Dr Savvas Savouri in his latest market discussion says that in the next seven years, the world’s largest banks (by market cap) will not be in the US anymore, rather the emerging markets or the “new growth economies” will be playing host to the world’s top twenty banks. Countries like, Russia, China, Australia, New Zealand and Canada have only had one contender in the line of the top twenty banks in the past years, however by 2020 this will change and most of the largest banks will be originating from the emerging economies.
Savvas Savouri Bullish on the UK
Savouri has been very bullish on UK and sees its future as different from the rest of the developed world, especially from Europe. He thinks that while the slowdown in other regions may hinder growth for a long time, London will be able to transform into better shape than the rest, in fact just as good as the new world.
According to Savouri’s timeline of new world banking order, as the largest banking giants of the US, Europe and Japan lose girth, there will be a flurry of merger and acquisitions. These M&A events will slow the process of evolution but will not be able to prevent it. The new banking order will experience a booming growth in assets that will be supported by growth in the parent countries and appreciation in their currencies.
Savvas Savouri also argues that the reason that new banks are not making leaps in investment banking is due to the conservative mindsets that have prevailed in the investors of the developed world, who do not have confidence in the new players. Savouri believes that this will change as old banks downsize and close their operations, and as this happens investors will move to other opportunities. This is particularly evident in the UK where investment banking exposure is being reduced and thus is freeing up space for new banks to create a market for themselves. Savvouri thinks that these changes across the banking industry will make it possible for the UK to ride along on the growth of emerging financial markets. These changes will produce 500,000 job opportunities by 2020, which Savouri thinks is a perfectly reasonable estimate.