Although the names of the Greenwich Associates 2016 Share and Quality Leaders in Asian Corporate Banking look familiar, stability at the top of this list masks a structural shift taking place across the region.

The global banks that have long dominated Asian corporate banking still rank as the industry leaders, but as a group they are much diminished. New regulatory and compliance requirements, mounting costs and serious balance sheet pressures have forced global banks to retrench and/or grow more selective in the roles they are able to play, leaving the industry in flux. Even as most global banks find their Asian operations profitable, a raft of bad press—and substantial losses—from Western markets have shaken their reputations in Asia. In the most extreme cases, banks have been forced to withdraw from profitable businesses in Asia.

As these important players reduce or redefine their presence in the region, companies are experiencing some dips in their coverage intensity and service quality—and in some cases, companies feel compelled to seek out replacements. In cash management, strategic shifts on the part of global banks are causing some large Asian companies to question the long-term wisdom of relying on these providers for such a mission-critical service.

Enter Asia’s domestic banks. Just as they did in the days following the global financial crisis, local Asian banks are capitalizing on the opportunity presented by the pullback of their global rivals. "Leading local banks in the 13 Asian country markets we cover are much better positioned to take advantage of the travails of global rivals than they were five years ago. They have been steadily building out their capabilities and increasing the quality of their own products and service, at least in their home markets," says Greenwich Associates consultant Paul Tan.

Domestic Banks Up Their Game

Every year, Greenwich Associates asks the companies participating in our Asian Large Corporate Banking and Cash Management Studies to rate the quality of the banks they use in a variety of product and service categories. From these results, we calculate scores for each bank on the Greenwich Quality Index. Banks with GQI scores topping those of rivals by a statistically significant margin are named Greenwich Quality Leaders.

Over the past 12 months, GQI scores for some global banks have dropped meaningfully. Meanwhile, the leading domestic banks in China have increased their GQI scores by some 20 points, and India’s leading domestic banks have improved their scores by 30 points. These are significant shifts. "Annual increases of this magnitude are not often seen in our research in corporate banking markets around the world," says Greenwich Associates consultant Gaurav Arora. "If there was a volatility index for the relationship quality Asian companies perceive of different banks, it would be at a historical high right now."

The results of these industry shifts appear to be a rapid de-concentration of the market, which Greenwich Associates believes will, in the short-term at least, lead to more specialization in bank strategies and in corporate banking relationships. Global banks can no longer be all things to all companies across Asia. Instead, they will pick their spots, focusing on products, markets and clients that they see as having attractive profit potential.

Meanwhile, Asian companies are being solicited by regional franchises like ANZ Bank and DBS Bank—as well as by Japanese banks seeking to grow their Asia ex-Japan businesses. Finally, local banks in China, India and other country markets are starting to win over some of the largest companies in their home markets.

In fact, the leading local banks (e.g., HDFC in India) have started to close the gap with their global competitors and pull away from "tier-two" competitors in their home markets.

As the industry average rises faster than in recent years, the global/regional banks will need to "run to stay ahead." Higher-order skills, such as advisory beyond product sales and market-leading capabilities including digital banking platforms, will be key battle fronts for the global banks seeking a competitive edge in capturing deep relationships.

Greenwich Share and Quality Leaders

The following tables complete the list of 2016 Greenwich Share and Quality Leaders in Asian Large Corporate Banking and Cash Management.

Consultants Paul Tan and Gaurav Arora specialize in Asian corporate banking and treasury services.

The findings reported in this document reflect solely the views reported to Greenwich Associates by the research participants. They do not represent opinions or endorsements by Greenwich Associates or its staff. Interviewees may be asked about their use of and demand for financial products and services and about investment practices in relevant financial markets. Greenwich Associates compiles the data received, conducts statistical analysis and reviews for presentation purposes in order to produce the final results. © 2016 Greenwich Associates, LLC. All rights reserved. Javelin Strategy & Research is a subsidiary of Greenwich Associates. No portion of these materials may be copied, reproduced, distributed or transmitted, electronically or otherwise, to external parties or publicly without the permission of Greenwich Associates, LLC. Greenwich Associates®, Competitive Challenges®, Greenwich Quality Index®, Greenwich ACCESS™, and Greenwich Reports® are registered marks of Greenwich Associates, LLC. Greenwich Associates may also have rights in certain other marks used in these materials. The Greenwich Quality LeaderSM and Greenwich Share LeaderSM designations are determined entirely by the results of the interviews described above and do not represent opinions or endorsements by Greenwich Associates or its staff. Such designations are a product of numerical scores in Greenwich Associates propri­etary studies that are generated from the study interviews and are based on a sta­tistical significance confidence level of at least 80%. No advertising, promotional or other commercial use can be made of any name, mark or logo of Greenwich Associates without the express prior written consent of Greenwich Associates.

Methodology

From August to November of 2015, Greenwich Associates conducted 681 interviews in large corporate banking and 865 interviews in large corporate cash management at companies in China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam. Subjects covered included product demand, qual­ity of coverage, and capabilities in specific product areas.