Banks are an integral part of the global financial system. They play an important role in our lives, and their resilience provides strength to the economy. Many of the world’s largest banks by assets are either Chinese or American. And if you ask people around you what banks are the safest in the world, there is a good chance they will name an American bank. But the US banks are not as safe as those in European countries. Here we take a look at the top 10 safest banks in the world.
Since the 2008-09 financial crisis, regulators and banks have taken a number of steps including Basel III and the IFRS 9 to improve the stability of the banking sector. However, the global economic conditions are still unstable. The US-China trade war, slow global economic growth, and geopolitical risks are some of the reasons behind the current economic uncertainty.
The ranking below is based on the Global Finance magazine’s annual report on the World’s Safest Banks. For close to three decades, the Global Finance magazine has been ranking banks with the greatest stability.
To compile the ranking, the magazine selects 500 largest banks in the world by assets. It then evaluates them based on their long-term foreign currency ratings provided by Fitch, Moody’s, and Standard & Poor’s. It didn’t include banks that were fully owned by other banks. Wherever possible, the magazine used ratings on holding companies instead of the operating companies.
Ranked: The safest banks in the world
All of the top 10 safest banks in the world are based in Europe. What’s more, European banks occupy 17 of the top 25 positions.
10- Banque et Caisse d’Épargne de l’État, Luxembourg
Headquartered in Luxembourg, BCEE aka Spuerkeess is the third largest bank in Luxembourg by assets. It has $52.5 billion in assets. Founded in 1856, BCEE initially served as a savings bank. It became a full-service banking institution in 1944. The state of Luxembourg is the sole owner of the bank. It has 1,800 employees.
9- Swedish Export Credit Corp, Sweden
Owned by the Swedish government, the Swedish Export Credit Corporation aka SEK is a new entry in the top 10. It was established in 1962 to provide credit and other financial solutions to Swedish exporters. SEK has only 240 employees, but $31.6 billion in assets. It also provides financing to foreign buyers of Swedish products and services.
8- NRW.Bank, Germany
Though it’s relatively new, NRW.Bank is among the world’s safest banks with a high financial stability. Established in 2002, it is owned by the German state of North Rhine-Westphalia. It’s a development bank supporting the structural policies of North Rhine-Westphalia. It has $169 billion in assets and about 1,500 employees. The bank has its headquarters in both Dusseldorf and Munster. In the past, NRW.Bank has received strong criticism for using Credit Default Swaps (CDS).
7- Kommunalbanken, Norway
Kommunalbanken doesn’t carry a Fitch rating. It’s rated Aaa and AAA by Moody’s and S&P, respectively. Kommunalbanken has $48.5 billion in assets, and fewer than 100 employees. Headquartered in Oslo, it is wholly owned by the Norwegian government. It provides low-cost financing to government authorities at municipal, county, and local levels.
6- Nederlandse Waterschapsbank, The Netherlands
The Netherlands’ NWB Bank is the sixth safest bank in the world. It was founded in 1954 to provide funding to water boards and local government authorities. It doesn’t provide banking or other financial services to individuals or companies. The NWB Bank has Aaa and AAA ratings from Moody’s and S&P. It doesn’t have a Fitch rating. It has $85.6 billion in assets.
5- L-Bank, Germany
L-Bank has $79.6 billion in assets. Headquartered in Karlsruhe, L-Bank is the state development agency of the German state Baden-Württemberg. It provides financing to small and medium-sized businesses in the region. It also works with other commercial banks to provide funding for infrastructure projects.
4- Landwirtschaftliche Rentenbank, Germany
As many as four of the world’s ten safest banks are German. It has AAA/Aaa rating from all three rating agencies. Founded in 1949, Rentenbank provides low-cost financing to rural and agricultural businesses. Rentenbank has $103 billion in assets. German government acts as a guarantor for the liabilities of Rentenbank.
3- BNG Bank, The Netherlands
Founded in 1914, BNG Bank provides financing exclusively to public or semi-public organizations such as municipalities, public housing, and provinces. The Hague-based bank doesn’t provide financing to private customers. It jumped two spots to become the third safest bank in 2019. The Dutch state owns 50% stake in the company. Municipal and provincial authorities own the other 50%.
2- Zuercher Kantonalbank, Switzerland
The Zurich Cantonal Bank is wholly-owned by the Canton of Zurich. Founded in 1870, it provides private lending, mortgages, investment, and pension services in the Greater Zurich area. The bank operates independently under the public law. It has a staggering $172.6 billion in assets. The Canton of Zurich acts as a guarantor for the bank’s liabilities.
1- KfW, Germany
Frankfurt-based KfW retains the title of the world’s safest bank for the 9th consecutive year. Established in 1948, KfW is a state-owned development bank with $556 billion in assets. KfW is exempted from having to pay corporate taxes. It enables the bank to offer loans at lower rates than commercial banks. It has a number of subsidiaries including KfW IPEX-Bank, KfW Förderbank, and KfW Mittelstandsbank. The bank also owns shares of several corporations on behalf of the German government.