The competitive dynamics of Asia’s corporate banking market are changing rapidly.
The list of Greenwich Associates 2017 Share Leaders in Asian Large Corporate Banking is topped by familiar names. HSBC leads with 54% market penetration, followed by Standard Chartered and Citi, which are tied for second at 43%. ANZ Bank and DBS Bank tie for fourth at 28%.
The situation is much the same in Large Corporate Cash Management, where HSBC and Citi are statistically tied for first place with market penetration scores of 31%–32%, followed by Standard Chartered at 22%, Bank of China at 17%, and DBS and Deutsche Bank sharing the No. 5 spot with scores of 14%–15%.
These regional leaders represent only the tip of the iceberg when it comes to companies’ options for banking services.
Asia is a highly heterogeneous group of markets, many of which support “national champions” whose businesses are growing in step with their domestic markets and becoming increasingly competitive on a domestic level.
Asian companies seem more than ready to take advantage of this wealth of alternatives. According to a new Greenwich Report, As Global Banks Sharpen Focus in Asia, Ambitious Locals Step In, approximately 40% of large Asian companies say they plan to shift a significant share of wallet from an incumbent core bank in 2017.
“Global franchises continue to dominate the pan-Asia stage, but are less dominant than before,” says Paul Tan, Greenwich Associates Managing Director. “We are seeing all of the market leaders make prudent ‘participation choices,’ prioritizing return over sheer market share.”
Global banks shift gears
As global banks become more selective in their Asia corporate banking landscape, the shift is creating new opportunities for a group of ambitious and fast-improving local providers that are emerging as a credible option for Asian corporate treasurers in search of replacement, supplemental or simply lower-cost banking service.
As recently as 2010, Asian banks held less than half of all available Asian corporate-banking relationships. Increasing steadily since then, that share now stands at 58%. Leading this charge are banks with regional ambitions, like ANZ and DBS, and the biggest banks from the regions’ largest country markets, including Bank of China, State Bank of India and HDFC.
“These gains reflect the perfect alignment of growing sophistication and opportunity,” says Greenwich Associates consultant Gaurav Arora. “The best Asian banks have made rapid improvements in terms of the quality of their offerings, the talent of their teams and the overall sophistication of their enterprises.”
Reflecting these improvements, the list of 2017 Greenwich Quality Leaders in Asian Large Corporate Banking includes one Asia-based franchise—DBS Bank—in addition to Bank of America Merrill Lynch and Citi.
On the whole, however, local Asian banks have not yet matched the quality and sophistication of the global banks, but large banks like Bank of China and HDFC have enhanced their platforms to be competitive within their domestic markets, and DBS has become competitive in key regional markets.