Tuesday, June 30, 2009

Top 1000 World Banks 2009

  
Dow Jones Newswires, Monica Gutschi, 30 June 2009

Canada's biggest banks may have been rated the world's soundest by the World Economic Forum, but they are still relatively small by global standards.

Not one of the country's leading lenders cracked the Top 25 in The Banker's 2009 survey released Tuesday. The list was led by JP Morgan Chase & Co., which moved up from number four last year.

Royal Bank of Canada came in at number 34, while Bank of Nova Scotia was 40, Toronto-Dominion Bank was 46, Bank of Montreal was 52 and Canadian Imperial Bank of Commerce was 71.

However, two of the banks were included in the Top 25 of largest profits, with Royal Bank ranking 10th and TD Bank at number 24. That list was led by Industrial and Commercial Bank of China, which moved up from number eight last year.

And CIBC fell into the list of Top 25 Largest Losses, at number 15. That list was led by Royal Bank of Scotland, with losses of $59.3 billion.

The Banker, a part of the Financial Times Group, will include the full list in its July edition.

The Top 1000 list has been published since the 1970s and ranks global banks by their capital strength. In a press release, the publication said the survery showed that the world's Top 1000 banks have had "an abysmal year."

It noted system profits fell 85.3% to $115 billion from $780.8 billion, as return on equity dropped to 2.69% from 20%.

The Banker: Top 1000 World Banks 2009.
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Financial Post, Theresa Tedesco, 24 June 2009

Canada's vaunted conservative banking culture offers its financial institutions a competitive advantage during economic downturns, but the edge they now enjoy over their global counterparts will likely disappear in about a year, says a top U.S. banker.

Robert P. Kelly, chairman and chief executive of Bank of New York Mellon, told a Toronto audience Wednesday that Canadians "should be proud" of their financial system because the "hard-core reality is that it's a system that works."

However, the 56-year-old head of the fifth-largest bank in the United States with total assets of US$220-billion, cautioned that while Canadian banks have "a huge competitive advantage right now, you have a window that'll probably last 12 to 18 months."

Mr. Kelly's comments were made during a two-hour panel discussion moderated by John Manley, former deputy prime minister, on how Canada and the United States are managing their financial systems in response to the current credit crisis.

Rick Waugh, CEO of the Bank of Nova Scotia, was the other panelist on the panel, sponsored by the Canada Institute of the Woodrow Wilson International Center.

Mr. Waugh told the blue-chip Bay Street audience that the "Canada brand has never been better," and acknowledged that it was a good time for the banks to take advantage of the country's favourable international reputation.

"The American model is broken and the whole world knows that," he said. "The doors are as wide open as I've ever seen. This crisis has created an opportunity and we have a leg up on the Americans."

Mr. Kelly cited three main reasons for the success of Canada's banks during the recent financial meltdown. He pointed to the "mess" in the US$18-trillion mortgage market south of the border, securitization markets that went "out of control," and a "mature, well-run and well-managed financial system" in Canada that does not exist in the United States.

For example, Mr. Kelly, a former vice-chairman at Toronto-Dominion Bank, said the United States does not have a national banking system, and while the regulatory reform package proposed by President Barack Obama last week is "largely a good thing," it still doesn't go far enough to consolidate the number of regulators and players in the industry.

For his part, Mr. Waugh credited Canada's system of "checks and balances" and "good governance" in the public and private sectors.

The head of Scotiabank, the third-largest in Canada by market capital, cited the macroeconomic policies of the Bank of Canada and regulatory oversight of the Office of the Superintendent of Financial Institutions, as well as "good management" practices inside the executive offices of the banks, especially prudent risk and capital management practises, as reasons for the stable financial sector.

"The back-up systems are working even though they may be far from perfect, they are working," he told the crowd of about 125 people. "There was not one regulation that said, ‘Don't invest in subprime and don't invest in toxic assets,' and yet no financial institution here got in over their heads."

Still, Mr. Waugh predicted that shareholders will have to recalibrate their expectations because there is still a lot of deleveraging to occur.

"We are resetting a new norm. That means a lower level of absolute profitability, lower level of savings and growth rates," he warned.

While Mr. Kelly is the latest to heap praise on Canada's financial system – he joins President Obama and the Geneva-based World Economic Forum – he seemed to caution against smugness.

"Canadians are more conservative by nature and that's a competitive advantage in a downturn but it's not a competitive advantage when things are good," he said.

"Over time, don't bet against the U.S.," Mr. Kelly warned, saying there is no greater growth system than U.S. capitalism because it encourages innovation, risk-taking and the rise of the best people to the top of organizations.

"A lot of bad things have happened with the U.S. capitalist system," Mr. Kelly said. "It's good to learn from its mistakes, but what's really hard is to implement the good aspects. Canada is very well-positioned."
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