Overview
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Period of transition
Although the impact of the 2008 crisis is still reverberating across the globe’s financial markets, the commercial banking scene is looking more positive in 2015 than it has for some years
This year stands out for the commercial banking sector: there has been a sharper focus on boosting profitability, as well as a significant improvement in consumer confidence, which is vital for an industry that provides services such as basic investment products, including deposits and savings, as well as loans and mortgages. Although further improvement is needed in both areas, the path to recovery is certainly underway – particularly in the US, although there is also a positive feeling in emerging markets (see Fig. 1).
As the US economy continues to show promising signs of growth, a spillover of confidence into the banking sector is also occurring, which is driving a greater frequency of loan originations, particularly for commercial and industrial loans.
Furthermore, recent profits in the US banking industry have surpassed historic records, although return on equity is still sluggish and has not yet reached pre-recession levels or returned to double digits. That being said, analysts believe that 2015 may very well be the turning point in which this goal is attained, despite the various challenges that US banks still face.
Also showing promise is the performance of European banks, albeit at a slower rate due to the weaker European recovery. Moreover, an increasingly complex and demanding regulatory framework constitutes another considerable challenge in Europe. Initiatives aimed at promoting growth remain a key focus for European banks this year, although efficiency initiatives and reducing costs will take precedence, together with the implementation of risk and regulatory programmes.
This challenging landscape has hit banks in the Middle East and Africa even harder, with regulatory pressures and weak economic activity leading many to produce poor results and disappointing profits. The lack of a sustainable business model has further exacerbated this state of affairs in the region: de-risking balance sheets may have enabled many banks to meet regulatory demands, but they have hindered profitability for the most part.
Click to enlargeTech space
From the ashes of the recession, new challenges now afflict the sector. Most notably so far in 2015 is the increasing occurrence and ever-looming threat of
cyber attacks. Not so long ago, banks needed only sturdy walls, security personnel and a sophisticated vault to keep robbers away. Of course, such physical impediments were not always successful in keeping intruders out, but the physicality of the whole affair made it far more manageable. While over the years various security systems have benefitted from improvements, today the threat is far more elusive and difficult to nail down. In fact – as has been the case in recent incidents – the presence of intruders can go entirely unnoticed, sometimes for several months.
From the ashes of the recession, new challenges now afflict the sector. Most notably so far in 2015 is the increasing occurrence and ever-looming threat of
cyber attacks. Not so long ago, banks needed only sturdy walls, security personnel and a sophisticated vault to keep robbers away. Of course, such physical impediments were not always successful in keeping intruders out, but the physicality of the whole affair made it far more manageable. While over the years various security systems have benefitted from improvements, today the threat is far more elusive and difficult to nail down. In fact – as has been the case in recent incidents – the presence of intruders can go entirely unnoticed, sometimes for several months.
At present, cyber attackers seems to be one step ahead of the systems that they hack, and so are able to move in and out with relative ease. Protecting against this growing threat is crucial for the sector this year – more so than ever before. Unfortunately, providing sufficient protection against an entire system is not only incredibly expensive, but it is not always possible, and can severely disrupt a bank’s operations. To counter this challenge, some experts suggest that banks should implement steadfast protection for only the most crucial elements of their software, which is then complemented by more basic levels of protection for all other areas.
Adopting more advanced technology is also essential for meeting evolving customer expectations. Mobile banking and online platforms are key areas that require more sophisticated services in order to stay ahead of competitors, as those that do not evolve with the trends will simply be left behind. It is a new era for commercial banks, with growing rivalries in nearly every aspect of the industry.
Regulatory hurdles
As a consequence of the financial crisis, a more rigorous regulatory framework is now in play (see Fig. 2), and is by no means complete. One major shift, which is at the core of the global response to the 2008 financial crisis, is Basel III – a set of international banking accords that aim to strengthen balance sheets by increasing liquidity ratios and capital requirements. With the last of the Basel III ratios scheduled for 2019, the transitional phase is extensive and requires the continuous implementation of compliance and risk management processes in preparation for this endpoint. Therefore, it is essential that, through the course of the year, banks continue to improve data management, apply new risk procedures, develop their capital and liquidity strategies and stay updated with the latest regulations.
As a consequence of the financial crisis, a more rigorous regulatory framework is now in play (see Fig. 2), and is by no means complete. One major shift, which is at the core of the global response to the 2008 financial crisis, is Basel III – a set of international banking accords that aim to strengthen balance sheets by increasing liquidity ratios and capital requirements. With the last of the Basel III ratios scheduled for 2019, the transitional phase is extensive and requires the continuous implementation of compliance and risk management processes in preparation for this endpoint. Therefore, it is essential that, through the course of the year, banks continue to improve data management, apply new risk procedures, develop their capital and liquidity strategies and stay updated with the latest regulations.
The challenge that remains for commercial banks in 2015 is conforming to the global regulatory reform agenda, while also delivering improved performance to investors and regaining customer trust. This may seem like an unachievable task, but through the thick fog of complex and strict rules, regulatory reforms are becoming clearer and the transition from design to implementation is currently taking place.
Naturally, banks must still contend with the intricacy and volume of new measures and the interconnected relationships between them all – yet signs of successfully implemented developments can be seen. Specific areas with new initiatives that are emerging in the sector include macro-prudential politics, risk weighted assets, comprehensive assessment, greater supervision, minimum requirement for eligible liabilities and total loss absorbing capacity. Moreover, in Europe, funding through wholesale markets has become easier for banks to access.
The future of the industry
As a result of the financial crisis and the ensuing restructuring, the industry has become more resilient, while lending growth is being supported via less restrictive policies in most sectors. The expectation is that this pattern will continue over the course of 2015. In order to survive a volatile environment and evolving trends, there is a need for banks to streamline services and deconstruct the products they offer, thereby providing bespoke solutions that better meet the needs of customers. This simplification of the business model will also allow more effective security systems to be enforced, together with more manageable structures.
As a result of the financial crisis and the ensuing restructuring, the industry has become more resilient, while lending growth is being supported via less restrictive policies in most sectors. The expectation is that this pattern will continue over the course of 2015. In order to survive a volatile environment and evolving trends, there is a need for banks to streamline services and deconstruct the products they offer, thereby providing bespoke solutions that better meet the needs of customers. This simplification of the business model will also allow more effective security systems to be enforced, together with more manageable structures.
A continued focus on improving digital platforms is also essential in order to cater to new customer demands and allow users to benefit from more encompassing facilities. Technology has now become the industry’s greatest tool, while simultaneously acting as its greatest weakness. A concerted effort to reduce cyber crime by reporting all instances across the world (which is currently only legislated in the US) can, together with smart strategies, lessen the threat in 2015.
Click to enlargeConsistent growth is now taking place in the US, while European banks appear to be on course to catch up (see Fig. 3). However, other regions around the world, which are struggling with slow economic growth and regulatory pressures, may have to drastically transform their business models in order to achieve sustainable growth and profitability.
Generally speaking, with improvements to all aspects of commercial banking being made and a more in-depth regulatory focus – which at first serves as a challenge, but ultimately benefits all parties in the long term – in place, the sector may not simply return to its previous level of success, but actually become stronger than ever before. The best commercial banks in the world can be found on the following pages.
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AlgeriaHSBCThe Algerian subsidiary of global banking giant HSBC has been operating since 2008, offering services to business and retail banking customers across the country. Able to leverage the truly global network of its parent company, HSBC Algeria has helped to provide the business community in Algeria with unrivalled commercial banking expertise.
argentinaSantander RioWith more than 333 branches and 2.5 million customers to its name, Santander Rio ranks among the country’s leading banks in payments, foreign trade, cash management and transactional services. Based in Buenos Aires, the firm is currently the country’s largest privately owned bank and the third largest bank overall.
austria VTB GroupFounded on an in-depth understanding of the changing trends and requirements in the commercial banking sector, services for corporate customers have long constituted a key part of VTB Group’s business. Successful in shepherding businesses on to greater heights, the bank’s solutions are second to none for corporate clients in Austria.
belarusBank BelVEBBelvnesheconombank has built on its many years of experience in the industry to establish itself as a major name both locally and internationally. Leading the way in commercial banking within the Republic of Belarus, the bank specialises in international settlements, forex transactions and foreign trade financing of state agencies and businesses.
boliviaBanco GanaderoOne of Latin America’s leading providers of retail banking solutions, Banco Ganadero has operated in Bolivia for more than 20 years. The firm provides customers with an impressive array of services and is particularly focused on assisting with the development of the region’s agriculture, commerce, industry and services sectors.
brazilItaúProviding a full repertoire of asset management tools and services, Itaú’s Brazilian outfit offers its clients the necessary expertise to make the most of daily banking and financial solutions. From direct portfolio management to trust and fiduciary services, the bank offers a diversified range of products to a growing number of Brazilian customers.
bruneiMaybankMaybank’s commercial operations in Brunei commenced in 1960, and the bank has since gone on to become a leading name in the sector, both in the country and beyond. Bolstered by the support of Malaysia’s leading financial services group, Maybank’s commercial operations are far greater than those of many rival names in the region.
cambodia ANZ Royal BankANZ’s commercial offering provides corporate and institutional clients with the highest levels of personalised service and product delivery. The bank offers tailored financial solutions to a wide market of small, medium and large organisations throughout the country. ANZ Royal’s awareness of the Cambodian market has helped it step out from the competition.
canadaBMO Bank of MontrealBMO is a highly diversified financial services provider based in North America, providing a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. It does business through three operating groups: personal and commercial banking, wealth management and BMO Capital Markets.
chileCorpBancaCurrently Chile’s fourth-largest commercial bank, CorpBanca enjoys a worthy reputation as a major cog in the country’s banking community and a key contributor to the economy at large. Headquartered in Santiago, the bank has repositioned its business interests in recent years to compete on a level footing with local rivals in the industry.
china ICBCThanks to its stable development, ICBC has become one of the largest listed financial organisations in the world. It boasts an excellent customer base, a diversified business structure, strong innovation capabilities and market competitiveness. These characteristics have allowed the bank to expand its presence into six continents and 41 countries.
colombiaScotiabankWithin just a few years, Scotiabank has firmly established its presence in Colombia, not least through a 2013 merger with Multibanca Colpatria, the country’s fifth-largest commercial bank. The bank now offers an extensive portfolio of services, from corporate banking and trade finance to personal finance and fiduciary management.
croatiaZagrebaĉka bankaWith 128 subsidiaries and more than 860 ATMs nationwide, Croatia’s leading bank, Zagrebačka banka, has an unmatched reach across the country. Its commercial banking services and customer care are second to none, both of which it maintains by focusing on expanding its offerings and channels for greater ease and convenience.
dominican republicBanco de Reservas de la República DominicanaFounded on a strong commitment to its stakeholders and the communities in which it operates, BanReservas aims to become the leading multi-service bank in the region. The bank’s mission is to offer high quality services to its customers and expand on its role in supporting the country’s economic and social progress.
egyptSuez Canal BankSuez Canal Bank offers retail and Islamic banking services for both corporations and individuals, while its far-reaching global network is among the region’s most impressive. The bank has sustained continuous growth through its strong emphasis on personal development training for employees and its drive to maximise returns to investors and shareholders.
france Societe GeneraleBoasting a major presence across an array of European markets, Societe Generale is said to be one of the most active banking institutions on the continent today. Putting customer service at the forefront of its priorities, the bank shows its many capabilities through diverse value creation, most especially in its domestic market.
germanyCommerzbankA global banking and financial services giant that has been in operation since 1870, Commerzbank is Germany’s second-largest financial institution. A network of branches and operations that stretches throughout 50 countries, the commercial arm of the bank has helped provide businesses with modern and innovative financial services.
ghanaGhana Commercial BankA leading force in African finance, Ghana Commercial Bank (GCB) has positioned itself at the forefront of Ghanaian commercial banking markets. The company offers both personal and corporate banking solutions, with a keen focus on providing the latest in digital and technological services. GCB is celebrated for its outstanding investor relations.
india State Bank of IndiaFounded in 1806, the State Bank of India (SBI) is now the largest commercial bank in the country, with the biggest assets, deposits, branches, customers and employees in the whole market. With the Indian government owning a majority share in the business, SBI is well placed to help develop the country’s economy.
indonesiaCitibankWealth management is Citibank’s core expertise and an area that it continues to develop through broadening its portfolio of financial advisory services. Acknowledging the individual needs of customers and offering the highest levels of protection has earned the bank a glowing reputation for providing a world-class service with a personal touch.
irelandDanske BankOver the course of its expansion across Ireland, Danske Bank has proved that it can offer top-quality products and services while simultaneously generating a large and reliable commercial base. The firm focuses a lot of its attention on improving cash flows for businesses and offering insights into financing options and long-term stability.
italyDeutsche BankA stalwart of the banking industry, Deutsche Bank’s presence in Italy has helped rebuild a stumbling infrastructure, creating a determined and focused commercial banking service in the country. Deutsche Bank has a substantial branch network across Europe, which allows for outstanding levels of deliverables in local markets.
jordan Capital BankSince it was established in 1995, Capital Bank has become one of the most respected financial institutions in Jordan, and has recorded impressive profit on a consistent basis. The bank offers its clients a wide variety of services including corporate finance, asset management and securities brokerage through its subsidiary branch, Capital Investments.
kenyaCo-operative Bank of KenyaWith over 4.5 million accounts, as well as being anchored in a 10 million-member co-operative movement, Co-operative Bank of Kenya is a huge Kenyan success story. The bank has enjoyed significant growth in recent years as the country becomes increasingly banked, and it is now the third-largest financial services provider in Kenya by asset value.
kuwaitCommercial Bank of KuwaitOne of the largest financial institutions in Kuwait, the Commercial Bank of Kuwait (CBK) is a strong corporate and retail banking force across the country. Continually growing, CBK provides innovative financial and investment services to an ever-increasing customer base. Founded in 1960, CBK is the second oldest bank in Kuwait.
lebanon Societe Generale de Banque au LibanLebanon’s premier banking establishment offers a wealth of commercial banking products, and is setting the standard across the country’s increasingly competitive banking sector. SGBL’s business model is based on providing universal banking services, catering to the needs of individuals, SMEs and corporates, financial institutions and high-net-worth clients.
malaysiaHSBCWith a national presence that dates back to 1884, HSBC Malaysia ranks among Malaysia’s leading names in financial services. As the firm that led Malaysian banking into the electronic age – delivering the nation’s first ATM in the early 1980s – HSBC Malaysia has since spearheaded a number of important developments in the financial community.
mauritaniaBNP ParibasOne of the largest banks in the world, BNP Paribas has built up a strong presence in Mauritania, where it has made great advances within the local market. With a wealth of financial service offerings, BNP Paribas has carved out a unique presence in Mauritania, and has bettered the overall banking environment in the country.
mexicoBanamexCitibank operates under the name ‘Banamex’ in Mexico, and today stands as the country’s second-largest bank. Backed by an imposing presence in more than 160 countries and boasting a customer base of over 200 million people, the bank’s Mexican operations are without compare in terms of global support and professional expertise.
mongolaCapital BankMongolia’s premier commercial banking institution supplies many unique products and services to the marketplace. With a range of investment tools, financial services and advisory facilities, the bank has long stood out in this growing market. The firm has gone from strength to strength in recent years, diversifying and adding to its extensive client list.
morocco AttijariwafaAttijariwafa has attracted more than 6.8 million customers worldwide and operates in 23 countries. The bank puts its customers at the centre of its global strategy, using a wide array of bespoke products and services to best serve their financial ambitions. The bank specialises in a range of markets, from consumer credit to asset management.
mozambiqueBCIBCI was established in 1996, and operates as a joint venture between two Portuguese financial groups – CGD Group, with 51 percent of share capital, and BPI Group, with 30 percent – and the Mozambican group INSITEC, with 18.12 percent. BCI has a solid structure, well established in Mozambique, through which it offers financial services to the market.
myanmarKBZ Bank (Kanbawza Bank)KBZ Bank’s presence in Myanmar’s commercial banking sector has expanded in recent years, lifting standards across the country. The institution’s presence there has encouraged growth, with small businesses looking to the bank for a wealth of financial products and services. The bank has a strong international presence and reputation for quality.
netherlands RabobankBased on cooperative principles, Rabobank’s Dutch presence has been in existence for more than a century. To say that the bank has flourished in that time would be an understatement: since its humble origins, the bank has expanded into a number of subsidiaries that have allowed it to spread throughout Europe and across various markets.
new zealandANZAlmost half of all New Zealanders have a banking relationship of some kind with one of ANZ’s brands. The strength and diversity of the bank’s 9,000 employees is a testament to its importance on home soil and in the surrounding region. The bank prides itself on its ability to help businesses achieve their financial aspirations.
nigeriaZenith BankNigeria’s leading commercial bank offers a plethora of services to individuals, small businesses and larger corporates. A relative newcomer to the industry by international banking standards, Zenith has become a domestic market leader since taking on the task in 1990. With subsidiaries positioned across the world, the bank is still growing at an impressive rate.
omanAhlibankOne of the leading commercial banking institutions in Oman, Ahlibank was previously known as Alliance Housing Bank. In 2007 it fully converted into a commercial banking institution offering smart and convenient services to corporate clients. Recently it announced its first mobile banking solutions, as well as the opening of its 19th branch in the country.
pakistanMCB PakistanA leading player in Pakistan’s commercial banking sector, MCB Bank was launched in 1947 after the country came to independence. With close links to Malaysia’s Maybank, MCB has expanded its services across South Asia in recent years. Offering traditional loans, deposits and other consumer banking services, MCB is helping to develop Pakistan’s economy.
panama BanistmoA leading light in the Panamanian market, Banistmo has a solid and long-term base in and among the country’s diverse banking and financial service requirements. The firm has attempted to personify a fluid and forward-looking institution, with a wide range of products and services on offer to its assortment of clients.
peruScotiabankOperating in 50 markets worldwide, the Canadian Bank of Nova Scotia’s many subsidiaries have each become specialists in localising services. Since entering Lima in 2006, Scotiabank Peru has successfully attracted a great number of clients through outstanding service on a number of platforms. The bank has now developed and adapted its branch network.
philippinesRizal Commercial Banking CorporationRCBC is among the largest private domestic banks in the Philippines, and has a presence in 24 countries worldwide. It is known for the excellent service it provides throughout its broad portfolio of products, which is driven by a highly motivated team that continuously adapts to meet the changing needs of its customers.
poland INGWith an active presence in Polish markets since the late 1980s, ING’s commercial banking outlet has shown great growth mechanisms over recent years, successfully weathering the financial crisis. Offering a full range of banking services, its impressive client list boasts nearly half of the largest corporations in Poland, arranging a number of top corporate bonds.
qatarMashreq BankMashreq Bank is regarded as one of the most innovative retail banks in the Middle East, having launched several digital initiatives in recent years. Its state-of-the-art mobile apps challenge traditional banking, and have provided customers with digital branches, engagement via various social media outlets and banking advice via video conferencing.
romaniaBanca Comerciala RomanaA member of Erste Bank, Banca Comerciala Romana (BCR) is a leading commercial banking institution. The bank prides itself on its hi-tech financial operations, and its commercial banking output is second to none. Furthermore, the bank’s investor relations are setting the national standard, as corporate governance remains a key part of BCR’s strategy.
russiaIntercommerz BankThe fastest-growing commercial bank in Russia, Intercommerz Bank offers a full range of banking services to both private and corporate clients. It has built a reputation as a reliable, high quality and committed partner for its clients ever since it was established in 1981, and it now runs a series of offices across Russia.
saudi arabiaBanque Saudi FransiBanque Saudi Fransi (BSF) was established on June 4 1977. The bank is an affiliate of Crédit Agricole Corporate and Investment Bank, and currently holds a 31.1 percent stake in the institution. BSF prides itself on its ability to offer a wide variety of commercial banking services for both domestic and international customers.
south africaStandard CharteredLeading the way in South African banking since 2003, Standard Chartered is a full service banking and financial services provider that creates value across markets, both domestically and internationally. Standard Chartered’s international presence adds weight across multiple markets, and the firm’s reputation in South Africa is second to none.
south koreaWoori BankFounded in 1899, Woori has grown exponentially, with a reputation for trusted products and outstanding customer service. The bank is fully diversified, with 10 units and 58 departments. Woori aims to present itself as the main ethical bank in Korea, dedicating vast resources to understanding the market’s ambitions.
spain SantanderThe largest banking group in the eurozone and perhaps the most distributed brand on the planet, Santander needs little introduction. Santander Group takes immense pride in being so large, but it has nonetheless proved able to react quickly to market conditions. The bank has increased its social initiatives over the course of the last few years.
sri lankaSampath BankA public limited liability company, Sampath Bank was listed on the Colombo Stock Exchange and incorporated in 1986. Teamwork has since remained a pillar of the bank, as have its mechanisms for feedback and monitoring results, which together contribute to its core missions of continuous improvement and value for customers.
switzerlandCredit SuisseCredit Suisse has more than 150 years of experience in commercial banking, and supports both SMEs and international companies. The bank is made up of specialist teams of experts, with each focusing on a particular industry or profession, making it an unrivalled business partner and provider of commercial banking services.
tanzaniaCBA BankWith a plethora of financial service offerings, CBA fulfils banking requirements across the country. Tanzania’s highly competitive commercial banking sphere is wrought with a number of competitors and is constantly engaged in changing platforms and technological advances. CBA is widely considered to be head and shoulders above the competition.
thailandSiam Commercial BankThailand’s first bank, Siam Commercial Bank, has become well known in the region for its excellent customer service since it was established in 1906. The bank has achieved its long standing success by continually improving its products with the latest technology and offering a series of investment opportunities at a variety of levels.
ukSantanderThe UK subsidiary of Spain’s Santander banking group has established itself as a major player in Britain’s highly competitive commercial banking sector. Since launching in 2010, Santander UK has challenged the so-called Big Four UK banks, now employing around 20,000 people across the country and supporting more than 14 million customers.
uruguay HSBCTaking pride in its ability to offer attractive products and services in local markets, HSBC has, somewhat unsurprisingly, made great gains in the Uruguayan commercial banking sphere. Offering services for both corporate entities and private individuals, the bank’s Uruguayan outfit has gone from strength to strength in servicing the market.
us (east)BMO HarrisBacked by the resources of BMO Financial Group, professionals at BMO Harris provide expert advice and highly personalised services in banking, investment management, estate, trust, succession planning and philanthropic services. With a substantial branch network across the US, BMO Harris is able to service clients in a variety of languages.
us (west)Bank of the West Commercial Banking GroupBank of the West is a full-service commercial bank and the US subsidiary of French banking giant BNP Paribas. The bank’s Commercial Banking Group meets the changing needs of growing businesses, offering specialised expertise and customised solutions for a range of business sectors including agribusiness, technology and real estate.
venezuela Banco Nacional de CreditoBNC provides the definitive answer to commercial banking activity in Venezuela. With a keen eye for technological progress, the bank provides customers with leading-edge products and services that have helped to define the country’s banking landscape. Expanding aggressively over the last few years, BNC is widely considered the market leader.
vietnamSaigon Commercial BankAfter three years of reform, Saigon Commercial Bank has become a significant player in Vietnam’s banking sector. With a nationwide network of branches, highly professional banking knowledge among its personnel, and a consistent focus on technological innovation, the bank now has a leading role in serving Vietnam’s business community.
yemenYemen Commercial BankAs the country’s first commercial bank, Yemen Commercial Bank (YCB) is a leading name in the local financial community and a major contributor to the country’s economic development. Overall, the bank has provided financing for over 12 infrastructure projects, and has already shown a great deal of leadership in this space.
zimbabweStanbic BankProviding a range of expertly assimilated products and services across personal and corporate services, Stanbic’s Zimbabwean presence is second to none. With a strong presence across the nation, the bank delivers the very highest standards of customer service. The bank is celebrated throughout the region for its impressive advisory services.