What's Interesting About the World's 50 Safest Banks

While this list was released back in March 0f 2009, we wanted to publish it up as we forgot to at the time. Global Finance World publishes a list of the World's 50 Safest Banks and they edited it mid-year which reflects the turmoil within the financial markets worldwide.

Interesting tidbits regarding the list: Only 4 American banks make the list, none of which are in the top 10. The closest is Wells Fargo (WFC) at 21st. This will certainly draw much criticism as there are many skeptics out there regarding Wells Fargo's stability.

Another interesting fact is that all of the major Canadian banks are included in the top 50, which confirms what many strategists and prominent investors have been speaking of throughout the turmoil. They have said that if you want to own banks at all, then your best bet is a Canadian entity. Specifically, Dennis Gartman has often noted his preference of Canadian banks. In addition to a large amount of Canadian banks on the list, there is quite a cluster of Australian banks within the top 25. Lastly, we'd also like to highlight the large amount of German banks on the list, especially ranked within the top 10.

Embedded below is the publication. (RSS & Email readers will need to come to the blog to view the embedded document). Here is Global Finance World's 50 Safest Banks list:




Now, while rankings lists like these might be fine and dandy, we're inserting an asterisk next to this one. Why? Well, because upon examination of the criteria for ranking, we were a bit surprised. Global Finance World ranked the banks according to long-term credit ratings and total assets. They used ratings from Moody's, Standard and Poor's, and Fitch. And there is your red flag right there.

They are compiling a list based on ratings from the ratings agencies... the same ratings agencies that have appalled many of us with their reactionary movements and downgrades. What good are the ratings agencies if they can't even provide accurate ratings to give us a barometer as to the health of various institutions? But, we digress. We've attached the list for your perusal (or comic relief) anyways.

As always, take things like this with a nice grain of salt.

Comments

[Ryu Mei Co:]

I will tear it up and throw it to the garbage can. Nuff Said.

Jul 07 07:33 AM

[DmytrenkoArtem:]

we are shorted big american banks - JPM, KEY, STI and hedge it with long of canadian banks - RY, TD, BNS

Jul 07 08:50 AM

[Stephen Kanitz:]

Canada's tax incentives does not include Mortgage Interest Tax Deductions, which means Canadian Banks do not over leverage in real estate, Canadians do not beg for second mortgages or equity carve outs so they can continue to have interest deductions.

Other than that, Canada and US are nearly mirror countries, and it is amazing how American economists are blaming hedge funds, bankers, greedy alpha seeking investors, and forgetting government subsidies as the real culprit of this crisis.

Jul 07 09:21 AM

[a. palmer jr.:]

I would assume that if you own any stock from Canada, banks or otherwise, that you pay income taxes twice, Canadian and US.

Jul 07 10:39 AM

[White Shield:]

The illusionists STRIKE AGAIN! No wonder that the Wizard of Oz was such a hit - there is so much metaphor embodied into that movie. We're just trying to get home and enjoy our families...ugh.

Jul 07 11:10 AM

[oilsands:]

First, to a palmer, jr. you assume wrong. The US Canadian tax treaty gives us full credit for taxes paid in Canada, That is, $100. paid to Canada is a credit to the amount owed on your US return. Not a deduction, but a credit.

To Stephen Kanitz, I agree with your first paragraph, but the second one is problematical. The US government did not hold a gun to the heads of bankers and say make foolish loans. Yes, tax policy did contribute, but along lines of the American dream which both parties supported. Moreover, the idea that we have a consumer economy is preposterous, stupid and fully endorsed by the last administration, many supposedly wise economists, CEOs of virtually every industry, media pundits, etc. I see your point, but in a society (like China) where savings is a strong personal discipline, the mortgage support would not be a problem. It was our insane "gotta have it" "I want it now" mentality which made the mortgage game a problem. Of course, we limped along slowly sinking until the bankers got super greedy and came up with exotic products like credit derivatives and the responsible agencies became irresponsible.

Sorry for the rant, but like so many who have seen their financial position trashed by the privileged (government and financial) I have some frustration which wants out and being past working age, am now faced with rebuilding in the worst conditions in a century.

Jul 07 11:30 AM

[texpat:]

No, you first pay tax where you live. If you also pay in the other jurisdiction (e.g. because you're a US citizen or green card holder, or because some dividends were withheld in the other country), you get a foreign tax credit. Double taxation does not occur to any significant degree.

On Jul 07 10:39 AM a. palmer jr. wrote:

> I would assume that if you own any stock from Canada, banks or otherwise,
> that you pay income taxes twice, Canadian and US.

Jul 07 11:34 AM

[Go Lakers:]

The only nations in the world that didn't bleed banking capital in the last 18 months or so are Australia, Canada, China and maybe some parts of south-east Asia. If there are others, I can't think of them.

So even though it seems a surprise that a country of only 21 million people can produce amazing banking results, that's why so many Australian banks are on that list. They didn't get into the sub-prime garbage with the exception of one bank - the largest bank, National Australia Bank. But they did it on such a small scale, it hasn't had anywhere near the impact it has in the US.

All that said, in 5 years time, I would expect that list to look dramatically different. The US banking industry has consolidated markedly and when this crisis passes (and for all you naysayers out there, I have bad news - it will pass), American banks like JP Morgan, Wells Fargo and even Bank of America will again rise up the rankings.

For whatever the rankings are worth.....

Jul 07 11:53 AM

[KIT:]

In 2005 a job with wages at 33k ( both working ) would get you a 170k home with only 5% down ( $8000 ). The loss of one job kills this mortgage. Canadian banks are not immune.


On Jul 07 09:21 AM Stephen Kanitz wrote:

> Canada's tax incentives does not include Mortgage Interest Tax Deductions,
> which means Canadian Banks do not over leverage in real estate, Canadians
> do not beg for second mortgages or equity carve outs so they can
> continue to have interest deductions.
>
> Other than that, Canada and US are nearly mirror countries, and it
> is amazing how American economists are blaming hedge funds, bankers,
> greedy alpha seeking investors, and forgetting government subsidies
> as the real culprit of this crisis.

Jul 07 09:49 PM