SHANGHAI: The Industrial and Commercial Bank of China (ICBC), a symbol of the country’s financial might, has been deposed as the world’s largest bank by market capitalization by Wells Fargo, data showed on Wednesday.
ICBC’s six-year reign as the world’s biggest bank began in July 2007, and its value peaked at $374 billion in November that year, thanks to China’s rapid economic expansion.
But Wells Fargo and Co. of the United States is now worth $236 billion, according to the New York Stock Exchange, where it is listed, while Chinese figures show ICBC’s value has fallen to around $223 billion.
“As the US economy recovered after the crisis, the rebound of the real estate sector supported the recovery of Wells Fargo,” said Lu Zhengwei, an economist with the Industrial Bank, which has no connection to ICBC.
San Francisco-based Wells Fargo has retained the top spot since taking it over on July 12.
The bank is the biggest retail mortgage lender in the United States, with 9,000 branches and 270,000 employees worldwide.
The shift comes at a time when China, the world’s second-largest economy, is losing steam.
China’s gross domestic product expanded 7.5 percent year-on-year in the April to June period, slowing from 7.7 percent in the previous three months.
A liquidity crunch last month also exposed risks in the Chinese banking system, when a shortage of funds on China’s interbank market sent the interest rates banks charge to lend to each other to record highs.
The development raised worries over the health of the financial sector and sent banking stocks into a tailspin.
Chinese authorities had refused to pump fresh money into the financial markets in an effort to rein in risky lending practices.
China’s benchmark Shanghai Composite Index has fallen more than 10 percent this year on worries over the slowing domestic economy.
Beijing last week also announced a long-awaited interest rate liberalization, removing a floor on banks’ lending rates, but the move sparked worries that narrower interest margins could erode earnings.
“The slowdown in China’s economy, coupled with the pressure from China’s interest rate liberalization, has led to very low valuations of Chinese banks,” said Lu of the Industrial Bank.
Last year, ICBC’s net profit rose 14.5 percent to 238.7 billion yuan ($38.9 billion), according to its website.
ICBC has 17,125 domestic branches and claims nearly 400 million corporate and individual customers. A spokesman at the bank’s Beijing headquarters declined to comment to Agence France-Presse about the ranking. No representatives of Wells Fargo in China could be reached for comment.
On Wednesday, ICBC closed down 0.25 percent at 3.92 yuan ($0.64) in Shanghai but went up 0.78 percent at HK$5.14 ($0.66) in Hong Kong.
Wells Fargo closed down 0.13 percent at $44.57 on Tuesday.