Wells Fargo overtakes Industrial & Commercial Bank of China as world's largest lender
24 July 2013
The Industrial & Commercial Bank of China (ICBC), a symbol of the financial might of the country, has been overtaken by Wells Fargo as the world's largest bank, data showed today, according to an AFP report to which Dow Jones contributed.
ICBC's six-year reign as the world's biggest bank started in July 2007, when its value peaked at $374 billion in November, thanks to China's rapid economic expansion.
Wells Fargo & Co of the US is now worth $236 billion, according to the New York Stock Exchange, where it was listed, while Chinese figures showed ICBC's value was down to around $223 billion.
According Lu Zhengwei, an economist with the Industrial Bank, not connected with ICBC, as the US economy recovered after the crisis, the rebound of the real estate sector supported the recovery of Wells Fargo.
The bank with 9,000 branches and a workforce 270,000 strong was the biggest retail mortgage lender in the US. The shift comes as the Chinese economy, the second largest loses steam.
The country's GDP recorded an expansion of 7.5 per cent year-on-year in the April-June period, slowing from 7.7 per cent in the previous three months.
But Mark Calvey of San Francisco Business Times says there would be no celebrations and high-fiving at local Wells Fargo branches.
Rather the bank would continue to focus on helping more Americans with their financial needs he says. He writes, the US was now looking pretty good, especially against Europe with its financial woes and China's slowing economy.
The lender, this month reported second quarter profit of $5.5 billion, up 19 per cent from a year earlier, with the results marking the ninth consecutive quarter of record profits.
Meanwhile, on Wall Street, the bank's shares changed hands yesterday at its 52-week high of $44.78.
The bank was cutting costs, with its second-quarter efficiency ratio up at 57.3 per cent.
According to Wells Fargo chairman and CEO John Stumpf the bank was pursuing several cost-cutting initiatives, such as 1,000-square-foot "neighborhood" branches that cost 40 per cent less than traditional branches to operate.
He told investors that there were tons of opportunities like that. He cited, paperless ATM receipts and nickels and dimes found in the corners that all added up at the end of the day.