2015 Share and Quality Leaders in U.S. Large Corporate Banking, Cash Management, Debt Capital Markets
Bank relationship rationalization and the easing of concerns about counterparty risk in the U.S. are setting the stage for increased concentration of corporate banking business in the hands of the market’s biggest banks.
Such consolidation adds to the already commanding market share and penetration levels of the world’s largest banks who offer industry expertise, best-in-class coverage, sophisticated product capabilities, and strong international networks.
In a new report released today, New Regulation Benefits the Top Banks with Larger Share, Greenwich Associates reports on a consolidation trend fueled further by the increasing internationalization of U.S. companies’ business with top banks.
“While we expect to see further gains among the top U.S. banks, it will be interesting to track the positive momentum the largest foreign banks are showing,” says Greenwich Associates consultant Andrew Grant.
Tightened capital reserve requirements and other new regulations have eroded bank profit margins and triggered substantial shifts in business strategy, with large banks becoming more selective in when and to whom they allocate capital and other resources, and some prominent foreign providers exiting parts of the U.S. business.
The results of Greenwich Associates 2015 research shows clear signs of business consolidation at the top - ensuring large U.S. companies higher levels of service and a bank group that has the most up-to-date product offerings.
“Across the full spectrum of corporate banking services, companies are receiving a clear message: Banks’ biggest and most profitable clients will receive the highest levels of service, while smaller and less lucrative accounts receive less intensive coverage or even see their relation¬ships dropped altogether,” says Greenwich Associates consultant Don Raftery.
2015 Greenwich Leaders: U.S. Large Corporate Banking
All the leading banks expanded their market penetration levels over the past 12 months, meaning that they added new relationships with large U.S. companies. In 2015, Bank of America Merrill Lynch and J.P. Morgan are tied atop the market with penetration scores of 85-86%. Wells Fargo is third at 75%, followed by Citi at 68%. Rounding out the top tier is a two-way tie between HSBC and Barclays at 43-44%. These firms are the 2015 Greenwich Share Leaders in U.S. Large Corporate Banking. The market’s top two banks—Bank of America Merrill Lynch and J.P. Morgan—also share the title of 2015 Greenwich Quality Leader in U.S. Large Corporate Banking.
2015 Greenwich Leaders: U.S. Large Corporate Cash Management
More than half of large U.S. companies require banks for cash management service in Western Europe, and an equal share employ at least one cash management provider for business in Asia. Forty-five percent of large companies use a cash management bank in Latin America, 36% use a provider in Central and Eastern Europe, and more than a quarter in the Middle East and Africa.
“Companies’ growing demand for international coverage will make it that much harder for smaller U.S. providers, who are already struggling to compete for domestic business against bigger rivals with significantly more resources,” says Andrew Grant.
The list of 2015 Greenwich Share Leaders in U.S. Large Corporate Cash Management is largely unchanged from last year. Bank of America Merrill Lynch now leads the market with a penetration score of 68%, followed by J.P. Morgan at 64%, Wells Fargo and Citi, are tied at 49-50%, and HSBC at 31%. The 2015 Greenwich Quality Leaders in Large U.S. Corporate Cash Management are Bank of America Merrill Lynch, PNC Bank and Wells Fargo.