By Andrew Cunningham
Banks from Australia, Canada and Singapore dominate the list of the Top 10 Safest Commercial Banks.
State-owned banks and those that enjoy some form of sponsorship from government or regional organizations have always occupied the highest positions in Global Finance’s rankings of the World’s 50 Safest Banks. Yet commercially owned banks take the majority of places in the top 50, with many claiming positions near the top of the rankings. All of the banks from positions 9 to 25 are commercial banks controlled by private-sector owners.
Rabobank continues to head the list of private banks, although it no longer stands head and shoulders above its rivals, as it did two years ago. In 2011, Rabobank held AAA ratings from Moody’s and S&P, and an AA+ from Fitch. This year four other banks hold the same average rating as Rabobank (now rated AA by Fitch, Aa2 by Moody’s and AA- by S&P): Canada’s TD Bank and the three leading Singaporean banks—DBS Bank, Oversea-Chinese Banking Corporation and United Overseas Bank. Rabobank takes top position by virtue of its larger asset size. (Under Global Finance’s methodology, banks that hold the same average ratings are ranked by asset size, reflecting the strong empirical correlation between asset size and rating level.)
No private-sector banks hold an AAA rating from any of the three leading agencies, but TD Bank and the three Singaporean banks hold Aa1 ratings from Moody’s. Neither Fitch nor S&P confer such a high rating on a private-sector bank.
The most striking feature of the leading 10 commercial banks is that nine of them come from only three countries. Australia provides four of the 10, Singapore three and Canada two. Although hardly backwaters, none of the three countries is a dominant player in global (as opposed to regional) financial markets. The Financial Stability Board’s November 2012 listing of 28 Global Systemically Important Banks contained no banks from any of the three countries.
Yet all are recognized as well-regulated banking systems that suffered less trauma during the global financial crisis than most other important banking systems. Mark Carney, the former governor of the Bank of Canada, chairs the Financial Stability Board and was relentlessly pursued by Britain’s chancellor of the exchequer until he finally agreed to become governor of the Bank of England earlier this year—a testament to both his management and the Canadian financial sector’s strength.
Below the top 20, Global Finance’s Safest 50 rankings contain a wide variety of both state-sponsored banks and commercial banks, although it is important to keep in mind a distinction between state-owned banks, whose sole purpose is to fulfil a national mission such as financing agriculture or local industry, and those such as National Bank of Abu Dhabi that are state-owned and conduct large amounts of government-related business but in all other respects operate and compete as a commercial institutions.
|Rank||Group Name||Fitch rating||Moody’s rating||S&P rating||Total Points|
|2||TD Bank Group||AA-||Aa1||AA-||23|
|4||Oversea-Chinese Banking Corp||AA-||Aa1||AA-||23|
|5||United Overseas Bank||AA-||Aa1||AA-||23|
|6||Royal Bank of Canada||AA||Aa3||AA-||22|
|7||National Australia Bank||AA-||Aa2||AA-||22|
|8||Commonwealth Bank of Australia||AA-||Aa2||AA-||22|
|TABLE PART 2|
|Rank||Group Name||Reporting Assets ($mn)||Statement Date||Country|
|2||TD Bank Group||811,430||10/31/2012||Canada|
|4||Oversea-Chinese Banking Corp||241,883||12/31/2012||Singapore|
|5||United Overseas Bank||206,702||12/31/2012||Singapore|
|6||Royal Bank of Canada||825,430||10/31/2012||Canada|
|7||National Australia Bank||798,462||12/31/2012||Australia|
|8||Commonwealth Bank of Australia||731,916||6/30/2012||Australia|
Source for ratings: Fitch Ratings, Moody’s Investors Service, Standard & Poor’s
Source for reporting assets: Fitch Solutions
Ratings correct as of 30 July 2013