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In a global economy that has been plagued by troubles in the world’s financial systems, the words “safe” and “bank” still give investors pause. The shakeup of banking systems around the world raises the question: "Which banks are the safest?"
For the past 21 years, Global Finance has compiled a list of the world’s 50 safest banks, and with the European debt crisis ongoing, and slowing growth having an impact on bank credit ratings, long-term safety of banks is of key interest. According to Global Finance, credit ratings and rankings of most European banks have suffered except for those at the very top of the list – those that have explicit banking from triple-A rated governments.
This ranking of safe banks was created through the comparison of long-term credit ratings (from Moody’s, Standard & Poor’s and Fitch) and analyses of total assets owned by the 500 largest banks in the world.
For ease of comparison, we’ve listed the highest-ranking bank in each country, since many of the highly ranked banks are headquartered in the same country.
It may be a surprise where you’ll find the safest banks in the world. Click ahead to for the list!
By Justin Menzan & Paul Toscano
Posted 16 Aug 2012
Safest Bank: Shizuoka Bank (No. 45)
For the third year in a row, Shizuoka Bank comes in as Japan’s safest bank. In 2011, Shizuoka reported net income of $473 million on $2.6 billion in revenues and had 9.7 trillion yen ($123 billion) in assets.
The bank operates 168 branches and 28 sub-branches, catering to domestic customers in Tokyo, Osaka, Nagoya and Shizuoka, in addition to overseas customers in New York, Los Angeles, Brussels, Hong Kong, Shanghai and Singapore.
According to the company, the bank's capital adequacy ratio is 15.9 percent on a consolidated basis, one of the highest ratios among Japanese banks. The capital adequacy ratio is the ratio of a bank’s capital to their risk-weighted assets and determines the bank’s ability to meet its liabilities and other risks.
Safest Bank: Bank of Taiwan (No. 44)
Bank of Taiwan, ranked No. 44, is the only Taiwanese bank on Global Finance’s list. The bank is the largest in Taiwan when based on assets. At the end of 2011, the Bank of Taiwan’s assets totaled $131 billion. Its deposits and loans accounted for 11.8 percent and 10.1 percent, respectively, of the entire Taiwan market.
The bank’s Tier 1 capital ratio stands at 10.5 percent. This ratio—also known as “core capital”—compares a bank's core equity capital to its total risk-weighted assets. It measures a bank's financial strength. Bank of Taiwan is rated A+ by Standard & Poor’s and Aa3 by Moody’s.
Safest Bank: BancoEstado (No. 42)
Chilean banks claimed two spots on the Global Finance list of 50 safest banks this year – BancoEstado at No. 42 and Banco de Chile at No. 46. The presence of two Latin American banks this year highlights the improving creditworthiness of many emerging market financial institutions.
BancoEstado is the only state-owned commercial bank in Chile. Its objective is to provide financial services across all social sectors and territories in the country.
With $40 billion in assets, BancoEstado is Chile’s third-largest bank. BancoEstado also has a 14 percent market share of the loan market. The bank is rated A+ by Fitch and Standard & Poor’s and Aa3 by Moody’s.
Safest Bank: Samba Financial Group (No. 41)
Samba is the only Saudi banking group to make Global Finance’s list of Top 50 safest banks.
It is listed on the Saudi Stock Exchange and is one of the largest listed financial services companies in the kingdom. In addition to operations in Saudi Arabia, the bank has maintained a branch in the U.K. and has recently established a presence in United Arab Emirates, Pakistan and Qatar.
At the end of 2011, Samba had assets of $51.3 billion and reported net income of $1.1 billion.
*Islamic banks specifically cater their business to adhere to Islamic laws.
Safest Bank: Qatar National Bank (No. 40)
The Qatar National Bank is not only the country’s safest, it’s also the largest, with more than 50 percent of the banking system’s assets and deposits. It is also one of the largest banks in the Middle East and North Africa with assets of $85.4 billion.
Half the bank is owned by the Qatar Investment Authority, Qatar’s sovereign wealth fund, and it makes up nearly a fifth of the country’s total stock market capitalization. Qatar National Bank is ranked A+ by Standard & Poor’s, AA3 by Moody’s and A+ by Fitch.
Safest Bank: National Bank of Kuwait (No. 34)
Under the supervision of Kuwait’s central bank there are five commercial banks, six Islamic banks* and one specialized bank, along with nine international branch banks incorporated within the country, as of March 2012.
According to the central bank, The National Bank of Kuwait operates 70 branches within the country and 14 branch offices abroad. The Bank holds an A+ rating from S&P, an AA- rating from Fitch and an Aa3 rating from Moody’s.
According to the company’s full-year 2011 financial statements, the bank recorded $1.09 billion in net profits and listed approximately $49 billion in assets, which comprises more than one-third of the Kuwaiti financial system.
Safest Bank: Pohjola Bank (No. 33)
Finland’s Pohjola Bank, ranked 33rd overall, is the only Finnish bank to make the list. Traded on the Helsinki Stock Exchange, the institution has a market cap of $2.2 billion as of August 2012.
The bank operates more than 580 branches in Finland and offers banking services through more than 200 independent member co-operative banks.
The OP-Pohjola group listed earnings before tax at 258 million euros (US$318.4 million) in 2011, and has approximately 3.7 million private customers and 420,000 corporate customers.
Safest Bank: National Bank of Abu Dhabi (No. 31)
The second-largest bank in the United Arab Emirates, the National Bank of Abu Dhabi, is the safest, according to Global Finance. The bank has total assets of $73.5 billion and a Tier 1 capital ratio of 16.3 percent as of June 2012. The government has a more than 70 percent stake in the bank; foreign ownership is limited to 25 percent of equity. The bank is listed on the Abu Dhabi Securities Exchange and is rated Aa3 by Moody’s, A+ by S&P and AA- by Fitch.
Safest Bank: Bank of New York Mellon (No. 29)
The U.S. banking industry has five in the Top 50, with Bank of New York Mellon ranking the best in the country at No. 29 overall. CoBank ACB (No. 32), US Bancorp (No. 37), Northern Trust (No. 39) and Wells Fargo (No. 48), are the other U.S. banks making this year’s list.
BNY Mellon is the seventh largest bank in the country by assets, according to the Federal Reserve, with $229.7 billion in total assets in first-quarter 2012.
Safest Bank: China Development Bank (No. 28)
In a sign of China’s status as a more important financial and economic power, the China Development Bank ranked in Global Finance’s top 50 for a second year running, climbing 10 spots. Agricultural Development Bank of China also broke into the top 50 in 2012, placing at No. 30.
The China Development Bank is under direct control from the state council. Debts issued by the CDB are guaranteed by China’s central government and the bank has been involved in the financing of large infrastructure projects, including the Three Gorges Dam, the Beijing-Shanghai high-speed railway and the decades-long South-to-North water-diversion project.
According to the bank’s 2011 financial report, total assets stood at approximately $986 billion, and loans outstanding were approximately $875 billion. Of these outstanding loan balances, 40.28 percent are in eastern China, 20 percent in central China and 23.86 percent in western China. The bank maintains a rating of Aa3 from Moody’s, AA- from S&P and A+ from Fitch.
Safest Bank: Nordea Bank (No. 24)
The four largest banks in Sweden—Nordea, Swedbank, Svenska Handelsbanken and SEB—account for approximately 70 percent market share of the country’s deposits, according to the Swedish Bankers’ Association. Three Swedish banks make Global Finance’s list this year, Nordea Bank at No. 24 overall, Svenska Handelsbanken at No. 27 and SEB at No. 50.
Nordea Bank says it has about 11 million customers and operates 1,400 branches, as well as call centers and an e-bank. The bank’s two largest stakeholders are the Sampo Group, a Finnish banking group that holds 21.4 percent of the company, and the Swedish government, which owns a 13.5 percent stake. The company holds assets of 694 billion euros ($856 billion) with a core Tier 1 capital ratio of 11.6 percent.
Safest Bank: HSBC (No. 23)
One of the largest banking systems in the world, the U.K. manages to get only two banks on the Top 50 list. HSBC has about 6,900 offices in developed and emerging markets around the world and serves about 60 million customers. Markets outside the U.K. now account for about half of group revenues.
The bank is listed on the New York Stock Exchange and is rated Aa3 by Moody’s and AA by Fitch. As of the second quarter, HSBC’s core Tier 1 capital ratio stood at 11.3 percent.
Safest Bank: Kiwibank (No. 22)
New Zealand’s Kiwibank is a new entrant to the Top 50, as its asset growth finally made it large enough for consideration.
Established in 2002, the bank has a 3.7 percent market share and 800,000 customers across New Zealand. The bank is rated AA- by Standard & Poor’s and AA3 by Moody’s.
Safest Bank: National Australia Bank Limited (No. 18)
Australia’s four leading banks all made Global Finance’s list, ranking Nos. 18 through 21.
National Australia Bank, one of Australia’s four major banking groups, is the third-largest bank by domestic assets ($510 billion as of June 2012). The bank operates in Australia, as well as New Zealand, Asia, the U.K. and the U.S.
The bank has a Tier 1 capital ratio of 10.2 percent.
Safest Bank: DBS Bank (No. 13)
Singapore’s safest bank in 2012 is DBS Bank. It is also the top Asian bank on Global Finance’s list. Singapore’s other major banks – Oversea-Chinese Banking and United Overseas Bank – ranked No. 13 and 14, respectively.
For the past three years, DBS has topped Global Finance’s list for the safest banks in Asia.
DBS operates in 15 Asian markets and has more than 200 branches across 50 cities. DBS’s primary markets of Singapore and Hong Kong account for more than 80 percent of annual net profits. Assets before goodwill increased 20 percent in 2011 to S$336 billion (US$269.6 billion).
Safest Bank: TD Bank Group (No. 11)
Canada had seven banks in the top 50, the most of any country. This year, TD Bank Group was the safest Canadian bank with Bank of Nova Scotia coming in one spot behind at No. 12.
With 22 million customers worldwide, TD Bank has C$773 billion (US$779 billion) in assets. TD also ranks among the world’s leading online financial services firms, with approximately 8 million online customers. TD Bank has a Tier 1 capital ratio of 12 percent.
Safest Bank: Banque et Caisse d’Épargne de l’État (No. 9)
Falling a single spot from 2011, Banque et Caisse d’Épargne de l’État is the only Luxembourg bank to make the list. The institution is owned by the government of Luxembourg and provides all the functions of a commercial bank, including retail and private banking.
The bank reported approximately 39.7 billion euros (US$49 billion) in assets in 2011 and Tier 1 capital ratio of 14.4 percent.
Safest Bank: Caisse des Dépôts et Consignations (No. 6)
France is home to the sixth-safest bank, Caisse des Dépôts et Consignations (CDC), according to Global Finance. It has fallen four spots in this year’s rankings. France has three banks in the top 50, including commercial bank BNP Paribas, ranked No. 47.
The Caisse des Dépôts group is a public financial institution that performs public-interest missions on behalf of France’s central, regional and local governments.
Although the bank has always had autonomy, CDC remains "under Parliament's supervision and guarantee," according to French law. The bank’s connection to the French government also helps it maintain triple-A credit ratings from both Moody’s and Fitch.
The CDC group had assets of about 262.2 billion euros ($323.6 billion) as of the end of 2011.
Safest Bank: Zürcher Kantonalbank (No. 3)
Zürcher Kantonalbank is the lone Swiss bank represented in Global Finance's rankings this year. Like other European banks ranking highly on Global Finance’s list, Zürcher Kantonalbank is owned by the canton of Zurich and has a public sector mandate to fulfill. Under the law, the canton bears responsibility for the bank’s liabilities.
Zürcher Kantonalbank has assets of $134 billion Swiss francs (US$138 billion) and holds triple-A ratings from Moody’s, S&P and Fitch.
Safest Bank: Bank Nederlandse Gemeenten (No. 2)
The Bank Nederlandse Gemeenten (BNG) is one of the three Dutch banks among the Top 10, and it moved up a spot from last year. A government-owned bank—50 percent by the Dutch government and 50 percent by municipalities—BNG is joined by Nederlandse Waterschapsbank and Rabobank at the top of Global Finance’s list.
According to BNG, total assets are 136.5 billion euros (US$168.5 billion). BNG’s long-term debt securities are rated triple-A by Standard & Poor's, Moody's and Fitch.
Safest Bank: KfW (No. 1)
Four of the five German banks that made Global Finance’s list appear in the Top 10, with KfW at the top of the pack. Landwirtschaftliche Rentenbank ranks highly at No. 4 and Landeskreditbank Baden-Württemberg-Förderbank comes in at No. 5.
KfW is owned by the Federal Republic of Germany and the federal states. As such, it has a public-sector mandate. The government guarantees all bank obligations, including loans extended, debt securities issued, fixed forward transactions or options, and other third-party lending activities.
The bank’s assets rose 22.6 billion euros to 516.5 billion euros (US$637.5 billion) as of June 2012. The bank has a solid core Tier 1 capital ratio of 17.3 percent, and 14.2 percent under upcoming Basel III standards.
The bank holds a triple-A rating from Moody’s, S&P and Fitch.