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The list of the World’s strongest bank is dominated by Canadians, and headed by Singapore’s Oversea-Chinese Banking (OCBC). No. 2 is Svenska Handelsbanken AB of Sweden.

Just three U.S. banks — Fifth Third Bancorp (No. 7), JPMorgan Chase & Co. (No. 14) and (WTF?!?) Citigroup (No. 16) — make the top 20.

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Source:
(Singapore’s OCBC Strongest Bank as Canadians Dominate )
John J. Curran and Yoolim Lee
Bloomberg, May 10, 2011
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aOL_DIcScvOA

Category: Bailouts, Credit, Digital Media

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

21 Responses to “World’s Strongest Banks”

  1. Who is Anna W? Did I miss the intro? Do you have a new intern Barry? It took you long enough. you’ve only been talking about getting one for, what, 3 years now?

  2. Chief Tomahawk says:

    Are the Cnadian banks only strong because they’ve off-loaded their bad loans to the Canadian central bank?

  3. rktbrkr says:

    CITI can only score high because of US INFUSIONS AND SOME STILL HUGE GUARANTEES probably secured by grossly overvalued RE collateral

  4. @Chief,

    No, our mortgage market was structured in such a way as to not get in as much trouble in the first place. We did have the government throw a bunch of guarantees around during the crisis so all is not roses up here

  5. phb says:

    If FITB is the 7th strongest bank in the world, then I am surely missing something on the strength of the economy in the Midwest. Had no idea they have worked through their foreclosure and commercial loan disasters throughout Ohio, Michigan, and Florida? Anyone?

  6. ashpelham2 says:

    Hard to believe that Citi is on this list at all. Anywhere.

    Wonder what that list looked like Circa May 2007?

  7. Chief Tomahawk says:

    Common Man, I appreciate your response. Michael Shedlock, on his blog, posted sometime ago (1.5 yrs. ago?) that Canadian banks had shielded themselves by sending all of the shaky loans ontot the Canadian Central Bank. I just tried a search, and found this:

    “Secondly, I am very aware of how the Canadian mortgage system works. Your system is arguably much worse than the US system of passing the trash to Fannie and Freddie.

    Canadian banks can and do directly pass every garbage loan to the Canadian Central Bank. In the US, Fannie and Freddie (in spite of their numerous faults), were actually among the more sane players in avoiding subprime slime.

    The worst of the trash in the US went to hedge funds, pension plans, foreign investors, etc.

    Canada’s policy avoided the bank failures we saw in the US, but at the expense of bloating the central bank balance sheet with garbage. That policy will work until it doesn’t.”

    http://www.safehaven.com/article/16814/email-from-canada-its-different-up-here-it-really-is

    Though that site is called “Safehaven”, it appears to be a re-post of what Mike posted to his own blog.

  8. I am aware of safehaven. I once followed it years ago and I usually agree with their take. I was under the understanding that our government had set up a bunch of loan guarantees (which I disagreed with) but these really do end up just being printing press obligations of the CB when trouble hits. It is not a huge concern for me as I don’t hold a mortgage so I only followed it to see if they would turn it into an Icelandic crisis. The concern that I have is if the economy tanks and my job disappears and that will probably not happen at this point. With all the debt Canadians have we will go through a rough patch if this thing backs up on itself. People up here did that to themselves with their million dollar ‘crack shacks’ (the Canadian version of the Mcmansion)

    I’m pretty sure our banks will do pretty well in a crisis. They are not too badly leveraged in the first place. I don’t think we will need to monetize all that debt but we have that ability to and I wouldn’t put it past the government to authorize the action.

    As with all well structured central banking systems most of the pain will be transferred to the little people while the banks get to socialize the bad deals

  9. financial says:

    OK before all you Americans go crazy on Canadian banks a few facts may be important.

    First, Canadians who consider a mortgage in excess of 75% of loan to value must insure their mortgage with CMHC — a Canadian government mortgage company. When the mortgage is guaranteed it can be pooled and sold off by the bank (yes CMHC securitizations are still popular). Then banks don’t make much money on those, since they don’t keep the risk in their books. Pension funds and foreign investors buy these “high yield” government guaranteed bonds — it has almost nothing to do with the banks

    Secondly, Canadian banks rely heavily on customer deposits for their funding — on average it exceeds 60%.

    Third, the central bank of Canada has withdrawn ALL the “2007 crisis” liquidity. Americans didn’t notice because it happened in early 2009 (so for the past three years the BoC’s balance sheet has remained unchanged).

    fourth, there is no suspension of the Canadian equivalent to FASB 157

    Fifth, there is no concept of Level 3 assets in Canada.

    Recently, the government has mandated that the maximum amount that can be borrowed by a Canadian house buyer is 85% of the purchase price (no fees included) and that maximum repayment term is 30 years. Also borrowers ability to sustain the financing at higher (historical) rates has to be tested (there are no liars loans in Canada — you don’t provide proof of income, no mortgage).

    As for Canadian banks passing on the “garbage loans” to the federal government, its simply not true.
    The banks process the paperwork for the CMHC following its strict standards. These mortgages are then immediately securitized.

    Finally, there is probably a bias in the Bloomberg’s analysis — three countries account for too many of the top spots (Canada/Switzerland and Singapore). Canadian banks are in good shape for a few reasons: housing market is still on fire (and is increasingly looking a bubble is there/forming), natural resources (which account for nearly 50% of the TSX’s market capitalization) are on fire.

  10. Chief Tomahawk says:

    So, has the risk ultimately been transfered to the Canadian currency then? And if so, then the relative health of the Canadian banks won’t matter much.

    “Also borrowers ability to sustain the financing at higher (historical) rates has to be tested (there are no liars loans in Canada — you don’t provide proof of income, no mortgage).”

    Okay, so then Canadian incomes have boomed x-times such as to sustain stratospheric prices (ie the million dollar crack shack phoenomenon.) Or is it more like here (U.S.) where income growth became grossly outstretched by home prices, and thus prices here are falling back in line with wages?

  11. Cynic_FA says:

    When a Canadian Bank lies to you and says there is no risk, it is more pleasant because they lie in that cute Canadian accent.

    I like Chief Tomahak’s take on it. when a $300,000 house sells for a $900,000 you can bet the price to income ratio is out of wack. Will the Canadian government be forced into massive bailout spending for CMHC like the US government billions into Fanniie and Freddie (Our unofficial, official government mortgage gaurantors)

  12. louis says:

    Cue Ostrich. Pathetic.

  13. andrew755 says:

    The comments sum it up; it is different up here in Canada!

  14. Cue Ostrich. Pathetic.

    x2

  15. Chief Tomahawk says:

    I must admit Vancouver is foremost on my mind. Home prices there just kept going up and up and up… How? Why? I believe there’s been a lot of immigration from Asian countries to there, but are all those immigrants rich? If so, the U.S. should look into how Vancouver gleaned the crim de la crem and avoided the cold hungry tired masses we seem to always get.

  16. godot10 says:

    The high end of the market in Vancouver are cash buyers from China looking for a safe landing spot if things go bad in China, and for schools for their children (so they can be educated in both China and Canada, a foot in both worlds).

    There are also tours for Chinese to buy condos in Vancouver and Toronto, and this phenomena is likely to begin in Calgary and Edmonton. Edmonton, in particular, has abundant cheap downtown land waiting to be high-rise condofied, especially since the Chinese have “discovered” the oilsands. (Americans better approve that Keystone Pipeline Extension, or oil will begin flowing to the coast and Asia, rather than south.)

    Canada takes in around 300,000 immigrants per year (1% of the population per year) and family reunification is the biggest chunk of that. There is a lot of independent (merit-based) immigration also. Probably more refugees per capita than pretty much any country in the world. And investor immigration. $400K invested in a Canadian business ($800K for a couple) was the investment requirement, but that was just recently doubled.

    Our Conservative government finally got reelected with a majority in part by stealing away the “NEW”Canadian vote which had historically gone to the Liberals. Some should tell that to the white yahoos in the GOP and the Tea Party. Recent immigrants turned citizens mostly have conservative values, and are entrepreneurial.

  17. financial says:

    Chief Tomahawk:

    Didn’t say that Canadian house prices would not be a problem in the future, and yes the reality of Vancouver is of great concern, starting with the Bank of Canada, but it is important to note that it is very concentrated phenomenon and that location immediately outside of Vancouver have not seem the same kind of price ramp up. Of note the average LTV on new Canadian mortgages fell from 74% in 2007 to 2009 to 70% in 2010.

    It is also important to note that most Canadian don’t refinance their mortgage as often as they do in the U.S., and study after study has shown that the bulk of the secured credit lines have been actually used for home improvement. All Canadian banks are concerned with the mortgage business, but without low/no doc loans in the market the kind of systematic fraud seen in the U.S. is virtually impossible.

    enough said

  18. AHodge says:

    not that we would know what capital is within three % pts of assets for US and European banks
    given their accounting in the toilet, which i assume.
    the Canadian /Asian data actually more reliable.
    Accentuates this story actually
    Nice, i like canadian banks

  19. tjgpdx says:

    Hodge nails it. The financials for US banks are worthless. See FAS 157. Overlay that with limp regulators and have the equivalent of a CDO squared..square root of worthless….

  20. V says:

    Chart headline may as well read world’s strongest bank façades.

  21. KentH says:

    With references to Vancouver, I agree, there is the immigration element from the Asia effect that is driving demand. But don’t forget, they have the Rockies butting up against it and the ocean on the other side. So they are essentially restricted in terms of the amount of land they can develop. On the other hand, I have a bunch of friends in Toronto and the market looks overvalued. The only thing keeping it from crashing is the fact that interest rates are so low. Keep in mind, you can’t deduct mortgage interest in Canada like the US, although cap gains on your primary residence is still tax free.