By Weiss Ratings
We live in interesting times … the electronic age, where baskets of millions of stocks are traded in the blink of an eye. And stock markets move just as quickly. International commerce has taken us from worrying solely about domestic banks to worries about the "world tent" and the monstrously complex web of global finance.
Today, almost every business is connected to international banking - competing in Europe, Asia and emerging markets. Company sales often depend on the financing and transaction speed that world banks offer. Banks facilitate letters of credit, collections, trade-loans, structured and barter trade products. It's eye opening to look at some of the recognizable brands that make up the four main types of companies that are likely to use global bank services:
Multinational companies like American Express (AXP), Apple (AAPL), Boeing (BA), Canon (CAJ), BP (BP), Coca-Cola (KO) , Colgate-Palmolive (CL), Fed Ex (FDX), Ford (F) , General Electric (GE), General Motors (GM), Google (GOOG) , Goodyear Tire (GT) , Halliburton (HAL), Hasbro (HAS) , Hewlett Packard (HPQ), IBM (IBM), Intel (INTC) , Johnson & Johnson (JNJ), Korn/Ferry (KFY), Lexmark (LXK), Lockheed Martin (LMT), Logitech (LOGI),Microsoft (MSFT), News Corporation (NWS), Nike (NKE), Nokia (NOK), Novartis (NVS), Oracle (ORCL), PepsiCo (PEP), Pfizer (PFE), Philips (PHG), Procter & Gamble (PG), Reuters (TRI), Siemens (SI), Sony (SNE), Texas Instruments (TXN), Walt Disney (DIS), Wal-Mart (WMT), Xerox (XRX),
Commodity companies like, Alcoa (AA), Archer Daniels Midland (ADM), BHP Billiton (BBL), CH Robinson Worldwide (CHRW), Dow Chemical (DOW), FMC Corp (FMC), Freeport-McMoran (FCX), International Paper (IP), Monsanto (MON), Newmont Mining (NEM), Occidental Petroleum (OXY), Potash Corp (POT), Weyerhaeuser (WY),
Consumer product producers like Allergan (AGN), Avon (AVP), Clorox (CLX) , Coach (COH), Dole Food (DOLE), Estee Lauder (EL), GlaxoSmithKline (GSK), Hershey (HSY), Hormel Foods (HRL), Kellogg (K), Kimberly-Clark (KMB), Kraft Foods (KFT), Newell Rubbermaid (NWL), Nu Skin (NUS), Philip Morris (PM), Ralph Lauren (RL), Revlon (REV) , Sara Lee (SLE), Stanley Black & Decker (SWK), Tyson Foods (TSN), Unilever (UL) , Whirlpool (WHR), …
So banks can play a crucial role in the trade scheme of lots and lots of companies. Today, even small companies use bank finance products or work with partners who do, and consequently they too have global exposure. And, of course, the banks themselves are heavily intertwined
Our "backyard" U.S. banks like Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), PNC (PNC), The Bank of NY Mellon (BK), SunTrust (STI), State Street (STT), Capital One (COF), BB&T (BBT) are all involved in world banking at some level.
And then there are the foreign banks doing business in the U.S. like RBC (RY), BNP Paribas (BNP.PA), Barclays (BCS), ING (ING), HSBC (HBC), and TD Ameritrade (AMTD). The list of recognizable players goes on and on. In fact, almost every country, from Argentina through Venezuela, has a bank presence in the U.S. So, whether you know the specifics or not, your investments and business holdings are, more than likely, enmeshed globally.
It's no wonder we are information hungry. With this new global paradigm, it's the only way to determine the "lay of the land." And knowing where bank risk is concentrated, just how strong or weak the financial system is in the major regions and countries across the globe, is now one more very important element to consider.
This chart is an aggregated view by region of our Financial Strength Ratings for more than 200 of the world's largest banks. You can see institutions with headquarters in Europe stand out as having the poorest financial strength overall with 24 of the 29 E ("Very Weak") rated banks with headquarters in the eurozone. Asia has the next highest number of weak institutions, but it also has the most highly rated. The top categories of A ("Excellent") and B ("Good") are peppered with banks in the Middle East, North America, South America and Asia.
Not satisfied that regional distribution gives enough information? Take a look at the Weiss Global Bank Rating distribution by country to get a more specific perspective.
Like puzzle pieces - you can only see the bigger picture after you put them together. Whether you can do that in time to react effectively is a whole other story. But, we all know the goal. It's to protect and grow assets.
So, if you own stocks or bonds in the types of companies apt to be operating in world markets or you own bank stocks, if you're researching a buy or sell, if you manage a portfolio, or manage some aspect of international business, in any company - you will want a global view of the bank landscape.
A review of our Ratings for individual institutions or institutions within a region or country may also make sense depending on your business or investment strategy and goals. Information can often make all the difference in keeping your business or portfolio safe … and there's always the potential to profit from being a step ahead of the competition.
See also Going Global? Know Your Bank!