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Best-performing banksAugust 31 2008

UK players maintain sizeable advantage

UK banks may have taken significant hits on their profit and loss accounts as a result of the subprime crisis, but they have also strengthened their capital and balance sheets significantly.
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Expanding UK banks, following Royal Bank of Scotland’s (RBS’s) joint acquisition of Dutch giant ABN AMRO in 2007, are taking an increasing slice of the Top 300 European (EU 27) banks market. Based on mostly end-2007 figures, the 25 UK banks in the Top 300 European (EU 27) listing, headed by HSBC Holdings and Royal Bank of Scotland, accounted for 22.5% of the aggregate Tier 1 capital total of $1653.5bn, well ahead of Germany’s 89 banks with 15.3% of the total.

And among the larger banks, UK banks are becoming increasingly dominant. The top 10 banks in the Top 300 account for $613.8bn in Tier 1 capital or 37.1% of the aggregate listing total, but the four UK banks in the Top 10 – HSBC (1), RBS (2), Barclays Bank (6) and HBOS (7) – accounted for almost $300bn in Tier 1 capital or 48.5% of the Top 10 aggregate total of $613.8bn.

With RBS’s capital expanding by 47.7%, HSBC’s by 19.5% and Barclays’ by 19.1%, the UK banks may have taken significant hits on their profit and loss accounts as a result of the subprime crisis and the credit crunch, but they have also strengthened their capital and balance sheets significantly.

RBS’s asset base expanded dramatically in 2007, rising by 118.1% to $3808bn, making it not only the largest bank (in asset terms) in Europe (EU27), but also in the world, by a considerable margin. In assets, UK banks (RBS, HSBC and Barclays) account for three of the top five banks and with HBOS, four of the top 10 players.

Besides RBS, Belgium’s Fortis Bank rocketed up the listings with capital up 51.9% to $37.8bn and 12th place (from 21st in last year’s Top 300 European, including Switzerland). Fortis’ aggressive CEO, Jean-Paul Votron, however, paid the price for perhaps too much expansion when shareholders forced him out in July this year. Deutsche Bank, similarly, saw assets rise 79.4% last year to reach $2974bn, the second largest bank in the world in asset terms after RBS.

France, led by the Crédit Agricole Group (third) and BNP Paribas (fifth) along with eight other French banks, accounted for 15% of the Tier 1 total, following the 25 UK banks and 89 banks from Germany. In country terms, Spain’s 46 banks in the listing came fourth with 12.7% of the aggregate capital while Italy’s 31 banks came fifth with 8.5% of the total. Despite the takeover of ABN AMRO, the Benelux banks maintained their share of the market with 17 banks from the three countries accounting for 10.8% of aggregate capital.

While the 19 smaller countries in the EU 27 provide 82 banks in the Top 300, together they only account for 15.2% of total capital, led by the 23 Scandinavian banks from Denmark, Finland and Sweden with 5.7% of the total aggregate and 16 Austrian banks with 2.3% of the total.

Category breakdowns

Having analysed the data in the Top 300, The Banker has produced the top 25 banks in the listing in these three particular categories:

  • Best profit on capital. This ratio shows the most profitable institutions and is led by France’s Compagnie Financière E. de ­Rothschild, with a profitability ratio of 58.66%. It also includes Hungary’s OTP Bank (41.54%), Deutsche Bank (30.89%) and Italy’s UniCredit (28.78%).
  • Best profit on assets. This profitability measure is led by Hungary’s General Banking and Trust Co (10.42%) and includes the Czech Republic’s GE Money Bank (5.18%), Belgium’s Euroclear Bank (2.44%) and Poland’s Bank Handlowy (2.31%), which all proved very profitable.
  • Soundest capital assets ratio. This ratio compares the level of Tier 1 capital with the level of total assets, assessing the bank’s capital adequacy. This ratio is led by France’s Electro Banque (85.71%), and includes the UK’s Sabanci Bank (16.78%), as well as the UK’s ABC International Bank (14.19%) and Austria’s Volkskreditbank (11.08%).
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Tier 1 capital (%) and Where they come from

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