When it comes to evaluating the world's safest banks, Canadian players continue to outshine their American rivals by a wide margin. But there has been some shuffling in the ranks. And perhaps most surprising of all, European banks now hold all of the top 10 spots.
Toronto-Dominion Bank ranks 11th in the annual top 50 list of the most creditworthy banks compiled by Global Finance magazine and appearing in its October issue. That's the same rung TD occupied in the magazine's last update in the spring. But Bank of Nova Scotia has moved up to 12th from 14th and Caisse centrale Desjardins has also advanced two places to 16th, just ahead of Royal Bank of Canada, which slid to 17th from 10th after suffering a ratings cut from Moody's. Bank of Montreal and Canadian Imperial Bank of Commerce have each slipped two rungs to 25th and 26th, respectively. National Bank of Canada climbed two places to 38th.
The creditworthiness survey is based on a comparison of long-term credit ratings and total assets of the world's 500 biggest banks.
Of the 10 most secure banks, four are German, including the global leader, German development bank KfW. That's one of the benefits of being owned or fully backstopped by a government that hasn't yet run out of cash. Dutch banks hold down three spots, including Bank Nederlandse Gemeenten at No. 2. Banks from Switzerland, Luxembourg and France round out the top 10.
The safest U.S. bank remains Bank of New York Mellon Corp., although it has fallen to 29th from 25th. Another U.S. bank, CoBank ACB, dropped one notch to 32nd. The only other U.S. institutions among the top 50 are U.S. Bancorp at 37th (38th previously), Northern Trust (39th, up from 41st) and Wells Fargo (48th). U.S. powerhouse JP Morgan Chase, which ranked 36th in April, has fallen right off the list – less because of heavy trading losses than a rating cut.
British bank Standard Chartered, ranked 49th, is enmeshed in a money-laundering scandal.
The list is bound to change as the financial crisis in Europe deepens, the global economy slows and banks get hit with a raft of credit downgrades. S&P cut its ratings outlook to negative for seven Canadian lenders last month, including Royal, TD, Scotia and National.
But when stacked up against their U.S. rivals, the Canadians remain bastions of safety, occupying the first six places and seven of the top 10 among North American banks.
"More than ever, customers around the world are viewing long-term creditworthiness as the key feature of the banks with which they do business," says Joseph Giarraputo, publisher of Global Finance. "These banks have solid capital positions and superior risk management capabilities."
The full list, including a breakdown by regions, can be found at GFmag.com.