Stars Of China: Banks Span The Spectrum

This year’s ranking of Chinese banks includes all 21 Chinese banks that have a rating from one of the three large, international rating agencies. In principle, the only criterion for inclusion, apart from having one or more rating, was that the bank be among the biggest 1,000 in the world. In practice, all the banks fall within the biggest 200. No Chinese bank of smaller size has a rating from any of the three big agencies.

In terms of rating strength, the banks fall into three broad categories. Highly rated banks, with ratings in the single- or double-A range, are included in Global Finance’s Safest Banks rankings. China Development Bank, Agricultural Development Bank of China and China Export-Import Bank are all included in the Global 50 Safest. The next five are included in the Safest Emerging Markets Banks ranking.

The second category comprises seven banks that have investment-grade ratings in the BBB range—not enough to find places in the Safest Emerging Markets Banks ranking, but good ratings nonetheless.

The third category comprises banks with sub-investment-grade ratings, albeit sometimes leavened by another that is investment-grade. No bank holds a rating lower than BB+, which is quite a high rating in the broader context of emerging markets banks.

The striking feature of this listing is how few banks it contains. Chinese banks account for about 100 of the biggest 1,000 banks in the world, yet only 21 of these have ratings from the three big international rating agencies.

METHODOLOGY: The scoring methodology used by Global Finance to rank the Safest Chinese Banks follows that used in its other Safest Banks rankings. A rating of AAA is assigned a score of 10 points, AA+ receives a score of nine points, down to BBB- which scores one point and BB+ which scores -1 point, and so on. When a bank has only two ratings, an implied score for the third rating is calculated by taking the average of the other two and deducting one point. When a bank has only one rating, an implied score for the second rating is calculated by deducting one point from the actual rating, and an implied score for the third rating is calculated by deducting two points from the actual rating.