North American Bank Direct Exposures to China Limited; Indirect Exposures More Concerning
This commentary reviews North American Bank direct exposures to China, Taiwan and Hong Kong.Key highlights include:
• As tensions rise between China and the U.S. around Taiwan, DBRS Morningstar is assessing North American Banks' direct credit exposures to China, Taiwan and Hong Kong. Public documents show that the vast majority of North American banks have very little or no direct credit exposures to these geographies with a few exceptions.
• The North American global capital markets players do have credit exposures, but in DBRS Morningstar's view, none of them are material given the size of their respective balance sheets, ample capital positions, and relatively lower proportion of earnings generated in these geographies.
• Nonetheless, China is the second largest economy in the world and is highly integrated into the global economy, so any conflict and associated sanctions would be hurtful to North American economies and adversely impact banks' asset quality.
“Public documents show that the vast majority of North American banks have very little or no direct credit exposures to these geographies with a few exceptions,” said Michael Driscoll, Managing Director, Head of NA FIG, – Global FIG.
Bank of America is a bank and a financial holding company. Through its subsidiaries, the company provides a range of banking, investing, asset management and other financial and risk management products and services. The company's segments include: Consumer Banking, which provides credit, banking and investment products and services; Global Wealth & Investment Management, which provides investment management, brokerage, banking and retirement products; Global Banking, which provides lending-related products and services, integrated working capital management and treasury solutions, and underwriting and advisory services; and Global Markets, which provides sales and trading services and research services.
Scotiabank is a financial services provider in North America, Latin America, the Caribbean and Central America, and parts of Asia. Through its three operating segments: Canadian Banking, International Banking, and Global Banking and Markets, Co. provides a range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. As of Oct 31 2017, Co. had total assets of C$915,273 million and total deposits of C$625,367 million.
Canadian Imperial Bank of Commerce is a financial institution. Through its three business units, Co. provides a range of financial products and services to individual, small business, commercial, corporate and institutional clients in Canada and around the world. Co.'s Retail and Business Banking business unit provides financial advice, products and services. Co.'s Wealth Management business unit provides integrated advice and investment solutions. Co.'s Capital Markets business unit provides integrated credit and global markets products, investment banking advisory services and research. As of Oct 31 2017, Co. had total assets of C$565.26 billion and total deposits of C$439.71 billion.
Citigroup is a financial services holding company whose businesses provide consumers, corporations, governments and institutions with a range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management. The company operates via two primary business segments: Global Consumer Banking, which provides banking services to retail customers through retail banking, Citi-branded cards and Citi retail services; and Institutional Clients Group, which includes banking and markets and securities services.
JPMorgan Chase is a financial holding company. Through its subsidiaries, the company's segments include: Consumer and Community Banking, which provides services through bank branches, ATMs, digital (including mobile and online) and telephone banking; Corporate and Investment Bank, which consists of Banking and Markets and Securities Services, provides a suite of investment banking, market-making, prime brokerage, and treasury and securities products and services; Commercial Banking, which provides financial solutions, including lending, treasury services, investment banking and asset management products; and Asset and Wealth Management, which is engaged in investment and wealth management.
Royal Bank of Canada is a financial services company that provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services. Co. serves personal, business, public sector and institutional clients through offices in Canada, the U.S. and 37 other countries. Co. is organized into five segments: Personal and Commercial Banking, which is comprised of Co.'s personal and business banking operations, and its auto financing businesses; Wealth Management, Insurance; Investor and Treasury Services; and Capital Markets. As of Oct 31 2017, Co. had total assets of C$1.21 trillion and total deposits of C$789.64 billion.
Toronto Dominion Bank provides financial services. Co.'s segments comprised of: Canadian Retail, which include Canadian personal and commercial banking businesses, Canadian credit cards, TD Auto Finance Canada and Canadian wealth and insurance businesses; US Retail, which includes the US personal and commercial banking businesses, US credit cards, TD Auto Finance US, US wealth business and the Bank's investment its subsidiary, TD Ameritrade Holding Corporation; and Wholesale Banking, which provides a range of capital markets, investment banking, and corporate banking products and services. As of Oct 31 2017, Co. had total assets of C$1.28 trillion and total deposits of C$832.82 billion.
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