The Agricultural Bank of China has celebrated the opening of their London branch this Tuesday. This is the latest step in the expansion of European business operations of the ‘Big Four’ – Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), China Construction Bank (CCB) and Agricultural Bank of China (ABC).
Earlier this year ICBC received their banking license in Switzerland. ICBC – the largest bank in the world by total assets and the most valuable bank in the world by market capitalization – has been licensed by the Swiss Financial Market Supervisory Authority Finma as a bank. Starting their European operations in the UK in 1995, it was formally established in 2013 in the City of London and has since expanded its operations from London to all major European cities, opening their latest branch in downtown Zurich.
ICBC, headquartered in Beijing, is one of the largest credit institutions in China, with more than 460,000 employees and just under 20,000 branches. The financial group was founded in 1984 and completely restructured in 2005, whereby the transformation into a private company took place. In addition to serving business and private customers with all industry-standard banking services, its core business also includes other credit card and e-banking services. The company reported revenue of £115.7 billion for the fiscal year 2016, with a profit of £32.1 billion.
The dominance of Chinese financial institutions has been growing for years. As the data service SNL Financial announced in 2015, four of the world’s five largest banks alone now come from China. Due to currency effects, European and Japanese banks fell behind. The top five also include the Agricultural Bank of China and the Bank of China.
The influence of Chinese banks in Europe, which has become increasingly noticeable and increasing for some time now, is an extension of the growing role they already play on other continents. According to Merrill Lynch, Chinese banks in Australia, for example, have already spent a considerable share of the new syndicated loans together with Japanese competitors in the recent past. In this way, they are chasing away significant market shares from down turning European banks in Australia.
The arrival of powerful Chinese banks is relatively new to the European market. The weakness of European financial services gives Chinese banks the best chance of gaining a foothold in financial markets, which are among the most competitive in the world.