"When the crisis erupted, we realized we had stuck to a fairly basic rule, which was that the bulk of Tier 1 capital had to be in equity. That turned out to be very, very important."
-Jamie Dickson, Superintendent, OSFI (Canada’s bank regulator)
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Bloomberg Markets has a list of the world’s strongest banks — they are dominated by Canada and Singapore firms.
Why Canada? Regulators there set strict criteria on the quality of banks' assets and reserves. Canadian banks don’t use a lot of leverage, and are required to hold 75% of their capital in equity.
Here is the top 10 list:
1. Oversea-Chinese Banking Corp OCBC (Singapore) 2. BOC Hong Kong Holdings Ltd. (Hong Kong) 3. Canadian Imperial Bank of Commerce CIBC (Canada) 4. Toronto-Dominion Bank TD (Canada) 5. National Bank of Canada (Canada) 6. Royal Bank of Canada (Canada) 7. United Overseas Bank Ltd. (Singapore) 8. DBS Group Holdings Ltd. (Singapore) 9. Hang Seng Bank 10. Svenska Handelsbanken (Sweden)
Other Canadian banks made the list, such as Bank of Nova Scotia ranked 18th, and Bank of Montreal was 22nd.
Only three U.S. banks — JPMorgan Chase (JPM) (No. 13), PNC Financial Services Group Inc. (PNC) (No. 17) and BB&T Corp. (BBT) (No. 20) made the top 20.
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Source: Canadians Dominate World's 10 Strongest Banks Doug Alexander and Sean B. Pasternak Bloomberg Markets Magazine, May 2, 2012 http://www.bloomberg.com/news/2012-05-02/canadians-dominate-world-s-10-strongest-banks.html
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
We’ll see how strong Canada’s banks look when their housing/credit boom goes bust.
Actually Barry, they’re strong because they’re pre-bailed out through the CHMC.
OK, the Bloomberg piece refers to Dickson only as Julie Dickson. Googling confirms that this is the correct name.
Have we got a little too much JPMorgan on the brain today?
I suspect that the reason Singapore and Hong Kong are represented here is that (IMHO) culturally, those places are less inclined to use leverage.
Takes a gunslinger mentality to base a national banking sustem upon extensively-levered banks.
But the Canadian banks all needed to be bailed out! It was just done without as much fan-fare.
http://www.cbc.ca/news/business/story/2012/04/30/bank-bailout-ccpa.html
And imagine if Glass-Stegall hadn’t been repealed. http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act
Just when will some of those fraud-loving bankers be sent on a long prison journey ?
Is there any downside to this for Canada? Do they miss out on *anything* beneficial by not having as much “financial innovation” as the U.S.?
If JP Morgan Chase is ranked 13th, then there is something wrong with the evaluation criteria. Chase has an enormous amount of derivatives bets, $70 trillion: http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html
Chase expects to win more bets than it loses, of course. Gambling doesn’t always go as planned, even for skill games like poker. Anyone on this forum win every time they sit down and play poker? Chase has real equity (the GAAP kind, not imaginary Wall St. kind) of less than $200 billion. The human comparison would be a middle-class guy with $200k in personal net worth sitting down at the poker table with a $70,000,000 stack of chips and figuring that if he wins, great. If he loses 0.03% of his stake he’s bankrupt anyway, so why not go for it?
And down the stretch they (zerohedge comment crowd) come
[...] The world’s strongest banks come from Canada, dontcha know? (And [...]
Agree about the Canadian Banks. Some of ours looked pretty good pre-housing bubble crash.
Where is V the B? 5 Yr CDS is where?
Also note that investors in MF Global – Canada got ALL their money b/c Canadian Bank regulations do not allow swapping of customer funds unlike here or in UK!
Our regulators/lawmakers are captive of those they regulated with no accountability!
i’m stoked for the Canadians that they have a lot of the world’s strongest banks, but then again, they also have Celine Dion, so it’s sort of a wash
The Canadian housing market peaked in May 2011 … precisely when the Price/Family-Income ratio hit 34% above trend. This is where USA topped out in 2005. Today Cndn homes are 28% overpriced and are values at 2.3 x’s their american counterpart. The good news is the mortgagee has personal covenant recourse for any and all losses on Canadian mortgages.
In the 1989 bubble (55%), Canadian home prices fell only 6% and instead the market went sideways for ten years. I expect the same this time around. Canada’s GDP was a 2.0% pace in February.
Realty Bubble Monitor: http://trendlines.ca/free/economics/RealtyBubbleMonitor/RealtyBubbleMonitor.htm
Putting JP Morgan at number 13 completely removes any semblance of creditability for this story. In addition to the $70 trillion in derivatives, JP Morgan has shorted silver far beyond any ability to get rid of their short position. JP Morgan has also invested in sovereign debt of Eurozone nations. Wells Fargo on the other hand does not invest in sovereign debt, yet is not included in the list.
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