Domestic banks will have to scale up their asset size five times over the next five years, if they want to cope with demand for capital from an economy that is clipping at near double-digits,says an industry report.
The report, prepared by McKinsey & Company, says the No 1 bank in the country (without naming State Bank) will have to scale up its asset size to USD 800-900 billion by 2015 from the current size of USD 200 billion (March 2009), while the No 10 will have grow to USD 90-100 billion by then.
The report further says the No 1 Chinese lender will have to grow its size to USD 4,000-4,500 billion by 2015, up USD 1,700 billion in 2009, while that of the No 10 lender will be USD 800-900 billion against the present USD 190 billion.
"A fast growing Asia will need USD 400-450 billion in capital by 2015, of which USD 380 billion will be for Chinese and Indian banks," the McKinsey report, titled Sustainable growth through inclusive institutional credit flow, said.
The report further says by 2014, the combined revenues of the domestic banks will be USD 73 billion, while that of China it will be USD 433 billion. But does not mean that foreign banks can have a quick run either in the country or in China, warns report. Because, the report says, "over 60 per cent of these revenue pool are subject to access restrictions that limit the traditional branch-based approach."
The report also says that by 2014, the five largest emerging Asian economies-China, India, Indonesia, Malaysia and Thailand-will alone account for 45 per cent of the banking assets and over 60 per cent of market capitalisation of all Asian banks, including those of the developed Asia -- Japan, Korea, Taiwan, Singapore Hong Kong and Australia.
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