Canada rated world's soundest bank system

Boxcar

Boxcar

New Member
Oct 19, 2006
20
1
3
4 hours ago - Reuters
By Rob Taylor
CANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.
But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.
The United States, where some of Wall Street's biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.
The United States was on Thursday considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.
The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).
Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).
UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).
The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.
The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF's banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.
Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.
At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).
RANKINGS
1. Canada
2. Sweden
3. Luxembourg
4. Australia
5. Denmark
6. Netherlands
7. Belgium
8. New Zealand
9. Ireland
10. Malta 11. Hong Kong
12. Finland
13. Singapore
14. Norway
15. South Africa
16. Switzerland
17. Namibia
18. Chile
19. France
20. Spain
--------------------------------------------
124. Kazakhstan
125. Cambodia
126. Burundi
127. Chad
128. Ethiopia
129. Argentina
130. East Timor
131. Kyrgyz Republic
132. Lesotho
133. Libya
134. Algeria
SOURCE: World Economic Forum Global Competitiveness Report 2008-2009.
(For the full World Economic Forum report click on: http://www.weforum.org/GCR0809_Browser )
 
A

Avro

Time Out
Feb 12, 2007
7,815
65
48
54
Oshawa
Gee whiz, I don't see China on that list.

We're #1:canada:

 
darkbeaver

darkbeaver

the universe is electric
Jan 26, 2006
41,035
201
63
RR1 Distopia 666 Discordia
Sound banks! That's wonderfull now we can all relax and order the new carpet for the cottage. What flipping difference does sound banks make when there is systemic meltdown in the very economic system of the planet? A sound banking system does not make for a sound political or economic future, it only means the banks will prosper even when you don't or even because you don't. You can't have the banks and the people prosperous at the same time, that's elementry Wattsun.:smile:
 
darkbeaver

darkbeaver

the universe is electric
Jan 26, 2006
41,035
201
63
RR1 Distopia 666 Discordia
Oct 20, 2008
Islamic banking escapes fallout
KUALA LUMPUR - ISLAMIC banking has largely escaped the fallout from the global financial crisis, thanks to rules that forbid the sort of risky business that is felling mainstream institutions. But experts say that because of its heavy reliance on property investments and private equity, the booming 1.0 trillion dollar global industry could be hit if the turmoil worsens and real assets start to crumble.
'In the current financial turmoil, it is interesting to note that Islamic financing may have prevented a majority of the mess created by the conventional banking and financial institutions,' Kuwait Finance House said in a report.
'The outlook for Islamic financing is bright and will likely take the lead in terms of providing funding for major projects as the conventional banking system reevaluates its business model.'
The rules of Islamic banking and finance - which incorporate principles of sharia or Islamic law - read like a how-to guide on avoiding the kind of disaster that is currently gripping world markets.
Islamic law prohibits the payment and collection of interest, which is seen as a form of gambling, so highly complex instruments such as derivatives and other creative accounting practices are banned.
Transactions must be backed by real assets - not shady repackaged subprime mortgages - and because risk is shared between the bank and the depositor there is an incentive for the institutions to ensure the deal is sound.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.
'Islamic banking has, thus far, remained positive, despite the current challenging global financial environment,' said Mr Zeti Akhtar Aziz, the central bank governor of Malaysia, which is Southeast Asia's leader in Islamic banking.
Mr Zeti said this month that because of the slowing global economy, plans for Islamic 'sukuk' bonds had been postponed or scrapped by companies including Kuwait's Abyaar Real Estate Development and Malaysia's Perisai Petroleum.
And Ms Jennifer Chang, a partner at Pricewaterhouse Coopers in the Malaysian capital Kuala Lumpur, said that given the extent of the global crisis, Islamic banks may suffer damage despite their strong position.
'Islamic banks, especially in the Middle East, got heavily into private equity and real estate investments, and a lot of loans may be backed by properties. So if the property market goes down, there will be an impact,' she said.
'If a borrower is not able to pay then the bank will foreclose and the question is - can you sell the property in the market and at what value? These are issues which all banks can face.'
There have been calls for the conventional banking industry to take a leaf out of the book of Islamic finance, which also shuns investments in gaming, alcohol and pornography in favour of ethical investments.
Influential Sunni cleric Sheikh Yusuf al-Qaradawi earlier this month called on Muslims to take advantage of the turmoil to build an economic system compatible with Islamic principles.
'The collapse of the capitalist system based on usury and paper and not on goods traded on the market is proof that it is in crisis and shows that Islamic economic philosophy is holding up,' said the Egyptian-born, Qatar-based cleric.
In recent years the sector has broken out of its niche and been embraced by mainstream banks. As well as basic bank deposits and investment accounts, it has expanded into areas including equity funds, bonds and Islamic hedge funds.
Mr Abhishek Kumar, a senior research analyst at Financial Insights, a company under market research and analysis firm International Data Corp (IDC), said recent events may further boost the sector.
'More and more institutions will be interested in providing Islamic services to diversify their risk portfolio,' he said, while warning that in the current financial storm there were no absolutely safe harbours.
'We're not really sure what the real extent of the impact is, and whether we've passed the worst of it or not, But the extent is not going to be as bad as in the mainstream sector,' he said. -- AFP
 
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