The US has been at the heart of the financial crisis. Of total losses of $1040.7bn in the financial sector worldwide, the US accounts for more than half, at $582.6bn. Of the top 10 worst losses during the crisis, six of them are from the US. Between them, banks in the top 10 of the North American ranking have lost a staggering $473.66bn since the crisis began. In 2008, the 152 US banks present in the Top 1000 made a pre-tax loss $91,078m.
It may seem ironic, then, that the top three biggest banks in the world are from the US, and that the Top 25 banks in North America by Tier 1 capital remains remarkably stable. Four out of the five same banks as in 2008 continue to jockey for the top slot.
This year JPMorgan is at number one, courtesy of its acquisitions of Bear Stearns and Washington Mutual, which boosted its Tier 1 capital by 53%, making it almost twice as big as China's ICBC.
Bank of America may be struggling to digest its acquisition of Merrill Lynch, but the deal has increased its capital by 45%, keeping it at second place in North America and pushing it up from fifth to second globally. Wells Fargo's acquisition of Wachovia (19th in last year's global ranking) increases its capital base by a whopping 136% and propels it from 23rd globally last year to sixth, and from fifth to fourth in North America.
However, US bank size is not matched by profitability. After years of being among the leaders in terms of pre-tax profit, this year there is not one US bank in the top 10. This instead is composed of Chinese (led by ICBC and China Construction Bank), Spanish, UK and Italian banks. Only two US banks make it into the top 25: Bank of America at 22 and US Bancorp at 25.
Canadian banks are faring better, with Royal Bank of Canada the world's 10th most profitable bank by pre-tax profits, and Toronto Dominion at 24. RBC's success highlights the disparate fortunes of the US and Canada during the crisis. Canadian banks, prevented from overleveraging by their regulatory environment, have avoided the worst of the financial meltdown. On aggregate, Canada's banks generated profit on capital of 12.91%, versus the US's -2.59%.
There are, of course, two outside runners from the US in this year's Top 1000. Goldman Sachs and Morgan Stanley, which only last year became eligible for the Top 1000 by converting into bank holding companies, have shot straight into the global rankings at 13th and 17th, respectively, and into the North American ranking at fifth and sixth. But now that the worst of the crisis is passed and they seem to be out of trouble, will the two still be holding companies and in the Top 1000 next year?
Top 25 North America ($M)
North America Tier 1 capital: assets %
North America pre-tax profits: capital %
