Global banks

Credit clout

The global advance of China’s companies is bringing its giant banks out into the world, too

AMERICAN BANKERS make for bold bosses. From his roomy office in Manhattan, in early February, the boss of one of the country’s biggest suggested he has few serious rivals—and all are just a few blocks away. “US banks continue to gain share from European banks.” Asia barely gets a mention. “Chinese institutions have generally proven incapable of expanding globally. When they buy sports cars and flashy hotels, it just doesn’t feel solid.” Days later Morgan Stanley, America’s sixth-largest bank, announced its $13bn acquisition of E-Trade, a broker—the biggest by a Wall Street bank since 2008.

Within weeks China had exported a different threat. As coronavirus-induced investor fever took hold, the Dow Jones index of top American lenders, which had soared by a third over 2019, crashed by 50%. The market rout did not wipe them out. But it is the sort of event that could lead incumbents to self-isolate—accelerating the discreet spread of Chinese banks in emerging markets. And the country is opening up its own market, hoping to learn tips from new entrants along the way.

Chinese banks are already huge. Their total assets now surpass those of American and European banks. They are also providing more cross-border credit, the bread and butter of…