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The Banker top 1000 – break up would devastate British banking industry

Breaking up the banks would destroy Britain’s leading position in international banking and finance, according to The Banker magazine’s Top 1000 World Banks ranking out tomorrow.

Despite the financial crisis, Britain still has three banks among the largest 10 banks in the world in terms of capital strength (HSBC, Royal Bank of Scotland and Barclays Bank), with Barclays Bank ranked fourth in the world in terms of profitability.

While Lloyds acquisition of HBOS proved hugely troublesome, the consolidated bank is one of the fastest movers in the ranking and is now the world’s 12th largest. It increased its capital strength by a greater percentage than any other bank and could soon be joining the likes of RBS, HSBC and Barclays in the top 10.

“If the coalition government decides to break up banks it considers ‘too big to fail’, this could have catastrophic effects on the UK’s leadership in the international financial industry. Britain would effectively be handing that role over to American, European and even Chinese banks,” says Brian Caplen, editor of The Banker.

“After an extremely troublesome period for the banking sector British banks are now starting to recover. Taking the axe to a blue-chip British company like HSBC would be an act of vandalism. We may see the bank relocate to Hong Kong to avoid such an outcome,” Caplen continues.

Bank of America, which absorbed Merrill Lynch during the crisis, leads the Top 1000 World Banks list as it did in the first ever ranking 40 years ago*. JP Morgan is placed second, Citigroup third, RBS fourth and HSBC fifth.

Banks from the emerging markets continue to grow in strength, and the most profitable bank in the world – seventh in terms of size – is Industrial Commercial Bank of China (ICBC). Overall, there are now 84 Chinese banks in the Top 1000 ranking contributing a staggering 25% of total pre-tax profits of the Top 1000.

The Banker’s Top 1000 World Banks issue rates banks according to capital strength, which is an important measure of a bank’s ability to lend on a large scale and endure shocks.

* The initial Top 1000 data was determined on the basis of assets rather than tier one capital.

About the Financial Times:

The Financial Times, one of the world’s leading business news organisations, is recognised internationally for its authority, integrity and accuracy. Providing essential news, comment, data and analysis for the global business community, the newspaper, printed at 23 print sites across the globe, has a daily circulation of 399,862 (ABC figures May 2010), while FT.com has over 2 million registered users and 126,281 digital subscribers. The FT has a combined print and online average daily readership of 1.9 million people worldwide (PwC audited figures, November 2009)

About The Banker:

The Banker was established in 1926 and is part of the Financial Times Group. The magazine has been carrying ranking since 1970 and also offers a database service. For more information about the ranking and the database go to www.thebanker.com/top1000.php and www.TheBankerDatabase.com

Brian Caplen has been a financial and business journalist for 25 years He has worked in Hong Kong and the Middle East and reported from all over the world. He joined The Banker in 2000 and became editor in 2003.

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