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Measures of soundness inch upwards

Soundness levels among the world's banks are showing a slight sign of improvement, though familiar names still feature at the top of the rankings.
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Top 25 soundest capital-assets ratio; Aggregate capital assets ratio by region; Top 25 soundest bis ratio

The highest capital-to-asset ratios (CAR) in The Banker’s 2013 Top 1000 rankings have nudged upwards from last year, with even the region that was the weakest in 2012's ranking – western Europe – improving.

The CAR is a measure of soundness in the banking industry and is an inverse measure of leverage – ie, the higher the CAR, the lower the leverage. The highest CAR in the tables is yet again France’s Electro Banque, with a CAR of 95.09%. This is even higher than its 2012 figure, which also topped the CAR rankings, of 89.2%. This again was an improvement on the bank’s winning CAR figure of 88.83% in 2011.

In terms of the Bank of International Settlements (BIS) ratio, the soundest bank in the Top 1000 is the United National Corporation (UNC), a US bank that is ranked 590th in the world but has a BIS capital ratio of 70.25%. There are eight US banks in the top 25 soundest banks by the BIS ratio. UNC is joined, among others, by Franklin Resources in fifth place with a BIS capital ratio of 53.6%, and NBH Holdings Corp in sixth place with a BIS capital ratio of 52.71%.

These banks rank slightly differently when they are measured by CAR, with UNC shifting down to fourth place globally, while Franklin Resources remains in fifth when measured by the CAR.

Although the US banks feature prominently in the top 25 tables, at a regional level North America does not perform so well. The aggregate CAR for North America is 7.1% this year, which is a slight drop from last year’s figure of 7.29%. The soundness of western Europe’s banks, which still have the lowest regional aggregate CAR, only crept up by a fraction this year, with the aggregate CAR coming in at 4.45%.

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