Canada rated world's soundest bank system: survey

Renegade · 10-09-2008, 06:36 AM

Thu Oct 9, 2008 4:40am EDT

By Rob Taylor

CANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.

But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.

The United States, where some of Wall Street's biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.

The United States was on Thursday considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.

The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).

Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).

UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).

The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.

The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF's banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.

Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.

At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).

RANKINGS

1. Canada

2. Sweden

3. Luxembourg

4. Australia

5. Denmark

6. Netherlands

7. Belgium

8. New Zealand

9. Ireland

10. Malta 11. Hong Kong

12. Finland

13. Singapore

14. Norway

15. South Africa

16. Switzerland

17. Namibia

18. Chile

19. France

20. Spain

--------------------------------------------

124. Kazakhstan

125. Cambodia

126. Burundi

127. Chad

128. Ethiopia

129. Argentina

130. East Timor

131. Kyrgyz Republic

132. Lesotho

133. Libya

134. Algeria

SOURCE: World Economic Forum Global Competitiveness Report 2008-2009.

(For the full World Economic Forum report click on: here )

(Editing by Kim Coghill)
http://www.reuters.com/article/ousiv...081009?sp=true

Ross · 10-09-2008, 06:57 AM

I think it important to note that this ranking was based on the
"opinions of executives" rather than unbiased accounting measures .

rb. · 10-09-2008, 07:47 AM

Yes, however not all opinions are from idiots. Executives of/from what/where? I'm sure they didn't just ask Lehman or Wachovia execs.

Several factors need to be looked at in regard to bank stability, and I brought this up last fall? winter? spring? when we were talking about this, and I said Canada wouldn't go through what the US is/has been going through. We don't have regional banks, we have national banks. We have regional credit unions. Neither has played fast and loose with checking the ability of customers to repay loans. We have different, and likely more, regulations. The worst, IMHO, product these banks have had of late is a 0% down mortgage for first time homebuyers. But that doesn't mean they don't have the ability to pay, just likely stuck in an apartment at 2 or 3 times the amount a mortgage would be. We also haven't had the real estate speculation/flipping that has gone on in the US. A lot of things are very different between the two countries. As to the rest of them, I can't speak to that. I know squat about any other country's banking system.

Ross · 10-09-2008, 08:49 AM

Rb - I do not want to upset you at this time but I doubt that the Canadian
system can be or will continue to be as robust as you suggest.

Your big neighbour is about to go in to catastrophic disintegration and the
financial and trade linkages between your two countries are very significant .

It defies all logic to suggest that the Canadian banking system will not also
end up in a broken-arsed condition .

Frankly I suspect that even the Australian banking system will fracture and
our financial and trade linkages are much less than yours .

Potemkin · 10-09-2008, 09:07 AM

Beat the US up news article.

Also from the WEF

http://www.weforum.org/en/initiative...port/index.htm
The Global Competitiveness Report 2008-2009

http://www.weforum.org/en/initiative...port/index.htm

The United States tops the overall ranking in The Global Competitiveness Report 2008-2009. Switzerland is in second position followed by Denmark, Sweden and Singapore. European economies continue to prevail in the top 10 with Finland, Germany and the Netherlands following suit. The United Kingdom, while remaining very competitive, has dropped by three places and out of the top 10, mainly attributable to a weakening of its financial markets.

The rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum together with its network of Partner Institutes (leading research institutes and business organizations) in the countries covered by the report

Rank
Country

US
Switzerland
Denmark
Sweden
Singapore
Finland
Germany
Netherlands
Japan
Canada

You have to put everything in perspective and not weigh just one measure when looking at the financial health of a country.

Let's think about this in personal terms. How many people have to worry about exceeding the US$100k per account to be protected by FDIC? Not a lot I suspect.

If you do then you spread it around, keeping each under the US$100k limit.

(Yes, I know the limit is US$250k right now but it expires after 1 year.)

rb. · 10-09-2008, 09:30 AM

Quote:

Originally Posted by Ross

Rb - I do not want to upset you at this time but I doubt that the Canadian
system can be or will continue to be as robust as you suggest.

Your big neighbour is about to go in to catastrophic disintegration and the
financial and trade linkages between your two countries are very significant .

It defies all logic to suggest that the Canadian banking system will not also
end up in a broken-arsed condition .

Ross, I think (and trust me, I'm no financial expert

) that you are confusing bank stability vs. a poor economy. Yes, we will tank if the US economy tanks, subject to the purchasing power of Asia, mainly China. Yes, the US is our biggest trading partner. But we've weather downturns in the economy before, including the depression. Solid institutions will remain solid, despite economic slowdowns. It's how they're built. Would their stock drop? Sure. Their customer defaults go up? Sure. But the structure will remain.

Johnny · 10-09-2008, 09:46 AM

Good thing those Canadian banks are in such good shape because the US and Mexico are going to need the support when we all merge...

I'm only half way kidding!

(is it too early to start drinking?)

Johnny · 10-09-2008, 10:02 AM

Ottawa weighs proposals to aid banks if crisis persists

http://www.theglobeandmail.com/servl...Story/Business

sandyd · 10-09-2008, 10:10 AM

Quote:

Originally Posted by Johnny

Good thing those Canadian banks are in such good shape because the US and Mexico are going to need the support when we all merge...

I'm only half way kidding!

(is it too early to start drinking?)

Look at the advantages...

We can buy into the Canadian healthcare and can get our meds even cheaper from Mexico.

Plus think of the tequilla we can get!

rb. · 10-09-2008, 10:14 AM

Quote:

Originally Posted by Johnny

Good thing those Canadian banks are in such good shape because the US and Mexico are going to need the support when we all merge...

Merging? Didn't you get the memo? We're taking you over. Banks are buying in, canoes are on their way. Better get more of that beer.

Johnny · 10-09-2008, 10:17 AM

I want some of that Sammy Hager tequila real cheap!

To my Canadian friends I'm working on the "Eh" thing but it just doesn't go with my accent..."Eh Ya'll" get's me strange looks everywhere I go, the greeter at Walmart told me I sounded like a donkey--my wife said nope he's just an ass.

rb. · 10-09-2008, 10:19 AM

Renegade · 10-09-2008, 10:26 AM

Damn you Johnny....I'll be thinking about "Eh, y'all" all day long...

sandyd · 10-09-2008, 10:26 AM

rb. · 10-09-2008, 10:57 AM

Better than thinking about banks, Ren.

Johnny · 10-09-2008, 11:14 AM

I should send that one to Larry the Cable Guy...

MomCares · 10-09-2008, 01:51 PM

A few years ago we hedged our bets by opening a Canadian bank account.

MomCares

Sarrah · 10-09-2008, 03:58 PM

That is a good one Johnny.

I've given lessons in how to speak Canadian before. Mainly for the entertainment of my neighbours who think I don't know what it is all about.

OK, so remember to speak Canadian you have to put the "eh" as the final word in the sentence.
Johnny with his accent would say How are y'all, eh?

Now then, I explain to my close friends, such as yourselves.
I am bilingual, y'all know eh, huh?

rb. · 10-09-2008, 05:09 PM

Quote:

Originally Posted by MomCares

A few years ago we hedged our bets by opening a Canadian bank account.

MomCares

Meaning a US-held account in Cdn dollars? Or a Canadian bank account, in whatever funds? If it's in a Canadian bank, are they screwing you on the interest rate? They've been pretty low the last five years, at least.

MomCares · 10-09-2008, 06:27 PM

Quote:

Originally Posted by rb.

Meaning a US-held account in Cdn dollars? Or a Canadian bank account, in whatever funds? If it's in a Canadian bank, are they screwing you on the interest rate? They've been pretty low the last five years, at least.

It's an account in a Canadian bank, held in Canada.

The interest rate isn't great, but we hold it more as a currency hedge than as an investment. We own property in Canada and vacation there frequently (at least 6 weeks/year), plus we have permanent resident status, so it's been a good thing for us.

Worst case, it allows us to pay bills on our property in the local currency and avoid cash machine/credit card FOREX fees.

MomCares