business

Where are the world’s safest banks?

Since every country regulates its banking in its own way, financial stability varies immensely from country to country. Some places value stability more than growth, and ask more of their banks.  Others relax regulation in order to encourage the financial sector, which delivers growth at the risk of increased instability, bailouts and banking collapses. Comparing the various approaches allows us to work out how sound each country’s banks are.

Care to guess which country has the soundest banking regime?

Every year the World Economic Forum releases its global competitiveness index, and among the many factors in their calculations are soundness of banks. Here are the top ten safest from the 2010/11 report:

  1. Canada
  2. South Africa
  3. Panama
  4. Australia
  5. Singapore
  6. Chile
  7. New Zealand
  8. Finland
  9. Lebanon
  10. Hong Kong

Some surprising names there. Well done Canada. Care to guess where Britain comes in?

111th

That’s behind such financial titans as Madagascar, Ethiopia, or Cambodia. I should add that that’s 111th out of 142. Among the few worse places to do your banking are Iran, Zimbabwe, Haiti, Iceland or Ireland, which limps in last.

The US comes 90th, in case you’re wondering.

What I find most disturbing about these rankings is that you’d know that investing your millions in a Haitian bank was probably a bad idea. You’d know it wasn’t safe in Zimbabwe or a failed financial tiger like Iceland. But you’d assume that Britain was a little safer than it is.

What’s also disturbing is how fast these things can change – in the 2008 rankings Ireland was in the top ten. And that, I suppose, suggests we should take the World Economic Forum’s rankings with a pinch of salt.

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