Los Angeles, CA (PRWEB) January 04, 2013
The Global Commercial Banks industry performs a vital role providing businesses, consumers and governments with access to financial products and services. They ensure the sustainability of the financial system by bringing together lenders and borrowers, which allows for the flow of funds. The collapse of the US subprime mortgage market and consequential global recession shook the world's financial system and threatened to destroy the core foundations that the financial system relies on. Throughout the world, banks suffered unprecedented losses as their loan loss provisions skyrocketed due to their borrowers becoming unable to repay debt obligations. In addition, during a time when the cost of funding rose sharply due to credit availability disappearing, banks wrote off billions of dollars worth of assets as values depreciated. As a result, industry revenue is estimated to decline at an annualized rate of 1.2% to $3.3 trillion over the five years to 2012.
At the height of the recession, many governments stepped in to bail out commercial banks on the verge of bankruptcy. In particular, the US government and leadership across Europe injected billions of dollars into their banking systems in an attempt to restore stability. However, the damage from the economic downturn was substantial and the recovery has been slow, although it has gained pace in the past two years. Over the past two years, unemployment rates have been dropping in developed nations, which has boosted consumer spending and helped the industry's revenue grow 5.3% in 2012. However, the sluggish recovery in housing markets has limited borrowing. Additionally, persistent uncertainty surrounding Europe's economy and slightly slower economic growth in China are expected to dampen overall growth. As a result, the industry has been undergoing consolidation to improve economies of scale and decrease variable costs. The Global Commercial Banks industry displays low concentration. The four largest players are Bank of America Corporation, JPMorgan Chase & Co., Industrial and Commercial Bank of China Limited and Citigroup Inc. Due to the sheer size of the industry and the revenue generated by thousands of industry players, the relative share of each industry player is minimized. The four largest industry players are truly global in their operations; however, the thousands of other industry players make them appear to have a relatively small status. The financial crisis has led a number of major corporations to either lose or gain market share. Citigroup, which once held the top position in the industry, has been severely affected by the global financial crisis, and its market share has declined in the five years to 2012. On the other hand, the credit crisis has seen the merger between two of largest British banks, HBOS and Lloyds. Concentration is forecast to increase moderately, but not for many years. Larger industry players will continue to enter untapped markets, in particular emerging markets in China and India.
Looking ahead, the industry is set to fare well, albeit at a slower rate compared with prerecession levels. Banks operating in developed economies are expected to perform better as deferred business and capital expenditure moves forward. Banks in emerging markets held up well during the crisis, and opportunities exist for large global banks operating in mature markets to expand into these regions and benefit from the growth that is expected to occur in the coming five years. In the five years to 2017, industry revenue is expected to increase. For more information, visit IBISWorld’s Global Commercial Banks industry report page.
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IBISWorld industry Report Key Topics
Banking establishments in this industry provide commercial, industrial and consumer loans as well as offer deposit facilities to their customers. These corporations also accept term deposits, extend mortgage and real estate financing, and invest in high-grade securities. Income from investment-related activities is excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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