“When the crisis erupted, we realized we had stuck to a fairly basic rule, which was that the bulk of Tier 1 capital had to be in equity. That turned out to be very, very important.”

-Jamie Dickson, Superintendent, OSFI (Canada’s bank regulator)

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Bloomberg Markets has a list of the world’s strongest banks — they are dominated by Canada and Singapore firms.

Why Canada? Regulators there set strict criteria on the quality of banks’ assets and reserves. Canadian banks don’t use a lot of leverage, and are required to hold 75% of their capital in equity.

Here is the top 10 list:

1. Oversea-Chinese Banking Corp OCBC (Singapore)
2. BOC Hong Kong Holdings Ltd. (Hong Kong)
3. Canadian Imperial Bank of Commerce CIBC (Canada)
4. Toronto-Dominion Bank TD (Canada)
5. National Bank of Canada (Canada)
6. Royal Bank of Canada (Canada)
7. United Overseas Bank Ltd. (Singapore)
8. DBS Group Holdings Ltd. (Singapore)
9. Hang Seng Bank
10. Svenska Handelsbanken (Sweden)

Other Canadian banks made the list, such as Bank of Nova Scotia ranked 18th, and Bank of Montreal was 22nd.

Only three U.S. banks — JPMorgan Chase (JPM) (No. 13), PNC Financial Services Group Inc. (PNC) (No. 17) and BB&T Corp. (BBT) (No. 20)  made the top 20.

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Source:
Canadians Dominate World’s 10 Strongest Banks
Doug Alexander and Sean B. Pasternak
Bloomberg Markets Magazine, May 2, 2012  
http://www.bloomberg.com/news/2012-05-02/canadians-dominate-world-s-10-strongest-banks.html

Category: Credit, Regulation

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.

18 Responses to “World’s 10 Strongest Banks (by Nation)”

  1. snider92 says:

    We’ll see how strong Canada’s banks look when their housing/credit boom goes bust.

  2. ReductiMat says:

    Actually Barry, they’re strong because they’re pre-bailed out through the CHMC.

  3. constantnormal says:

    OK, the Bloomberg piece refers to Dickson only as Julie Dickson. Googling confirms that this is the correct name.

    Have we got a little too much JPMorgan on the brain today?

  4. constantnormal says:

    I suspect that the reason Singapore and Hong Kong are represented here is that (IMHO) culturally, those places are less inclined to use leverage.

    Takes a gunslinger mentality to base a national banking sustem upon extensively-levered banks.

  5. Durrman says:

    But the Canadian banks all needed to be bailed out! It was just done without as much fan-fare.

    http://www.cbc.ca/news/business/story/2012/04/30/bank-bailout-ccpa.html

  6. A says:

    And imagine if Glass-Stegall hadn’t been repealed.
    http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

    Just when will some of those fraud-loving bankers be sent on a long prison journey ?

  7. Scott Teresi says:

    Is there any downside to this for Canada? Do they miss out on *anything* beneficial by not having as much “financial innovation” as the U.S.?

  8. Marc P says:

    If JP Morgan Chase is ranked 13th, then there is something wrong with the evaluation criteria. Chase has an enormous amount of derivatives bets, $70 trillion: http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

    Chase expects to win more bets than it loses, of course. Gambling doesn’t always go as planned, even for skill games like poker. Anyone on this forum win every time they sit down and play poker? Chase has real equity (the GAAP kind, not imaginary Wall St. kind) of less than $200 billion. The human comparison would be a middle-class guy with $200k in personal net worth sitting down at the poker table with a $70,000,000 stack of chips and figuring that if he wins, great. If he loses 0.03% of his stake he’s bankrupt anyway, so why not go for it?

  9. DarthBeta says:

    And down the stretch they (zerohedge comment crowd) come

  10. [...] The world’s strongest banks come from Canada, dontcha know? (And [...]

  11. Mike in Nola says:

    Agree about the Canadian Banks. Some of ours looked pretty good pre-housing bubble crash.

  12. shelli says:

    Where is V the B?
    5 Yr CDS is where?

  13. Sunny129 says:

    Also note that investors in MF Global – Canada got ALL their money b/c Canadian Bank regulations do not allow swapping of customer funds unlike here or in UK!

    Our regulators/lawmakers are captive of those they regulated with no accountability!

  14. scottinnj says:

    i’m stoked for the Canadians that they have a lot of the world’s strongest banks, but then again, they also have Celine Dion, so it’s sort of a wash

  15. The Canadian housing market peaked in May 2011 … precisely when the Price/Family-Income ratio hit 34% above trend. This is where USA topped out in 2005. Today Cndn homes are 28% overpriced and are values at 2.3 x’s their american counterpart. The good news is the mortgagee has personal covenant recourse for any and all losses on Canadian mortgages.

    In the 1989 bubble (55%), Canadian home prices fell only 6% and instead the market went sideways for ten years. I expect the same this time around. Canada’s GDP was a 2.0% pace in February.

    Realty Bubble Monitor: http://trendlines.ca/free/economics/RealtyBubbleMonitor/RealtyBubbleMonitor.htm

  16. roark183 says:

    Putting JP Morgan at number 13 completely removes any semblance of creditability for this story. In addition to the $70 trillion in derivatives, JP Morgan has shorted silver far beyond any ability to get rid of their short position. JP Morgan has also invested in sovereign debt of Eurozone nations. Wells Fargo on the other hand does not invest in sovereign debt, yet is not included in the list.

  17. Gatsby says:

    Canadian banks have been the story to watch since 2008. The next 12 to 24 moths will be key to see how this story ends.

    While there has been much hoopla about the CMHC backing of Canadian Banks (see Durrman’s comment). The CMHC still acts to insure mortgages and there fore it is not a bailout unless the insurance is used (i.e. a default). The next 12 to 24 months will show us if Canada will face a default crisis.

    I think it is also important to state that despite your view on the CMHC insurance, you have to remember the Canadian government do NOT bailout prop desks (i.e. AIG, Citi, etc.) and is actively working to reduce consumer lending (see the cover story of this month’s Canadian Business magazine) via tightening CMHC standards.

    Ultimately the Canadian government needs to return to pre-Harper lending standards, which it is doing althout too slowly.

    Time will tell but my instincts tell me that American voters would benefit my paying attention to what is going on in “The Big Empty”.

  18. victor says:

    When we all rile at ” US Wall Street” (justifiably so, considering their crimes against capitalism) we forget how strong the foreign Wall Street is and that perhaps little would change even if US WS were defanged. Also, most US Wall Streeters would just pack up and move to London, Singapore, etc. It’s a worldwide problem.