Unveiling China’s Banking A-Listers: The Biggest Players in the Financial Market

China is the second-largest economy in the world and is striving to become the top global economy. To achieve such a grand ambition, a robust banking infrastructure is essential. Hence, it comes as no surprise that Chinese banks are massive in size and consistently rank high in various industry ratings.

Understanding the main drivers behind Chinese banks’ high capitalization and asset levels

Chinese banks are some of the largest in the world, and this comes as no surprise given the favorable factors that contribute to their growth:

• China’s massive population. The largest in the world, China’s population is a key factor driving the growth of local banks. The country’s citizens are the primary source of the huge demand for financial services. Consequently, the necessity to cater to the population’s needs has been a significant impetus for the growth of Chinese banks
• Government support. The proactive support that the Chinese government renders to the country’s banking sector to promote its growth is another critical factor. Financial assistance and favorable policies have played a pivotal role in the expansion of Chinese banks.
• Economic growth. In P. R. China, buoyancy of the national economy has been a crucial factor for the country’s banks, with the PRC going through a significant economic upturn over the past few decades. The growth has led to a surge in demand for banking services, with China’s GDP rising from USD 360.9 billion in 1990 to USD 17.73 trillion in 2021. Chinese banks made a decisive difference in financing and supporting this remarkable growth.
• Expansion into international markets. Chinese banks are actively expanding into offshore markets, particularly those in Asia and Africa. This has significantly contributed to their growth in size and influence, as they tap into new sources of revenue and customers outside of China.
• Export support. China’s industry is the world’s largest exporter, and therefore, all companies and enterprises need to ensure the stability and safety of their financial transactions, which is impossible without large banks. As a result, Chinese banks play a crucial role in facilitating export transactions, e.g., providing trade financing, foreign exchange services, and other related financial services to support China’s exporting companies.

It is due to a combination of several factors that Chinese banks have become some of the largest globally. These factors include a large population, government support, sustained economic growth, and active international expansion. The synergistic effects of the said factors have enabled Chinese banks to achieve remarkable success and cement their positions as key players in the global financial landscape.

Comprehensive look into China’s banking system

Before 1978, China operated under a monobank model, where all banks were part of a single administrative government hierarchy. However, with the advent of a market economy that emphasized profitability, the People’s Bank of China split into five specialized state-owned banks, collectively known as the “Big Five.” With the above move, each bank enjoyed a chance to focus on specific areas of expertise and better serve the needs of their customers. Today, these banks remain major players in China’s financial landscape, driving economic growth and innovation.

• Bank of China (BOC)
• Industrial and Commercial Bank of China (ICBC)
• China Construction Bank
• Bank of Communications (BoCom)
• ABC (Agricultural Bank of China).

The aim of splitting the People’s Bank of China into 5 specialized state-owned banks, known as the “Big Five,” was to expedite the development of the PRC banking system and raise the quality of financial services across various economic sectors. Initially, each bank focused on specific areas, but gradually their areas of expertise began to overlap, allowing them to serve a wider range of customers. Despite this, the “Big Five” continue to play a significant role in China’s financial system, providing diverse services to both individuals and companies.

Here are the banks they have in China apart from the state ones:

• specialized banks, namely the China Development Bank (CDB) and the Agricultural Development Bank of China (ADBC), designed to extend loans to businesses throughout multiple economic sectors
• commercial banks that are institutions offering a wide range of traditional banking services
• overseas banks, i.e., financial institutions set up in jurisdictions outside China but operating within the country’s borders. 

According to Statista, they had 187 banks in China in 2021.

Discovering key insights into the Chinese banking system:

• Chinese banks currently represent 19% of all banks included in the Top-100 ranking based on total assets 
• China ranks 2nd in total market capitalization of banks, following the United States
• 12 Chinese banks are among the top 70 largest banks in the world
• China and the United States account for 54% of the total global market value of bank stocks
• in 2021, the value of the Chinese banking system exceeded USD 46 trillion
• Industrial and Commercial Bank of China has been the leader of The Banker’s Top 1000 for over 10 years.

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Top ratings of China’s biggest banks

To see how large and powerful Chinese banks are, you should look at international rankings. The latter analyze financial institutions around the world based on various indicators. Regardless of the criteria considered, there you can always find several Chinese banks in the top 10. This underscores the importance and strength of China’s banking sector on a global level.

Forbes Global 2000

The above ranking categorizes the world’s largest companies based on 4 indicators, namely, sales, profits, assets, and market value. The latest ranking was compiled based on data as of April 22, 2022.

FYI: top 10 banks in Forbes’ ranking include 3 Chinese banks.

S&P Global Market Intelligence 2022

The ranking evaluates financial institutions based on their asset size. In the latest ranking, most banks were ranked according to their total assets as of December 31, 2021.

Bank	Position in S&P Global ranking
Industrial and Commercial Bank of China	1
China Construction Bank	2
Agricultural Bank of China	3
Bank of China	4
Postal Savings Bank Of China (PSBC)	14
Bank of Communications	18
China Merchants Bank	25
Industrial Bank	27
China CITIC Bank	28
Shanghai Pudong Development Bank	29

The top 4 spots in the ranking of the world’s largest banks by assets are held by state-owned Chinese banks from the “Big Five”.

The Banker 2022

NB: the top 10 banks in The Banker 2022 ranking include 5 Chinese banks, all of which are state-owned. Overall, if we analyze the entire top 1000 ranking, one-third of Tier 1 capital belongs to Chinese banks.

While China currently holds a dominant position in terms of bank size, the number of Chinese banks in the top 1000 has decreased by four to 140 in 2022. Yet, China remains in second place after the United States (186 banks) as far as the total number of national financial institutions in the ranking is concerned.

Go ahead and learn how you can set up a bank account to operate in China and other Asian markets.

Top-5 Chinese banks

The largest Chinese banks are representatives of the “Big Five”. All the way supported by the government, they have reached enormous sizes.

ICBC or Industrial and Commercial Bank of China

ICBC is ranked 12th in the list of the strongest banks in the Asia-Pacific region by Asian Banker 2021, which evaluates banks based on their balance sheet quality. 

The Industrial and Commercial Bank of China (ICBC) is a global financial institution with a vast network of more than 400 subsidiary companies. With its largest Initial Public Offering globally, ICBC made history in 2006, raising over USD 21 billion. This groundbreaking event marked the first time that a bank’s shares were simultaneously listed on 2 major stock exchanges, namely, the Shanghai Stock Exchange and the Hong Kong Stock Exchange. With its strong reputation and impressive financial performance, ICBC has become a leading player in the international banking industry.

In its capacity as an international financial institution, the Industrial and Commercial Bank of China (ICBC) provides comprehensive banking services to meet the needs of diverse clients. Take a look at what its extensive range of offerings encompasses:

• deposits
• loans
• trade financing
• capital management
• treasury transactions
• intermediary services for certain customers, etc.

BOC or Bank of China

Established in 1912 during the reorganization of the Imperial Bank of China, this bank is the second oldest in mainland China. Over the years, the bank has grown to become one of the largest lenders in the country, offering a broad range of financial services to both individual and corporate clients. 

The Bank of China (BOC) is a highly significant financial institution, as demonstrated by its license to issue banknotes in two of China’s special administrative regions. Known for its extensive involvement in facilitating international transactions, BOC was the first major bank to allow investments in yuan in the United States. With a strong focus on innovation and customer service, BOC has built a global presence in 57 countries, cementing its position as a leading player in the international banking industry. 

ABC bank, a.k.a. Agricultural Bank of China

Bank ABC is one of the largest banks in the world, boasting an extensive network of 25,000 branches and ranking third in terms of the volume of loans issued. Originally established to provide financing for rural enterprises in China, Bank ABC has since expanded its services to include a wide range of consumer and corporate offerings. With a customer base of over 300 million individuals and more than 3 million companies, Bank ABC is a major player in the global banking industry. 

China Construction Bank

The bank has periodically been a leader in growth rate rankings. It was the second-largest bank in the world by market capitalization in the early 2000s and 2015. China Construction Bank provides a full range of consumer and business services through a network of over 15,000 branches and subsidiaries in Luxembourg, South Africa, South Korea, the United States, and Australia. While it was founded as the People’s Construction Bank of China in 1954 to serve only construction companies, it has since expanded to provide comprehensive banking services.

Bank of Communications

Founded in 1908, the above Chinese bank was among the first to issue banknotes. Bank of Communications primarily focuses on the domestic market and provides a full range of financial services for individuals and legal entities. Its network includes over 2,800 branches with more than 90,000 employees.

China’s leading banks boast enormous resources and opportunities. With the constant government support, the need to satisfy the demand of a growing population, and an export-oriented national economy, they have turned into the largest financial institutions in the world.

If doing business in the Chinese market sounds appealing and you require a personal or corporate bank account with one of the banks in China, the International Wealth experts are here to assist you. You are welcome to message us at info@offshore-pro.info.