With some of the biggest banks retreating from overseas markets, there is an impression that the age of global banking is over.
This isn't true. The form of global banking is changing- less cross-border flows, more lending through local affiliates. Moreover, the large international banks are being replaced in some markets by regional banks.
Regulation is the principal driver of these changes, followed by politics and shareholder pressure on large banks to perform.
More in my article in EPW, Global banking in retreat?
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3 comments:
This makes me recall the lectures of Prof. Pankaj Ghemawat of IESE Madrid. He maintains that the world is not flat. Telecom is the example he cites often to prove his case. - NS
NS, The earlier fad was 'glocalisation', that is, global entities catering to local tastes. In banking, the issue is of maintaining controls and the costs of regulation. In other sectors, market forces themselves may go against the 'the world is flat' proposition.
TTR
Prof.
Thanks for the article.
I recall you mentioning often about banking consolidation or banks getting too big because of complexities of managing large assets.
Probably, the "Global Banks" have realised this now and thankfully retreating. Infact the cost of operation from the retail perspective is probably higher for customers with these banks than with local banks.
Couple that with the money laundering charges against HSBC, we are blessed with such a withdrawal.
- Deeps
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