Global Finance Magazine is being very very ambitious. Global Finance, which claims to have a readership of 180,000 readers including “chairmen, presidents, CEOs, CFOs, treasurers, and other financial officers” and “8,000 key portfolio investors who control over 80% of all
assets under professional management” has released its 17th annual list of the most creditworthy banks in the world.
Unfortunately, I don’t think they’ve ever had to rate banks in an environment like this. I can’t quite figure out what a safe bank in these circumstances is or if there even are 50 safe banks in the world!
Ratings Agencies
The ratings are based on long-term credit raitngs from agencies like Moody’s, Standard & Poors and Fitch, and on the total assets of the banks themselves. These ratings agencies, however, are the same ones that assigned investment grade ratings to bunches of completely sub-prime real estate CDOs (Collateralized Debt Obligations - basically when a home loan made by a bank to a sub-prime customer, and is then bundled with a higher quality loan, made to a prime customer, is sold as a bunch to a buyer. This process is called securtization, and the loan itself is a collateralized debt).
Selling low grade CDOs with high ratings for great returns is what got us into this whole mess in the first place.
The List
The list includes some of the bigger casualties of the crisis like UBS and Credit Suisse. Both these banks are still under severe pressure and are constantly rumored to be breaking up, or worse, going under. The list in all it’s glory is after the break.
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