Cont.. Currency war and its implications on Forex market

Cont.. Currency war and its implications on Forex market
Important: Please read the disclaimer at the end of the post.


Short to medium term movement across some currency pairs


USD/CAD

The most undervalued currency in the Forex market is Loonie (Canadian Dollar). We expect a persistence appreciation of Loonie against Greenback (US Dollar) in the short to medium term. However, around parity the currency pair may experience high volatility and is well suited for scalpers. The crude oil price is likely to move up and a similar trend could be observed in Loonie as well is expected the same.

EUR/USD

Europe economy has been hit by number of crisis which were prevalent earlier (western Europe Debt crisis, Irish bank crisis etc.). The appreciation in Euro is hurting European exporters significantly. However, the US economy has fallen into liquidation trap and further bailout or rejuvenate policy may not help US in achieving a turnaround. We expect EUR to appreciate against USD amid high volatility in coming days.

USD/JPY

Twice intervention by BOJ is a warning sign for traders to be cautious for showing confidence in Yen. Traders will avoid long term (months etc.) investment in this currency with positions restricted to intraday exposure. Short term reversal can be expected in this currency in the coming weeks. This currency pair is currently positioned around historical lows.

AUD/USD

The Australian dollar seems to be currently in an overheated state. The Australian economy provides highest interest rate in the developed economy and hedge funds are expected to chase this currency. There is high correlation between price of Gold and AUD. Further appreciation of AUD against USD will be slow and any positive news related with US economy will move the currency pair down sharply. The currency pair current position is around all time high.


Disclaimer - The views expressed in this article are opinion of the author and are for knowledge sharing purposes only. Anything material published in this blog should not be treated as recommendation to buy/sell. For further details read the site disclaimer.

Currency war and its implications on Forex market

There is uproar in the international currency market about the advent of 'currency war'. Currency war is a situation when many countries interfere in the foreign exchange market to devalue their currency. A cheaper currency helps makes the exports more competitive. Exports form a significant of economy of countries like China, Japan etc. A strong Yen (Japanese currency) for example will make Japanese exporters less competitive and can led to recession in Japanese economy. In an effort to prevent slowdown in their economy countries take deliberate measures to devalue their currency. Japanese Yen has been touching new historical highs in the year 2010 with Yen breaching 15-year high record in September. This is likely to impact the Japanese exporters which form a significant part of Japanese economy. Recently, Bank of Japan (BOJ) intervened twice in the currency markets which by many analysts has been seen as signs of open currency war in the coming years. The atmosphere has become quiet tense in past few months and volatility is expected to be high in the currency market, which is seen by many as a sign of dramatic change in the dominance of Greenback (US Dollar).

Some of the recent developments that have rocked the Forex market are:

• - Greenback lost foothold against all currency & currently any positive news related with US economy is not helping it to reverse the already battered currency.
• - US economy seems to be caught up in a Liquidation trap.
• - Unemployment rate (~10%) is currently one of the major issues of the developed economy.
• - US/Europe's focus is to halt economy slowdown was to boost domestic demand, achieved by maintaining low interest rate regime.
• - However, persistently depreciation of Greenback against major currencies might result in inflation in US
• - Near zero interest rates and falling economy condition of US has led to the flow of money to the emerging markets as the condition in most of the developed economies is fragile.
• - Hence, developing countries are facing currency appreciation against Dollar which is the dangerous sign for their foreign trade. Also, there is danger of short term inflation in the emerging economy and may jeopardize their economy.
• - China has stringent/controlled economy policy: fixed interest rate, undervalued Yuan against USD, unfair advantage in foreign market as China can export goods at much cheaper rate, Accumulation of USD and hold approx. 30% of the total foreign reserve of the world.
• - IMF meeting was unsuccessful as nothing concrete came out of the meeting.
• - Bank of Japan unilaterally intervenes in the international finance market (Forex) firstly by selling Yen and buying USD to keep it export competitive in the international market followed by decreasing interest rate to 0%. Yen broke record of all time high 82 USD/JPY in last 15 years and the Japanese currency is appreciating further.
• - Japan is facing the danger of economy collapse as its economy relies on export and any appreciation of Yen against USD will doubly hurt Japan.
• - Japan intervention in International financial market has led to other countries like Brazil, Israel to control the inflow of money. Since they don’t want to lose pace with China.
• - We have seen emerging equity market like India moving higher as their market witnessed the Foreign cash inflows. However, there is a risk that the Central Bank of these countries may take steps to halt cash inflow; there is a high volatility in the Asian market.
• - In Europe Irish bank crisis and bailout has hit hard the situation of Europe economy.
• - OPEC countries are worried about the falling purchasing power of Greenback. They are urging to revalue crude oil price around 100$ per barrel.

Disclaimer - The views expressed in this article are opinion of the author and are for knowledge sharing purposes only. Anything material published in this blog should not be treated as recommendation to buy/sell. For further details read the site disclaimer.

Banks failures continue in 2010, pose risk for economic recovery

The financial crisis had severe repercussion on the banking systems in America. The number of banks that have failed in the country in the last two years (2009 and 2010) is much higher than the number of bank failure in the rest of the 2000-2010 decade.

Overall about 270 banks have failed since October 2000 out of which 173 have failed in the last one year (July 2009 to May 2010). The number is 238 for the last two year period (July 2008 to May 2010). To give a perspective of how big the scale is the total number of FDIC (Federal Deposit Insurance Corporation) insured institution as on May 2010 were 7895. So the number of banks that have failed in the last two years is about 3% of the total number.

What is a bank failure?

Bank failure is basically closure of a bank’s operations mainly by the regulators because the bank is likely to face insolvency and the risk of the bank being unable to meet its financial obligation towards depositors and creditors are high. This arises due to erosion in the market value of the assets owned by the bank leading to lower capital (net worth) of the bank. If the market value of assets of a bank becomes lower than the market value of liabilities, the net worth becomes negative and the bank even if it liquidates all its assets will not be able to pay the depositors and creditors. The regulators generally look at the capital ratio as a sign for a probable bank failure. If there is a high probability of negative net worth of a bank, it is better to declare the bank failure because if the bank keeps on operating those depositors who have the information about the bank’s weak position will withdraw their money leaving even lesser capital for the less informed depositors. The major loss will then have to be taken by the remaining depositors.

Contagion effects associated with a bank failure

Failure of a single bank can lead to a string of such failures and shake the entire financial system as the banks are closely intertwined with many cross exposures. Failure of one bank can result in capital erosion for other banks thereby triggering a chain reaction which could over a short time spill over to a large number of banks. The impact of the current bank failures can be estimated by FDIC estimate that another 700 banks are at risk of failure.

Role of regulators to shield the financial system

Due to domino effect associated with a weak bank, the role of regulators becomes very important. In United States, FDIC takes over the weak bank to reduce its impact from the system. The bank's assets are seized and liquidated/sold to other banks and the depositors are paid the insurance up to deposit insurance limit which is currently $250,000.

An example of a big bank failing

Washington Mutual Bank (WaMu) is the largest bank failure so far. Founded in 1889, the American bank had annual revenues of about $16 billion before its failure in 2008. WaMu faced bank run after news of its weak capital position spread. In 10 day time about $16 billion dollars of deposits were withdrawn. The regulators took over the bank to prevent systemic risk to the whole system. Later, its assets were sold to JP Morgan Chase.

Top 10 banks in the world by market value as on March 2010

About a year back we posted an article on the largest banks in world by market capitalization as on Feb 26, 2009. At that time I was searching for the list of the biggest banks but couldn't find it on internet for free. So, I had to find the market cap of the big banks in the world (finding the names of banks wasn't that difficult). 

Recently, I came across the list of biggest companies in the world by their market value published by Financial Times (FT). The list was comprehensive and has details like country and sector so finding the top 10 banks was a very easy thing now. Here's the top ten banks as on March 2010:

Rank	Company	Country
1	Industrial and Commercial Bank of China	China
2	China Construction Bank	China
3	Bank of America	US
4	JP Morgan Chase	US
5	HSBC	UK
6	Wells Fargo & Co	US
7	Bank of China	China
8	Citigroup	US
9	Banco Santander	Spain
10	BNP Paribas	France

There have been few changes in the list to what we published in Feb 2009. As the global financial situation witnessed some improvement, the American banks have regained some of their lost market capitalization thereby helping them to improve their rankings. Compared to Feb 2009 when the top 10 list had four banks  from China, two from US and one each from Italy, Japan, Spain and UK, in Mar 2010 there were four banks from US, three from China and one each from UK, Spain and France. However, the Chinese banks still hold the top two slots. This might be because the American banks although bigger than Chinese are yet to fully recover from the financial crisis that had hit the investor's confidence, while Chinese banks being  in an emerging economy also commands high valuations. However, what came in surprising is that in the list of top 500 companies in the world there were only seven American Banks, while China has nine banks in top 500. This appears to be bit on the lower side for the country with most number of banks  (as per Federal Deposit Insurance Corporation US had 7895 FDIC insured institution as on May 2010) and a highly advanced banking system. Is it because of consolidation in the US banking sector or investor's lack of confidence in smaller banks given the recent series of bank failures.

Country	No. of Banks in Top 500 Global Companies
China	9
US	7
Canada	5
UK	5
Australia	4
Brazil	4
France	3
India	3
Japan	3
Singapore	3

Data Source: Global Top 500 

Is the era of supernormal growth for Google Inc over?

The phenomenal growth witnessed by Google Inc during the start of this decade is gradually slowing down. Google’s revenues had jumped 250 times in 7 years from 2001 to 2008 showing a compounded annual growth rate (CAGR) of 120%. The profits even fared better with the net profits in 2008 being more than 600 times the net profits in 2001 – a CAGR of 150%. However, Google’s revenue growth rate has been slowing down as its size is increasing. The annual growth rate which was more than 400% in 2002 has gradually fallen to about 30% in 2008 and in the first half of 2009 the growth rate was in single digit.

Has Google’s growth matured? Is Google’s supernormal growth phase behind us? It is quite possible as suggested by the trend in the growth rates. Google is now one-third the size of Microsoft and one-fifth of IBM. For a company that was incorporated only 11 years ago - growing to such a size is amazing. Continuing to show such phenomenal growth is not sustainable in long term. If Google can grow by more than 25% in next 4-5 years it would be a significant achievement. A growth rate more than that will require entering into other related businesses. Google has done it in past and is very capable of doing it in future. With plans of entering into the Operating System business which has Microsoft's dominance, Google has a huge potential opportunity which if it can unleash will help it grow even faster.

Huge write downs (~ £21 billion) waiting for Lloyds Banking Group

Lloyds Banking Group plc (erstwhile Lloyds TSB Group plc) is expected to write off as much as £21 billion of bad debt from its books in the year 2009. The H1 2009 (Jan – June) results which are likely to be declared by July end or early August are expected to show more losses than in the previous year same period. The losses will be mainly because of the high provisions which the bank is expected to make. According to an estimate the write-offs to be made in the H1 2009 will be more than that made by HBOS and Lloyds TSB combined in 2008. The huge write down in one of the biggest banking group of United Kingdom (UK) indicates that the banking system is yet to stabilize.

The UK Government has invested £50bn so far in Lloyds and RBS, but that could rise when Lloyds joins the asset protection scheme. At present, the state's stakes are worth £7.5bn and £14.3bn. Notably, UK Financial Investments (UKFI), the agency that manages the stakes for the Treasury, holds a majority stake in the company (43 per cent of Lloyds) following the government support. This holding could rise even higher, as the bank issue shares to insure its bad loans with the Government. However, the Treasury is hoping that it can recover its investment, although it may have to wait for some more time. When things will improve, UKFI plans to sell its stake and return the bank to the private sector. Any such share sale will have to be spread over several years in order to prevent huge share inflow into the system.

In 2008, Lloyds had acquired HBOS for about £12 billion. The deal was backed out by UK government to prevent collapse of the banking system. However, Lloyds shareholders saw wealth erosion after a £15 billion 'black hole' was discovered in HBOS accounts. Many of the Lloyds shareholders’ are skeptical of a possible government-bank nexus behind this deal as they lose a huge portion of their holdings (about 85 per cent). Furious Lloyds shareholders have demanded transcripts of secret negotiations between Mr Brown and the bank's chairman Sir Victor Blank last July and September.

About Lloyds Banking Group plc

Lloyds TSB Group plc was renamed Lloyds Banking Group plc on 19 January 2009, following the acquisition of HBOS plc. The group owns the Lloyds TSB brand which is one of the largest retail bank in the UK brand and came into existence in 1995 by the merger of Lloyds Bank and the Trustee Savings Bank (TSB Bank).

Under the UK government Asset Protection Scheme announced on March 7 Lloyds has to provide a total of £14 billion of additional lending in the period up to 1 March 2010 to boost the spending and investment activities which could be vital in avoiding a prolonged recession.

A bit of history of economic crises

The current crises got me looking into the other economic downturns in the 20th century. Here are my findings:
We all know about the great depression in the early 1930s, but I was actually surprised by the number of recessions in the world since. Here are the major ones:

1. Latin America's woes
Latin America has long endured economic problems like currency crises, hyperinflation, banking failures etc. The lack of prudent governance and macroeconomic populism continued till 1980s, when the economic reforms were introduced. These measures included:

• State - owned firms were privatized
• Import restrictions lifted
• Budget deficits trimmed, inflation became a priority

These measures led to efficiency, investor confidence and large inflows of money. But soon there was a recession in Latin America (esp. Mexico and Argentina) in 1990s, the exact reason for which is still not understood well by economists. Some of the causes were:

• Impending devaluation of Mexican pesos not handled well
• High government spendings and
• Wide spread corruption and dollar-loan exposure

This crisis was finally controlled by huge loans provided by the United States, Canada, and International Monetary Fund(IMF).

2. Japan's downturn
Japan suffered laggard economic growth and recessions in the most of the 1990s (also known as the lost decade. The crisis started in Japan in 1989-90 and the reasons were:

• Loose financial regulation, bad debts.
• Bubble in stock markets and real estate from 1986-1990

Japan has suffered economic paralysis for such a long time. The country's economy was investment driven and this recession caused investments to flow outside the country. The falling interest rates (at one point the interest rates were zero also) inhibited spending. This low consumption led to a deflationary spiral which was only strengthened by rising unemployment levels. The central bank has also dithered far too long where it alternated between public spending and budgetary control.

3. South East Asia's crash
South Asia till late 1990s was a tremendous success story. The region saw extended economic growth and was a role model for many. All that changed in 1997 when the many south Asian economies were caught in a currency crisis: Thailand, Malaysia, Indonesia and South Korea to be precise. Again economists disagree over exact reasons for this crisis, generally the following factors are considered to be the culprit:

• Started with currency collapse of Thai Baht, which was long under attack from speculators and hedge funds. Government finally floated Baht leading to its fall.
• Crony capitalism where in these economies there was a collusion between government and big business players.
• These economies had relatively free markets and light regulation, which led them vulnerable to the vagaries of foreign investors.
• This crisis led to slumping currencies, stock market devaluations and precipitous private debt

4. Internet bubble of the 21st century
Also known as the dot com bust, happenned in 2001. There was a considerable bubble in the stock markets of western economies from 1996-2001. The bubble was caused by inflated valuations of stock markets, especially internet and technology related firms. These firms in turn had flawed business models, where in all of them were rooting for growth over profits working under the assumption that finally profits will come once the markets are captured.

Results of Stress tests - who sailed through and who needs more capital

The results of the SCAP were out on 7th May 2009 and the 19 Bank Holding Companies will require an additional 74.6 billion dollars to make the financial system sail through without collapse if the economic situation worsens.
Here's the summary of results:

Bank	Additional capital needed (billion dollars)
AmEx	0
BofA	33.9
BB&T	0
BNYM	0
CapOne	0
Citi	5.5
FifthThird	1.1
GMAC	11.5
Goldman Sachs	0
JPMC	0
KeyCorp	1.8
MetLife	0
Morgan Stanley	1.8
PNC	0.6
Regions	2.5
State Street	0
SunTrust	2.2
US Bancorp	0
Wells Fargo	13.7
Total	74.6

Top 10 Hedge fund management firms by assets under management

Bridgewater Associates	1
JPMorgan	2
Paulson & Co.	3
D. E. Shaw	4
Brevan Howard	5
Och-Ziff Capital Management	6
Man AHL	7
Soros Fund Management	8
Goldman Sachs	9
Renaissance Technologies	10

Hedge Fund Industry size falls sharply in last one year

From a peak of 1.93 trillion dollars in mid of 2008, the hedge fund industry size is reduced to merely 1.33 trillion dollars owing to the credit crunch and macro-economic situation.

The 'Funds of funds' industry has also come down sharply from 825 billion dollars in mid 2008 to 525 billion dollars at the end of first quarter of 2009.

The fall in assets size is partly due to trading losses and partly due to investors pulling out money from these funds.

These are the data from Hedge Fund Research (HFR) as available on in the publicly available news articles across the internet. Due to the ambiguity of the breadth of the hedge fund and the voluntary nature of data disclosure these may be different from those published by other research firms.

Top 10 global financial centres

As of March 2009, the following is the ranking of the top financial centres of the world as published by GFCI (Global Financial Centres Index):

The GFCI is published by City of London Corporation every March. The full report by GFCI can be found at ZYEN.

	Rank	GFCI rating
London	1	781
New York	2	768
Singapore	3	687
Hong Kong	4	684
Zurich	5	659
Geneva	6	638
Chicago	7	638
Frankfurt	8	633
Boston	9	618
Dublin	10	618

London, the financial hub of the world, has been at the helm since long time. London, also the banking centre of the world, has headquarters of more than 100 of European's 500 biggest companies.

The rise and fall and rise of oil prices

The oil prices have been very volatile lately. According to the data published by Energy Information Administration, U.S., the Europe Brent spot price has touched a daily average high of $143.95 per barrel on July 3, 2007 during the bull phase and then fallen to a low of $33.73 per barrel on Dec 26, 2008. The fall from the peak has been quite steep and was triggered with the slowdown in the demand of oil owing to the economic recession and credit crunch.

The chart below summarizes the journey of the oil prices.




























Source of Data: EIA

India's most reputable companies - 2009 Forbes ranking

Forbes has published the list of top 200 most reputable companies in world. The list is available at Forbes website.

In the list there were following 17 Indian companies with Tata group at the helm:

Company	Global Rank	Industry
Tata	11	Conglomerate
State Bank of India	29	Banking
Infosys Technologies	39	Computer
Larsen & Toubro	47	Construction/Engineering
Maruti Udyog	49	Automotive
Hindustan Unilever	69	Consumer Products
ITC Limited	95	Conglomerate
Canara Bank	102	Banking
Hindustan Petroleum	111	Energy
Indian Oil	112	Energy
Wipro	116	Computer
Reliance Group	132	Conglomerate
Mahindra & Mahindra	137	Automotive
Bharti Airtel .	163	Telecommunications
Bank of Baroda	174	Banking
Bharat Petroleum	175	Energy
Punjab National Bank	177	Banking

Source: Forbes

Bank of America needs 34 billion USD to pass Fed's stress test

America's largest bank, Bank of America, is reported to require additional 33.9 billion USD to meet the capital target set by Federal Reserve during the stress test. The stress test also known as Supervisory Capital Assessment Program (SCAP) was conducted by Fed on 19 biggest financial institutions to find out the capital that will be required if the recession becomes deeper. The results of the test are expected to start coming from this week onwards. Speculation is rife that most of the banks will need additional capital to pass the test.

BofA had about 240 billion dollars of shareholder's equity capital as on 31st March 2009. This was about 10.3% of its total assets (2.3 trillion dollars). Since 2007 BofA has increased its shareholder's capital significantly to deal with the financial crisis and economic recession. However, if the macro-economic situation worsens in near term BofA would require still more capital as the results of SCAP of Fed would show.

According to a ews article by UK's 'The Guardian', BofA could sell a part of its stake in Chinese bank 'China Construction Bank' (CCB). The stake sale could fetch BofA about 8 billion USD. Even with this sale, BofA will have to garner the remaining 26 billion USD from other sources. In case of no other option left, it may have to convert some of the government's prefferred shares to common shares, thereby diluting the existing shareholder's stake.

Small banks continue to fail in US

Three banks have been reported to fail in the first day of May taking the total number of bank failure in this year 2009 to 32 in just 4 months and 5 days. The banks to fail this month were:
1. America West Bank, Layton

2. Citizens Community Bank, Ridgewood
3. Silverton Bank, N.A., Atlanta

The news was updated on FDIC's website on 5th May. The biggest of the three is Silverton with about 4 billion assets. The bank, on its website, has put up the following notice:

"Silverton Bank, N.A. is participating in the FDIC's Transaction Account Guarantee Program. Under that program, all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account through December 31, 2009. Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules. Accounts that sweep into overnight Fed Funds are not considered non-interest bearing; therefore, they will not be covered under the FDIC’s Transaction Account Guarantee Program."

FDIC has created a bridge bank, Silverton Bridge Bank, to take over the operations of Silverton Bank. The bank will start its regular business from July 29, 2009.
The depositors will have the first priority followed by creditors and shareholders.

Details on the deposit insurance and other bank failure related information can be assessed from FDIC's website.

Top Bank holding companies in US by total domestic deposits

The biggest domestic deposit banks on June 30, 2008 as per the data published by FDIC were:

Bank Name	Deposits (Jun 2008) billion $
BoA Corp	701.5
JP Morgan Chase	497.2
Wachovia	422.0
Wells Fargo	293.4
Citigroup	271.3
US Bancorp	127.8
Suntrust Bank	115.6
National City Corp	97.8
RBS	95.3
Toronto-Dominion Bank	89.8

Of these the last two were foreign banks. In all there were 12 foreign banks in the top 50 list.

	Bank Name	Deposits (Jun 2008) billion $
1	RBS Group	95.3
2	Toronto-Dominion Bank	89.8
3	HSBC Holdings	83.0
4	Banco Santander	53.8
5	BNP Paribas	43.9
6	Mitsubishi UFJ	42.0
7	BBVA	39.4
8	Allied Irish Bank	36.5
9	Bank of Montreal	29.1
10	UBS	24.4
11	Royal Bank of Canada	17.8
12 Source:	Deutsche Bank FDIC	15.2

47 Indian companies in Forbes 2000 List

The following 47 companies have figured into the Forbes 2000 list:

Company	Sector
Reliance Industries	Oil & Gas Operations
SBI	Banking
ONGC	Oil & Gas Operations
IOCL	Oil & Gas Operations
NTPC	Utilities
ICICI Bank	Banking
Tata Steel	Materials
Bharti Airtel	Telecommunications
SAIL	Materials
Reliance Communications	Telecommunications Services
L&T	Capital Goods
BPCL	Oil & Gas Operations
BHEL	Capital Goods
HDFC	Banking
TCS	Software & Services
Hindalco Industries	Materials
HDFC Bank	Banking
DLF	Diversified Financials
Infosys Technologies	Software & Services
Punjab National Bank	Banking
ITC	Food, Drink & Tobacco
Wipro	Software & Services
Bank of India	Banking
HPCL	Oil & Gas Operations
GAIL (India)	Utilities
NMDC	Materials
Canara Bank	Banking
Power Grid of India	Utilities
Tata Motors	Capital Goods
Bank of Baroda	Banking
Power Finance	Finance
Axis Bank	Banking
Union Bank of India	Banking
Grasim Industries	Construction
Indian Overseas Bank	Banking
Sun Pharma Industries	Drugs & Biotechnology
Mahindra & Mahindra	Consumer Durables
Allahabad Bank	Banking
Indian Bank	Banking
Syndicate Bank	Banking
IDBI Bank	Banking
Central Bank of India	Banking
Jindal Steel & Power	Materials
National Aluminium	Materials
Oriental Bank of Commerce	Banking
UCO Bank	Banking
Hero Honda Motors	Consumer Durables

Rank	Companies	Sales (b $)
121	Reliance Industries	34.03
150	State Bank of India Group	22.63
152	Oil & Natural Gas Corp	24.04
207	Indian Oil Corp Ltd	51.66
317	NTPC	9.63
329	ICICI Bank	15.06
463	Tata Steel	32.77
508	Bharti Airtel	6.73
582	Steel Authority of India	9.82
689	Reliance Communications	4.26

Forbes global 2000 list is published every year and takes into consideration the assets, sales, profits, and market capitalization of the corporations.

Source: Forbes

Financial institutions with highest revenues in world

Once again from the Forbes 2000 list(published on 8th April 2009), the biggest turnover companies in the Financial services domain are as follows:

	Company	Industry	Sales ($bil)
1	ING Group	Insurance	213.99
2	Fortis	Diversified Fin.	164.37
3	AXA Group	Insurance	156.95
4	HSBC Holdings	Banking	142.05
5	Allianz	Insurance	127.24
6	Deutsche Bank	Diversified Fin.	124.78
7	Generali Group	Insurance	118.39
8	Bank of America	Banking	113.11
9	BNP Paribas	Banking	107.96
10	Berkshire Hathaway	Diversified Fin.	107.79
11	Crédit Agricole	Banking	107.75
12	Citigroup	Banking	106.66
13	JPMorgan Chase	Banking	101.49
14	Société Générale	Banking	99.25

While the world's top three companies Royal Dutch Shell, ExxonMobil, and Wal-Mart have annual sales more than 400 billion dollars, the biggest financial institution, insurance major - ING Group generates about half the revenues. In the banking sector this is even lower with the biggest being HSBC holdings at 142 billion dollars.
For the complete list of 2000 companies, please visit Forbes.

Top 10 banks by assets (2009)

About two months back when I had tried compiling a list of world's top banks by asssets, the task was not easy. The main reasons being that full year results of all companies were not out. Also, all the firms don't report their numbers in dollars using a point-in-time exchange rates was debatable. However, recently Forbes had published the list of world's top 2000 companies. Great!, so now I know who stands where without much efforts :). If we go by the Forbes numbers (which I beleive should be correct), the top 10 companies in the whole world when put in the order of their balance sheet size are as follows:

Rank	Company	Country	Assets ($bil)
1	Royal Bank of Scotland	United Kingdom	3491
2	Barclays	United Kingdom	2948
3	Deutsche Bank	Germany	2947
4	BNP Paribas	France	2889
5	HSBC Holdings	United Kingdom	2520
6	JPMorgan Chase	United States	2175
7	Crédit Agricole	France	2064
8	Citigroup	United States	1939
9	Mitsubishi UFJ Financial	Japan	1931
10	UBS	Switzerland	1899

No surprise these are all banks or financial institutions. Banks have a slightly different way of accounting and the public deposits form a significant part of their assets. As a matter of fact in the top 50 companies only two companies, GE(ranked 28th) and Deutsche Post (ranked 49th), are outside the financial domain. While GE's presence in top 50 was expected, Deutsche Post at 49th position was a bit of surprise for me.

For the complete list of 2000 companies, please visit Forbes.
Source: Forbes, Google Finance, Reuters.

Top 10 banks of the world by market capitalization (April 2009)

Bank	Country	Mkt Cap on Apr 30, 2009
Indl & Coml Bank of China	China	197
China Construction Bank	China	133
JP Morgan Chase	US	124
HSBC	UK	123
Bank of China	China	120
Wells Fargo	US	85
Banco Santander	Spain	73
Mitsubishi UFJ Financial	Japan	63
Goldman Sachs	US	59
Bank of America	US	57