April 11, 2017 – Citi was the top bank last year in transaction banking, a segment comprising trade finance and cash management services, rankings compiled by industry analytics firm Coalition showed today.
This is the first time Coalition has ranked banks on transaction banking, basing the scores on services provided to clients with annual turnover of over US$1.5 billion.
Cash management encompasses services such as direct debits, wire transfers and currency clearing, while trade finance can include items such as letters of credit and trade loans.
Coalition regularly releases investment banking league tables and its 2016 rankings, released last month, showed U.S. banks grabbing the top five places.
Eric Li, research and analytics director at Coalition, said that while the investment banking industry typically grabbed more attention, transaction banking had proved to be a more steady source of income for global banks.
Also, trade finance, a key element in transaction banking, is picking up after a decline caused by the slowdown in global commerce in recent years, he noted.
“This business is a lot more resilient compared to investment banking, you don’t see huge swings by 20-30 percent in terms of top line revenue. It’s a very steady business,” Li said.
“As a result … we are increasingly seeing a gradual increase in coverage of this from the media as well as the bank management perspective.”
Coalition’s transaction banking list is less U.S. heavy than its investment banking league table – after Citi, U.S. banks JPMorgan, Bank of America Merrill Lynch and Wells Fargo were in second, fourth and ninth place respectively.
HSBC was the top placed European bank, tying for second place with JPMorgan, while other top 10 European names were Deutsche Bank, BNP Paribas, Standard Chartered, Societe Generale and Barclays, Coalition said.
“In trade finance, most major players are European banks. This is a big divergence from the investment banking industry where you see big dominance by U.S. banks,” Lee added.
The data showed Citi increasing its market share in trade finance as well as cash management, and dominant in the Americas. HSBC, on the other hand, was rapidly growing its transaction banking business in EMEA and Asia-Pacific.