBC and Crisis
On 9 March 2009 HSBC's share price fell 24.14%, with 12 million shares sold in the last few seconds of trading.
In March 2009, it shut down the branch network of its Finance arm in the U.S.
6,000 job losses and leaving only the credit card business to continue operating
Uncertainty over the rights' issue's implications for institutional investors caused volatility in the Hong Kong stock market
(HSBC, 2012)
3rd largest private bank
in Swiss
Heaven for global private wealth
2009 – regulatory
stormShield for tax
evaders?
Positioning = luxury
banking brand
Global growth
Julius Baer
Large capital base = engine of opportunities, high
liquidity level...
(Oh & Lechner, 2010)
JULIUS BAER in time of crisis
New net money inflows
UBS account holders took their money out and brought to JB= profit
Countering crisis with speed (mergers, demergers, management changes)
Quickly adjusted to new realities
Quick turnaround
Private clients believed that JB could handle the crisis better than others.
(Oh & Lechner, 2010)
Conclusion
Globalisation
• has made banking more easy, faster, and flexible
• has brought interest of individuals, corporations, and government through banking
• has enabled the expansion of banking sector
Thank You!
References• Casu, B., Girardone, C. & Molyneux, P., 2006. Chapter 4 International banking. In: Introduction to banking. 1st ed. s.l.:Prentice Hall Financial Times, pp.
76-105.• Dicken, P., 2007. Making the world Go Round: Financial services. In: Global Shift: Mapping the Changing contours of the world economy. 5th ed.
s.l.:SAGE, pp. 379-409.• Dicken, P., 2011. "Making the world go round": Advanced Business Services - Especially finance. In: Global Shift, Mapping the Changing Contours of
the World Economy. 6th ed. s.l.:SAGE Ltd, pp. 367-398.• Economist, 2011. The world's bigest banks. [Online]
Available at: http://www.economist.com/node/18898228[Accessed 2 April 2012].
• HSBC, 2012. Our history. [Online] Available at: http://www.hsbc.co.uk/1/2/about-us/history[Accessed 10 April 2012].
• Jayawardhena, C. & Foley, P., 2000. Changes in the banking sector – the case of Internet banking in the UK. Internet Research: Electronic Networking Applications and Policy, 10(1), pp. 19-31.
• Oh, L. J. & Lechner, C., 2010. 'Julius Baer Group: Business Model Simplicity in Turbulent Times'. [Online] Available at: http://www.ifb.unisg.ch/en/Lehre/Fallstudien/Julius+Baer+Group.aspx[Accessed 3 April 2012].
• Peachey, K., 2012. Barclaycard unveils mini, stick-on credit card. [Online] Available at: http://www.bbc.co.uk/news/business-17754810[Accessed 19 April 2012].
• Pennington, M., 2011. The global banking sector: current issues. [Online] Available at: http://www.cimaglobal.com/Thought-leadership/Research-topics/Management-accounting-in-different-sectors/The-global-banking-sector-current-issues/[Accessed 1 April 2012].
• Sensarma, R., 2008. Deregulation, ownership and profit performance of banks: evidence from India. Applied Financial Economics, October, 18(19), pp. pp. 1581 - 1595.
• Digital wallet• Mini stick – on credit
card• At contact-less
terminals
(Peachey, 2012)