Posted on 09/03/2009 7:11:02 AM PDT by SeekAndFind
The Global Finance magazine released the world’s safest banks list for 2009 on February 25th. For the first time they published this mid-year update due to the turmoil in the world’s banking industry.
The list was compiled based on the comparison of long-term credit ratings and total assets of the 500 largest banks in the world. The ratings were issued by Standard & Poor's, Moody’s and Fitch.
According to Global Finance publisher Joseph D. Giarraputo “The rating agencies have determined these banks have demonstrated a more prudent and sustainable approach to risk than their peers.”
(Excerpt) Read more at seekingalpha.com ...
This site shows the World’s Safest Banks in 2008 ( just for comparison ) :
http://topforeignstocks.com/2008/11/09/the-worlds-top-ten-safest-banks-2008/
I would think that for an American, offshore French or Chinese banks would be the safest banks.
Why? They are partially or wholly state-run (yes, I know it not ideal, but China will never allow the Bank of China to go under) and they also will tell the US Treasury and IRS to go screw themselves if they come looking for info.
We use a Savings and Loan, as well as Wachovia/Wells Fargo. I find it odd Wells Fargo made the list because Wachovia was in deep trouble when they took them over.
However, our savings and loan is only in a couple states. We have our mortgage with them, and use them for some accounts too, but the interesting thing is, they did not have one, not one, foreclosure on properties they hold mortgages on. That’s because they do things the old fashioned way, insist on a substantial down, and won’t write a mortgage for a second home, etc.
I’m waiting for the credibility rating on the credit rating firms. Liars lying about other liars? Who can tell?
bump
Is Seeking Alpha your website?
Yeah, I always wrap money, not bodies.
ping
Ping!
Or, you can travel less and just put your money in any Canadian bank. Every one of them are on the list.
JPMorgan Chase Bank NA (OH), or “JPM,” is the largest U.S. commercial bank with $1.8 trillion in total assets.
It has extremely elevated derivatives‐related credit exposure to the tune of 400.2 percent of its risk‐based capital.
It holds nearly $9.2 trillion in credit derivatives.16
It has approximately half of all derivatives held by U.S. commercial banks. As such, it would be at ground zero of any systemic crisis.
Apart from its derivatives risks, it merits no more than a “fair” Financial Strength Rating of C+ from TheStreet.com, based primarily on several years of mediocre earnings performance, a factor that could threaten its capital.
In response to concerns such as these, on February 26, 2009, JPM provided a presentation, entitled “Derivatives,” in which it sought to reassure investors regarding the quality and risk management of its derivatives portfolio.
17 In the report, while acknowledging that its derivatives are a core component of its assets and that there are multiple risks associated with derivatives, it seeks to make the case that it has adequate tools for measuring and managing the associated risk. However,
JPM does not demonstrate how its risk management tools are any better than those used by other sophisticated derivatives players that failed, such as AIG, Bear Stearns, Lehman Brothers and Merrill Lynch.
Those tools did not provide adequate protection against unexpected “Black Swan” events, such as the collapse of the U.S. mortgage market or the failure of triple‐A rated companies like Fannie Mae, raising serious questions about JPM’s ability to withstand shocks of similar magnitude in the future.
JPM states that, through the use of collateral and hedges, it reduces its derivatives counterparty exposure almost in half. However, with 400.2 percent credit exposure, even a 50 percent reduction does not bring the bank back down to acceptable risk levels. JPM acknowledges that it remains exposed to “gap risk” — changes in market value that are too sudden to allow for additional collateral calls or hedging. Given the likely volatility of market prices in a continuing financial crisis, this risk, no matter how well monitored, can be difficult to contain.
JPM’s report seems to minimize the threat of its “Level 3” assets — assets typically valued using uncertain financial models rather than actual market prices. Although JPM states that these represent only 6.4 percent of JPM’s assets, a figure that may appear small, JPM fails to explicitly point out that they represent a very high 91.2 percent of risk‐based capital.
18 By comparison, prior to their demise, Bear Stearns had Level 3 assets representing 155 percent of capital and Lehman Brothers had Level 3 assets of 160 percent of capital. Although these Level 3/capital ratios may not be directly comparable due to inherent differences in the business models of securities firms and commercial banks, they do indicate that JPM’s... $2.251 trillion. Since JPM’s total risk‐based capital was $159 billion, the ratio of Level 3 assets to risk‐based capital was 91.2 percent. 19 exposure to these assets may be different in degree — but not significantly different in kind — from those of other large derivatives players that have failed.
Most important, although JPM highlights its monitoring of risk, it does not disclose detail regarding its assumptions or scenarios used in stress testing, a significant omission given the extreme nature of recent derivatives collapses and economic dislocations. Weiss Research action: In light of mounting dangers in the financial markets and the economy, as well as the additional data revealed by the company in its report on derivatives of February 26, Weiss Research has added JPM to its list of U.S. banks at risk of failure.
See reply #17... I’m having a hard time replying to you Tiger... keep getting switched away. Maybe this will work.
So I suppose it will be around in one form or another until 'the end time (of financial system or world?)' :-)
BBVA and TD both have a large presence in the US.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.