By ADRIAN LOWCOCK 24/06/2009
As the fallout of the banking crisis subsides Bankers Magazine, in their June issue, has published a report on the relative strengths of the world’s banks and identified those which lost the most money. Knowing which banks have the best capital position and which are being well run can help when deciding where the best place to put your savings.
Losing banks
Top of the list is the majority Government owned Royal Bank of Scotland, which last year racked up losses of £36 billion, followed by Citigroup (£32 billion) and Wells Fargo (£29 billion). The banking sector saw profits slump 85% to £69.8 billion, down from £474.1 billion a year earlier.
Strongest banks
The annual list covers the top 1,000 strongest global banks. The rankings are based on capital strength of the bank measured by the amount of tier 1 capital held. Tier 1 is considered by regulators as the most relevant measurement of bank strength.
This year JP Morgan tops the list replacing HSBC, who have fallen to the 5th spot. Bank of America was ranked 2nd followed by Citigroup and perhaps surprisingly Royal Bank of Scotland was in 4th place. Of the top 5 banks, only HSBC has not required government bailout.
The report is supportive of the bailouts, as many of those banks who were on the receiving end are now much stronger than before the crisis occurred.
Profitable banks
A fairer appraisal is who were the most profitable last year, as a measure of which banks avoided the biggest write downs on their assets and investments. As Asian countries avoided most of the impact of the banking collapse it is not surprising to see Chinese banks take 1st, 2nd and 4th places. Spanish banks also feature in the top 5 with Banco Santander, which capitalised on the opportunities during the crisis by taking over Alliance & Leicester and also owns Abbey, coming 3rd with profits of £9.59 billion and BBVA the 5th most profitable bank with £5.82 billion.
Two British banks, HSBC (£5.64 billion) and Barclays (£5.4 billion) came in at 6th and 7th respectively.
With the likes of Royal Bank of Scotland featuring high on the list it shows that the bailout by the British Government has succeeded in providing the financial support required for these companies to operate and compete in the global market.
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