Over the past year, US banks have been hit by unprecedented fines over alleged wrongdoings, ranging from the mis-selling of mortgage products to helping American citizens evade paying taxes. JPMorgan Chase’s $13bn settlement with the US Department of Justice was the most palpable example. While others have either not yet reached a settlement or decided to challenge authorities in the courts, questions have been raised over the impact of such penalties on US banking.
Philip Alexander reports on the full results of The Banker’s Top 1000 World Banks ranking 2014, in the story Top 1000 World Banks 2014: Back on track?
Judging by their Tier 1 capital, however, US banks look in good shape. Almost all names in the regional list have strengthened their capital positions – with the exception of Ally Financial. Ranking positions also remained unchanged in the top six places for the country’s giants, lead by JPMorgan’s $165.66bn Tier 1 capital, up from $160bn in the 2013 ranking.
In relative terms, the best performance was provided by Sterling Bancorp, a new entrant in the Top 1000 World Banks ranking. Tier 1 capital for the small lender that serves the New York metropolitan area rose by almost 115% to $528m in 2013. Sterling Bancorp, owner of Sterling National Bank, merged with Provident New York Bancorp, the holding company for Provident Bank, at the end of last year.
American Express tops the profitably ranking with a return on capital (ROC) of 48.77%, followed by Franklin Resources and Discover Financial Services, which boast ratios of 39.69% and 37.89%, respectively.
Royal Bank of Canada remains the highest scoring Canadian lender in the regional list – it retains its seventh position with $36.11bn in Tier 1 capital, up from $32.94bn. It also displays the best ROC figure for a Canadian bank, 28.54%, the fourth highest in the profitability table.
Since the financial crisis, Canada has been singled out as a safe, well-regulated banking market. Over recent years, however, personal debt levels in the country have reached historical highs. While this is something to watch, lenders remain confident in the soundness of the local market. The individual soundness of the country's top banks has, in fact, generally improved, with larger Tier 1 capital recorded at Scotiabank, Toronto Dominion Bank and Canadian Imperial Bank of Commerce, as well as co-operative group Desjardins.
