Banking sector in emerging economies forecast overtake those of G-7

Jun 28, 2007, 4:35 GMT

Singapore - The banking sector in developing economies led by China and India is likely to overtake the banks in the currently richest countries by 2050, a PricewaterhouseCoopers (PWC) report said on Thursday.

The emerging economies including Brazil, Russia, Indonesia, Mexico and Turkey are forecast to see their banking sectors surpass those of the G-7 countries - the United States, Japan, Germany, UK, France, Italy and Canada.

China and India show the greatest growth potential through organized growth and merger and acquisition activities, PWC said.

India's domestic banking market could beat China's in the long run, the report said, noting the country has seen major financial sector reforms since 1991 with private and foreign banks gaining market share.

The middle class is also growing stronger in the cities.

'Institutions that do not develop strong positions in these markets will find it difficult to maintain the same growth rates of assets and profits as those that do,' said Dominic Nixon, Asia financial services leader of PwC.

Leading banks among the emerging economies mentioned are expected to become major competitors in the 'war for talent,' the report said, mentioning Russian, Chinese and Indian banks in particular.