Charting China's Take Over Of The Banking World... And A Stark Warning

Tyler Durden's picture

In what may come as a surprise to some, the top 3 banks in the world by market cap, are not based in the US, nor the UK, nor, obviously, Europe. All three are Chinese, namely ICBC, CCB and the Agricultural Bank of China. The top two US banks by market cap, Wells and JPM, are 4th and 6th respectively. And what is probably scarier, and what is not shown on the chart, is the amount of "assets" that these banks need to hold on their balance sheets to generate the returns needed to maintain this market cap: off the top of our head we would imagine that the US banks, when adding derivative exposure, have balance sheet risk that is orders of magnitude higher than that of China. Yet the most fascinating aspect is the amazing speed with which China took over the banking world (and with which market caps have increased), in the past 20 years. Without a single bank in the top 10 as recently as 2005, China now has 4 banks among the ten biggest in the world. Yet should China be worried and is history poised to repeat? Back in 1991, 6 of the top 10 largest banks in the world... were Japanese. Now not one of the 6 is to be found anywhere.

via Goldman Sachs

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GeneMarchbanks's picture

Wow.

Yet should China be worried and is history poised to repeat? Back in 1991, 6 of the top 10 largest banks in the world... were Japanese. Now not one of the 6 is to be found anywhere.

I heard people like Mish saying that we were Japan. I'll go on record saying the Chinese banks have as much chance of being off of that list as JPM.

Matevski's picture

Ron Paul Moneybomb today! Time to break his record from 2007 with $6 million in donations! Dig deep folks!

ultimate warrior's picture

http://www.ronpaul2012.com/

Lets take our country back!  Lets fight these corrupt assholes!

GMadScientist's picture

Put your money where your mouth is. Send him silver.

tmosley's picture

Gresham's law is totally lost on you, isn't it?

JPM Hater001's picture

I just dropped $100...double my last 3 donations.

Divine Wind's picture

DISCLAIMER: I Love Ron Paul, but see him as unelectable for a variety of reasons, none of which you Libertarians seem to want to face.

Ron Paul CAN NOT and WILL NOT get the nomination. Not because of lack of popularity, but because the lib media will destroy him, just as I am about to do below:

He has delivered 4000+ babies:

Do you really think he will make it through the election gauntlet with this baggage? He has manhandled 4000 snappers with kids hanging out. For sure, a bunch of them will come forward to say that RP abused them in some way, touched them inappropriately, fucked up their kid or did something else wrong. This is certain. Even if all of it is BS, it will bog him down.

Not enough? Already hit the neg vote arrow?

How about this:

Here is an excerpt from an article on RP electability from Hot Air:

Paul, writing in his independent political newsletter in 1992, reported about unspecified surveys of blacks.

”Opinion polls consistently show that only about 5 percent of blacks have sensible political opinions, i.e. support the free market, individual liberty and the end of welfare and affirmative action,”

Paul continued that politically sensible blacks are outnumbered

“as decent people.”

Citing reports that 85 percent of all black men in the District of Columbia are arrested, Paul wrote:

“Given the inefficiencies of what D.C. laughingly calls the `criminal justice system,’ I think we can safely assume that 95 percent of the black males in that city are semi-criminal or entirely criminal,” Paul said.

Paul also wrote that although

“we are constantly told that it is evil to be afraid of black men, it is hardly irrational. Black men commit murders, rapes, robberies, muggings and burglaries all out of proportion to their numbers.”

Need more or are you still in political fantasy land salivating over the Libertarian Dream Team?

How about Paul’s suggestion that the age of adulthood for criminal prosecution be lowered — for blacks?

“We don’t think a child of 13 should be held responsible as a man of 23. That’s true for most people, but black males age 13 who have been raised on the streets and who have joined criminal gangs are as big, strong, tough, scary and culpable as any adult and should be treated as such.”

Do you really think that with quotes like this on record, and not having the backing of the MSM to cover for you, as they have done for POTUS, that he stands a chance?

The Congressional Black Caucus will eat his lunch.

The Hot Air article goes on with much more, but suffice it to say that if RP wins the nomination, this election is a walkaway. The libtards will destroy him.

Save your money. Go buy a new Wii instead. The impact on your life will be far greater.

Again, I love the guy, but as we say here in Texas:

This dog don't hunt.

http://hotair.com/archives/2011/12/15/can-ron-paul-win/

 

Raymond K Hessel's picture

Cass?  Cass Sunstein?  Is that you again?

Killer the Buzzard's picture

Divine Wind coming out of your sphincter.

Divine Wind's picture

Hmmmm. I would have to guess you are a liberal hiding behind the skirt of Libertarianism.

So typical: Resorting to insults when your argument/thesis breaks down or has no basis in reality in the first place.

slewie the pi-rat's picture

L0L!!!

you're funny!

a highly-opinionated texan going on about someone else's "argument/thesis"

oh, and reality, too!

very entertaining!

MolotovCockhead's picture

Divine Wind??!! More like a case of terrible bad breath.

eureka's picture

If anyone "sinks" Ron Paul with any kind of garbage stories, it will be the hyper rich US oligarchs, who run the world and treat everybody in the entire world - except of course their henchmen, like slaves, through the control of their prime weapons of mass terrorism institutions:  US banks & US Federal Reserve - backed up by the 99% corrupt, sold & bought US politicians AND US military Empire.

Ron Paul is just about the only honest and non-imperialist US politician, and if he - and his non-imperialist view does not win, because the US citizenry does not shar this view, or is so dumb that it must continue its vicarious and false life through the notion and desparate clinging to the institutions of Empire - then the US is over and done forever - both as "the land of the fre and the home of the brave, but ultimately also as Empire, because all empires self-destruct and US empire rose, and wil equally fall, faster and harder than any empire before it.

Vote for Ron Paul. Don't give in to his naysayers, condesenders - nor to the intellectually weak, who are afaraid to argue the truth - whatever statistics, back it up. The 2012 election is more than any time before since its founding, about nothing less than the soul and identity and future of the US.

Prepare for battle. Prepare to win.

Divine Wind's picture

That's just it.

Super guy, wonderful policy ideas, but very very sinkable.

Pinko's picture

With friends like you, who needs enemies?

 

I for one don't count on someone else to form my opinions, nor do I weigh a man's words higher than his actions.

 

Keep bringing trash and lead weights, but it doesn't change my view of Ron Paul or my lack of faith in the establishment candidates. He becomes a viable candidate when people are ready to stand up for their convictions and stand behind a man they believe in.

Chump's picture

Isn't that the point?  You are not dumb enough to fall the BS.  99.99% of voters are.

Pinko's picture

My point was also of guidance for the easily misled; until we step and show that actions speak louder than words they know only words. Evil flourishes when good does nothing. At least point out the BS and make note of the peddlers, don't let them hide behide lies and inuendo. MSM becomes irrelevant when we're ready to step up and call out their lies. If we ignore the lies as little they become the reality.

Police Commissioner Jacobs's picture

There is no "liberal media" retard, unless you are talking about "Democracy Now." All of the media is corporate. And if anyone brings down Ron Paul, it will be the Republican establishment, at the direction of Wall Street.

 

audiorbit's picture

Ron Paul will not be nominated, I agree. But for none of these reasons and certainly not because he is sinkable. Every preseident has mountains of dirt in their past. But there are ways the powerful interests deal with that.

Ron Paul will not be nominated because the system simply doesnt work like that. Some think that there is some kind of process to find a representative to lead the party to power by representing the people and winning their vote. Nothing could be further from the truth. Both parties, and their politicians, are the vassels of rich, powerful men. They groom, then select two candidates, one from each "side" who will put their own ideals aside and basically do their bidding in the office. Those candidates stand and one wins. Ron Paul refuses to serve these interests. Thus he will not be nominated, no matter how popular he is.

The whole election system may have been based on good intentions when it was invented. But over the centuries it has simply become a method of reinforcing the dominant power while giving the public an illusory sense of control.

Pinko's picture

You have a choice to make your own decisions or take the line that is fed to you. If the populace votes for a candidate and he does not win, they start to ask questions. If they compromise and accept one of the two options they are only upset theirs didn't win. Change takes time, the 3rd party turnout has been steadily increasing since 1992, it will eventually overtake the two party system, but only if we don't give up and join the two party system.

Mo Bius's picture

Oh, Divine, I think you just might be a troll for Americans Elect (Americanselect.com).  Americans Elect is a new political group, organized as a "social welfare" concern, currently seeking status as a political party in several states, and sporting such prominences as Lynn Forester deRatschitt. and other Wall Street phallus suckerrs, who will select, by their board , who they want as a candidate.

See here:http://www.salon.com/2011/12/09/the_slick_schtick_of_americans_elect/

Better Wake The Fuck Up!!

Oh yeah...go tell your phallus sucking friends it's Ron Paul or DIE, bitch.

knukles's picture

And ICBC just got accepted into the LBMA.

The prot friken.

Troll Magnet's picture

all yo bang a beronging to us?

Shineola's picture

Asians are goy too, right?

Chief KnocAHoma's picture

I have to disagree. China is a paper tiger and the poster child for malinvestment. Their real estate bubble is far worse than the US, their interior strife higher, and they really do not want war. They only care about keeping the country together which is about to become much more difficult.

We razy mericans not buying as much crap.

Chump's picture

I agree that their financial problems are dire, but that does not preclude war.  In fact, think of how much better off they'd be if they could get their subjects to rally around a cause like, oh say, fighting those damn wide-eyed American imperialists.  Think of how much their demographic crisis would be eased by, oh say, killing off a few million young single men.

War is looking more and more like a way out for...everyone.

WhiteNight123129's picture

Well As I am short base metal (iron ore mainly) for a while, I can tell you that a lot of things do not work in China (a lot of things do work do). That being said, one has to make the difference bewteen a massive housing slump and banking crisis versus a sovereign-banking-currency crisis. China is the camp of massive housing slump and banking crisis, but it is not in a sovereign-banking-currency crisis. EUrope is a sovereign-banking-currency crisis. Britain is a bit different because they print but they have massive leverage and they will end up with a currency crisis-inflation. US better leverage but measured conventionally, you had off balance sheet and CDS and the leverage is really unknown currency destruction is the end game. So CHina has mid cycle crisis, they might have hyperinflation in say 20 30 years who knows, but they do not face that risk now really. They GDP is going to be flat to negative at the through and you will see massive SOE privatization to replenish the Central Gov coffers that is it.

 

riley martini's picture

 In 1999 6 of the top 10 were USA the dot com ponzi .

sgt_doom's picture

Fantastic point, GeneMarchbanks, fantastic points, good citizen!

With all the talk recently about the Poles, my prediction is that the top three banks this time next year will be Polish!

(Or were the talking pukes discussing "polls"?????)

Anywho, it's really not about the banks, as we all know here, it's really about the interlocking stock & bond ownership, as in AXA Holdings, and the really senior capital owners behind that outfit, as well as a few others.

 

Gully Foyle's picture

First the wine, now the money. Next it will be chicks. Now that you can laser change eye color expect many more blue eyed asian hotties.

spanish inquisition's picture

Communism= Hot chicks, good wine and money. Who knew?

Caviar Emptor's picture

Chicks already partying in swanky NYC apts bought up by Chinese last 2 summers. You behind the times!

Divine Wind's picture

Affectionately known as 'Yellow Fever' . I suffer from this malady. It hurts so good.

sabra1's picture

at least they shoot bankers!

knukles's picture

Egality, fraternity, ect...
They fuckin' shoot everybody, equally.

Ever notice how we be goin' there and they be comin' here?
One for all and all for one.

We've always been at war with ourselves.
                                  -Snookie Orwell

WhiteNight123129's picture

They do not need too. The SOE chief have a minister ranking in hte communist party ranking system and the bankers vice-minister. So if you are a head of a big Bank you are a loser compared to a head of a large SOE. And if you wonder why so much loan are written is because the bankers are yes men, sort of lacquais compared to CEO of large real economy company. Now you wonder why the Chinese did not allow more than 2% of the banking system being in the hands of foreigners? They know that you have muzzle those guys because otherwise hells can break lose. After 2009 though the banks were kind of free to do whatever they want, Chines gov is going very hard to control them back. (That will not prevent a property crunch and banking crunch though).

Schmuck Raker's picture

Yet should China be worried and is history poised to repeat?

Naw, it's different this time.

UnderDeGun's picture

Shouldn't that be "History pissed to repeat"??

TruthHunter's picture

"top 3 banks in the world by market cap"

 No mark to fantasy here?

 

 

The Axe's picture

China stepping up its grip on the internet freedoms......

Eally Ucked's picture

Who the hell cares about it? Their population is 1.5 billion or something, so they should be the biggest. You have to worry when Japan supported biggest banks with population 10x smaller. JPM and WF are much to big for their base so be careful with them.

Caviar Emptor's picture

Oh yeah? Ask the Swiss and Cayman Islanders if their banking sysem is too large 

youLilQuantFuker's picture

I guess the team is worried. Maybe israel should hold the title? By proxy?

firstdivision's picture

Which is why China is having a massive income gap disparity that is widening. Wukan > OWS

GMadScientist's picture

Closer to the Wisconsin thing.

laomei's picture

Try reading more on wukan, they have no trust for the local government, they want Beijing to intervene... and it will... and local corrupts will get executed or tossed in jail for a long long time.

 

The income gap in China is far lower than the US. The US is already at India levels.  China is also taking serious measures to address it as being a problem.

 

The property bubble, it's being deflated in a calculated and controlled manner.  Housing prices are not "crashing", they are being forced lower through regulation and controls.  Rentals are getting higher, but at the same time tons of public housing (of really good quality and good size) are being set up which are open to average-income residents.  The next gun to be fired off will be property taxes, but it will be targetted more or less entirely at the rich, it's something that the average resident will literally never have to worry about... same goes for taxes as well.  This is what happens when you have a socialism-based country that is big enough to tell the west and the us to fuck off when they come in with their demands and "suggestions".

WhiteNight123129's picture

Lao Mei do not be too nationalistic it blurs the judgment.(Now I am french so yes we fucked up with the second opium war that was a bad idea, sorry about that).

At least De Gaulle in 1964 was the first country from the West to recognize the PRC (the same DE GAULLE who was calling for Gold Standard). France only went straight down with ridiculous leaders after DE GAULLE :-(

I know you guys say the ~Emperor is far and the mountains are high~, so yes Beijing will take every opportunity that when things go wrong, ask the Emperor (Beijing), and solve the problem. THe income gap will be somewhat corrected with the housing slump because it was mainly the people with money who gambled with housing. Now they will have to sell those homes where the price clears that means quite low. I does not strike me as being a political problem or being a social problem to have the rich guys forced to sell their homes at a price where the masses can afford them.....

Now your guys are pretty smart at the standing committee (all a bunch of engineers) but they are not supermen. At some point there is that much that you can control. Everyone is trying to make Adam Smith look like a fool, it works for a while, but eventually it does not.

You guys still need to privatize your SOEs though, that would be good because it will foster an equity culture in China. As for Democracy, there is a problem with that, because it results in the crowd deciding and the crowd is angry, irrational and stupid. So actually a Republic is better, with little room for demagogues, (I guess Deng Xiao Ping hated the mass movements that Mao was so fond of--- you masses movements only brought problems in China---

But I guess it is the same everywhere . if you let the crowd decide you are in trouble. You need a parliament a republic, a solid system of law, no arbitrary judgments and forget about asking the masses their opinion or they will bring Mao back in China or elect G.W. Bush in America.

Now do not worry your housing slump will just create a banking crisis but nothing like 2008 in the US, you do not have enough debt for that. Eventually if your guys at the poliburo keep creating debt you might run into trouble. That is why I guess people will be surprised to see that China will not necessarily stimulate as even as close as people expect. I think the strategy of stimulation and Exports was to force a change of world currency regime. We are getting close.

 

 

laomei's picture

Privatize the SOEs?  Hahahah, no, privatization is a scam that creates oligarchs and destroys lives.  Getting a job at an SOE is pretty much the goal of most graduates.  It's safe, it's secure, it's not going to go bust and there are tons of perks that more or less guarantee a life-long job and all the stability that goes along with it.  Anything and everything that is anyway critical to the nation NEEDS and MUST be state owned.  The very notion that investors with interests other than the welfare of the workers and the wellbeing of the nation should have any say in it is laughable.

 

Construction used to be 100% SOE, it was broken up in the 80s.  Construction workers previously had no real worries, they were well trained by the state, well paid, certified and with no profit motive, there was no corner-cutting motive.  All profits booked went straight to the state, simple as that.  The build quality from those days is still very impressive.  Fast forward to today... workers are treated like shit, they have no security, they have on real stability and their skill sets are very lacking.  Shit materials are used to cut corners and enrich a small handful.  Government buildings, demanding high standards get the quality you'd expect, but beyond that? Most is shit.  Crazy idea here, but "profit" is most definitely NOT the most important thing in the world here.  General welfare of the people is the only thing that honestly matters at all.  If anything, the state needs to take MORE control back from the private companies.

 

There is no "housing slump" here, I really do not understand where you idiots get that idea at all.  The government is literally forcing prices down to keep them from rising even more and dropping roadblocks and speedbumps behind them as they progress forward.

Examples of what has been done so far:

Limitations on eligibility for buying property: You must either have a resident hukou or have 5 years of stable history and tax paying to be eligible.

Limitations on number of properties: 1 person, 1 apartment.  After that you start getting 60% up front in cash required and 100% required.  Furthermore, there are limits on absolute number of properties you can buy.

Taxes: Previously, it was more or less a free for all.  Holding time for most properties is now 5+ years to avoid paying taxes based on capital gains and selling price.  Holding for under a year results in a massive penalty regardless of gain or loss.

More taxes: Property tax systems are being devised.  The base ration is 60 sqm per person.  So a family of 3 gets an exemption of 180 sqm.  Past that? well... it starts to get expensive.  This is inclusive of ALL properties owned, so it hits landlords especially hard.

Public housing: With taxes on the horizon, rents are going up.  Public housing provides a family of 3 earning under 100,000 RMB per year to have a 45 sqm apartment paying no more than 1,800 per month.  A family of 4 is 150,000 per year and 60sqm.  Do, keep in mind that the fair market rate for where these units are being built is around 3000-4000 per month.  This alone will counter the rent increase problems.  Shifting that onto landlords rather than allowing them to pass it on to renters.  This also allows for a nice increase in fire sales from landlords, which will help push prices down further.  Approximately 30,000,000 units are being built with the first batch of 300,000 already on the market in Beijing and currently accepting applications.

 

Foreigners: Vague rules have become concrete laws.  1 property in all of China is allowed, full stop.  Said property must be a primary residence and renting it out is illegal, full stop.  Said foreigner must have been in China as a resident for no less than 1 full year prior before being eligible.  Minimum downpayment is 30%, with 50% being more common.  There are higher restrictions on the sale of the property as well.

 

This "housing problem" is also more or less entirely limited to the cities.  Out in the countryside, a farmer does not rent land, a farmer does not buy or sell land.  A farmer and village dwellers are GIVEN land by the state and they have more or less permanent rights to it as long as it is productive.  So, sure, you might be a poor farmer, but your house is free, you owe no taxes, the state is now providing essentially free healthcare and your daily commodities are further subsidized by price controls.  House "ownership" in China is higher than 80%, with that ownership being defined as owned outright with no mortgage.  HELOC does not exist here in any real capacity and Chinese can and will put everything they can into a mortgage to make sure it is gone faster, no one with any sanity will take a loan against their home, as "walking away" is simply not permitted and non-payment of debts greater than 10,000 RMB can bring fraud charges and jail time.  Then again, the banks are very people-focused and highly flexible as far as terms go.  The banks are not in the business of kicking people out on the street.

 

I think a lot of this "analysis" from the west is simply because they have absolutely zero clue how any of it works, are incapable of understanding a government in the non-neoliberal sense anymore, and in order to write a story that sells advertising, they have to somehow try and relate it to what their readers can actually comprehend.  The very notion of the worlds largest country proactively making housing more affordable for the masses, keeping a tight reign on its banks and setting higher taxes on the rich while providing an increased social security net is just something that is "inconvenient" for the hacks in the US to deal with if it became widely known.

 

Also, here's a fun factoid, but first some basic information.  The average compensation level (yearly) is ~50,000RMB per capita.  This does not in any way take into account bonus (typically 1-2 months pay) and other perks that are built into the system.  This also only includes the base-pay for city workers who also receive a ton of perks, typically greater than their actual pay.  Feel free to pay minimum wage, but you are required to provide room and board as well as refunding a bunch of other expenses.

So, factoid ahoy! What is middle class in Beijing?  What is rich in Beijing and what is poor in Beijing? (I will be using a "w" to indicate x10,000, think of it like a "k")

Poor: under 10w per year, post tax.

Middle: 40-80w per year, post tax.

Rich: 200w or more per year, post tax.

This comes from a survey we did with a few other partners and it's fairly cool to see how it was more or less consistent with clearly defined bands.  The wages do not include bonus or perks and are based on tax-home, post tax pay.  The majority of bonus received is equal to 1.2 month's pay.

So, what class are you in Beijing?  Pre-tax, without taking into account state taxes and health insurance premiums (we have basic UHC coverage) or 401k contributions (closest thing you really have to a housing fund I guess), you are looking at a household income (assuming married with 1 kid for tax benefits) of no less than $80,000 per year to qualify at the very bottom rung of "middle class".  

Chump's picture

There is no "housing slump" here, I really do not understand where you idiots get that idea at all.

Could be all those empty fucking cities, but maybe that's just our lying eyes deceiving us once again.

So, is "propagandist" a good, solid, middle class job?  Or do you do this out of the goodness of your heart?  Maybe strictly in the evenings to supplement your day job attaching battery covers for iShits?