Biggest banks in the world list: China dominates, US fades

Global investment banks see slowest year start since financial crisis
Global investment banks see slowest year start since financial crisis

So what's all this talk about U.S. banks being too big to fail?

While regulators and legislators try to find ways to reduce the financial footprint of domestic institutions, American banks continue to lag behind their global competitors.

In fact, fully eight of the top 10 banks in the world are based outside the U.S., according to the most recent rankings from S&P Global Market Intelligence. The biggest American institution, JPMorgan Chase, even has fallen down a notch to seventh. Bank of America is the only other U.S. institution in the global top 10.

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The one caveat to the list is that JPMorgan Chase would move up the ladder considerably if it followed the same accounting rules as its foreign competitors. The bank's assets are computed under generally accepted accounting principles, while global banks use international financial reporting standards. The difference essentially is between reporting net derivative assets, as under GAAP, or gross derivative assets, as under IFRS.

If the field was leveled in that regard, JPMorgan would move up No. 2, though that in itself is a decline from the No. 1 spot a year ago.

Of the top 20 banks, just four are in U.S., which has only six of the top 50. (Wells Fargo is No. 11, Citigroup is No. 13, Goldman Sachs is No. 28 and Morgan Stanley is No. 38.) By contrast, China occupies the top four slots and 11 of the top 50. (See the full list.)

The biggest of the big banks

Bank Headquarters Assets ($Trillion as of Dec. 31, 2015) Assets (March 31, 2015) Rank 2016 Rank 2015
Industrial & Commercial Bank of ChinaChina3.423.4511
China Construction BankChina2.832.8222
Agricultural Bank of ChinaChina2.742.7233
Bank of ChinaChina2.592.5845
Mitsubishi UFJJapan2.462.3858
HSBC HoldingsUK2.412.6764
JPMorgan ChaseUS2.352.5876
BNP ParibasFrance2.162.5787
Bank of AmericaUS2.142.1499
Credit AgricoleFrance1.841.941012

Source: Source: S&P Global Market Intelligence

The trend comes amid the continued clamor for Wall Street banks either to shrink or break up altogether. Recent shareholder votes show little internal appetite for breakups, but pressure from Washington is likely to continue as the populist drumbeat intensifies.

"It's public policy. The public policy is working," bank analyst Dick Bove, vice president of equity research at Rafferty Capital Markets, said in an interview. "The U.S. banks are shrinking while the Chinese, the French have no such desire. The net effect is you get a shift in global financial power. It goes away from those countries which are shrinking in size and is picked up by those countries which are expanding in size."

Bove has found himself as one of the few fighting against the strong political wind to downsize the too-big-to-fail institutions.

"If you keep trying to shrink the biggest banks in your system, you're going to reduce lending, you're going to reduce the money supply and you're going to harm the economy," he said. "It's definitely supported by every element in society. The Congress, the president, the regulators, the public, the press — everybody believes that smaller banks are better for the United States. They just haven't thought through the issue."