China is home to the world’s largest bank, the Industrial and Commercial Bank of China (ICBC). With over 6.5 trillion US dollars in assets, ICBC surpasses all American, European, and Japanese banks. For comparison, JPMorgan Chase, the largest bank in the US, holds around 4.1 trillion in assets, while HSBC, a major global bank, has only 2.9 trillion. So, why is ICBC so massive? Is it due to China’s large population or the limited number of banks in the country? Let’s explore what makes ICBC so dominant.
ICBC was founded on January 1, 1984, as part of China’s financial reforms. It took over commercial banking operations from the People’s Bank of China (PBC), allowing the PBC to focus on its role as the central bank. This move was crucial in modernizing China’s financial system, positioning ICBC as one of the world’s biggest banks today.
Although ICBC holds the top spot in total assets, it isn’t the largest in other categories. For instance, it ranks third by market capitalization, valued at $256 billion, behind Bank of America and JPMorgan Chase, which is valued at over $616 billion. Market capitalization reflects how investors view a company’s future, not just its current financial strength. Investors may give more value to banks like JPMorgan Chase due to higher profitability, global reach, and investor confidence.
ICBC also lacks significant international presence, as it relies heavily on its domestic market. In 2023, only 8.5% of ICBC’s operating income came from overseas markets, showing that its dominance is mainly within China. However, ICBC’s global influence comes from its strategic investments in other banks worldwide.
In 2015, ICBC acquired a majority stake in Standard Bank’s London-based global markets business for $690 million, marking a major step for Chinese banks in London’s financial market. Earlier in 2008, ICBC purchased a 20% stake in South Africa’s Standard Bank for $5.6 billion, the largest foreign investment in Africa at the time. ICBC also made significant investments in Indonesia, acquiring 90% of Halim Bank in 2006, which had been a leading Indonesian bank for years. These moves show that ICBC’s strategy for global expansion involves acquiring stakes in other banks.
Domestically, ICBC’s impact is significant, as it is state-owned and plays a key role in China’s economic policies. The bank provides funding for major infrastructure projects and supports state-owned enterprises in line with national goals. For example, ICBC is a major player in financing the Belt and Road Initiative, which aims to expand China’s trade network globally. Between 2000 and 2023, Chinese banks, including ICBC, loaned $182.28 billion to African countries, helping to build infrastructure and support development projects.
In 2023, ICBC approved a $1.3 billion loan for Pakistan, helping to stabilize the country’s foreign reserves during a financial crisis. This demonstrates the bank’s crucial role not just within China, but also in supporting international economies.
So, why is ICBC the world’s largest bank? It’s largely due to China’s population size and the concentrated number of banks. As of 2022, China had 4,561 banking institutions, a similar number to the 4,886 banks in the European Union. However, with a population of 1.4 billion compared to the EU’s 448 million, China’s major banks, including ICBC, serve a much larger customer base, allowing them to accumulate more assets.
This concentration of banking power is intentional. China’s centralized financial structure, government policies, and economic strategy all support the growth of large state-owned banks. Fewer banks allow tighter government control over financial activities, helping direct funds to key sectors like manufacturing and infrastructure.
In contrast, the European Union has a more fragmented banking sector with many smaller institutions, limiting the size any single bank can achieve. This is why ICBC, operating in a more centralized system, has grown to become the world’s largest bank by assets.