World's Safest Banks 2017 | A Measure of Safety

Click here for World's Safest Banks 2018.

Story updated on  November 9, 2017

At a time of unprecedented concern about the security of financial systems, the Global Finance annual ranking of the World’s Safest Banks provides a guide that is both consistent and transparent.

We use long-term foreign currency deposit ratings (or an equivalent, if a deposit rating is not available) from all three of the major international credit rating agencies. These ratings are publicly available, as are any changes made to them. In addition, we factor in asset size, as that has historically correlated with stability. This is our 26th consecutive year publishing this analysis, giving us a long-term perspective on bank safety.

Of course, the reputation of the rating agencies has suffered as a result of the global financial crisis of 2008, when it became clear the agencies had awarded exceptionally high ratings on banks that later had to be rescued by their governments or sold to healthier rivals. But much has changed over the past 10 years, in terms of both the strength of the rating agencies’ methodologies and the transparency with which they go about their work.

To mitigate the danger that one agency might have an overly optimistic or pessimistic view on a bank, we make it a criterion for inclusion in our Global and Regional lists that banks hold ratings from at least two of the threeagencies. For example, following the halving of oil prices in 2014, S&P has been the most bearish on Saudi Arabia, downgrading many banks by three notches. In contrast, Moody’s has been more sanguine, usually downgrading by only one notch.

The rankings that we publish are valid as of a specific date. This year it was July 31. Unavoidably, there is a gap between the day on which we finalize our rankings and the day when they are published in the magazine (although we can post them on our website more quickly). And of course, ratings can change during that time.

This year, S&P downgraded the People’s Republic of China by one notch to A+ on September 21. On the same day, several of the large Chinese banks were also downgraded by one notch. China Development Bank Corporation (47th) and Agricultural Development Bank of China (49th) would not have been included in the Global Top 50 Safest Banks if that downgrade had occurred before July 31.

Along with Export-Import Bank of China, both those Chinese banks are among the top 10 Safest Emerging-Market Banks. After the downgrade, all three would have retained very high positions on that list.

Another highly rated casualty has been Qatar. On August 28, Fitch downgraded the Government of Qatar by one notch, to AA-. Downgrades of some of the banks followed.

Qatar National Bank had already lost its chance for inclusion in the Global Top 50 Safest following a downgrade by S&P in June, but it remains highly placed in the Emerging-Markets list and would have kept its place in the Safest Commercial Bank ranking even after the Fitch downgrade in August.

In practice, the time lag between closing the rankings and publication has little impact on the overall picture. State-sponsored European banks lead the Global rankings, with South Koreans making a strong showing and Australian, Canadian and Singaporean banks alongside a variety of US banks making the top 50. Banks from the GCC dominate the Emerging-Markets list, accompanied by banks from a select group of Asian countries, such as South Korea, China and Taiwan. European banks are the largest contingent in the Commercial Banks list, although Canadian, Australian, Singaporean and US banks also feature strongly.

From Latin America, only Chilean banks have ratings high enough to make the Global, Emerging Markets or Commercial lists, but even the largest Chilean bank isn’t large enough to make the asset cut-off for the Global list. Similarly, from Eastern Europe, only Czech Republic banks are even contenders.

That leaves many of the world’s biggest banking systems struggling for visibility. Russian, Turkish, Brazilian, Indian and Indonesian banks, even when they have the assets to vie with big players, still fall far short of the ratings needed to compete among the world’s strongest. And for those that can’t compete in the global leagues, our Country-by-Country list gives an indication of how the banks’ security in 106 different countries compares relative to their domestic peers. 

First published on September 22, 2017

World's Safest Banks 2017 Rankings Released
 

In addition to the safest banks in the world, the full survey also released rankings like that for world's safest banks by country, world’s 50 safest commercial banks, 50 safest banks in emerging markets, safest Islamic financial institutions in the Gulf Cooperation Council (GCC), and safest banks by region (Africa, Asia, Australasia, Central & Eastern Europe, Western Europe, Middle East, Latin America and North America ). A full list of the press releases for the awards with limited information can be found in the table below. 

Andrew Cunnigham, founder and director of UK based Darien Analytics and consultant to the International Finance Corporation (IFC) has been preparing the ranking for the magazine since 2011.  He informed that the banks this year had to have assets of $14 bn or more to be considered eligible for being ranked among the world's top safest 50 banks. They also needed to get three A1 ratings from the rating agencies mentioned above. Cunnigham mentioned that some of the highlights for this year's list included downgrades for "some of the Canadian, Australian and big Chinese banks where as upgrates were more of a bank by bank story." The full rankings and their details will be released in the November issue of the Global Finance magazine. The safest banks will be presented awards at a special ceremony to be held during the annual meetings of the IMF and World Bank in Washington, DC on October 14 at the National Press Club. 

Key Highlights

Some of the key highlights from this year's ranking for world's 50 safest banks  included the domination of the list by European banks. They took all top 10 positions.  German banks were especially strong taking five spots on the top 10 list. Also, Germany’s KfW came in at the top spot for the sixth year in a row. 

Asian banks too put in a strong showing in the top 20 led by Singapore’s DBS Bank at #11. Singapore's OCBC and United Overseas Bank came in at number 13 and 14 respectively.  Korea's Korea Development Bank and Export-Import Bank of Korea took positions 15 and 16 repsectively. In the Middle East, First Abu Dhabi Bank became the top ranking bank in the UAE after National Bank of Abu Dhabi’ merged with First Gulf Bank. First Abu Dhabi had assets of  $186 billion at the end of March 2017.

Among the new entries to the safest banks list this year include AgFirst and Farm Credit Bank of Texas at #43 and #45, LGT Bank from Liechtenstein at #44 and Bank für Sozialwirtschaft from Germany at #4. 

The video below presents a quick look at the methodology used and some other key highlights from this year's rankings.