ANNUAL SURVEY / WORLD’S BEST BANKS 2008
Now more than ever, the world’s best banks deserve recognition for continuing to provide excellent products and high levels of service to their clients, despite the distractions of the global credit crunch and financial market turmoil that continues to swirl around them.
The most successful financial institutions in the past year have been those that moved quickly to distance themselves from the fallout of the crisis, as well as those lucky enough to be located in fast-growing emerging markets remote from the epicenter.
The foundation of the global banking system remains unstable, and further aftershocks are possible, but the process of rebuilding and creating a new culture and business model is already under way. Some banks, such as Goldman Sachs, reacted quickly to the first signs of problems in the US mortgage market and changed their tack.
As British economist John Maynard Keynes said during the Depression, “When the facts change, I change my mind. What do you do, sir?”
The facts changed very quickly in the past 12 months, as triple-A-rated investments lost much of their value and credit markets seized up, pushing the US economy to the brink of recession. In Britain, the credit crunch caught Northern Rock in its vise, causing the first run on a UK bank in 150 years.
Fearing a major US bank collapse that could have brought down the entire financial system, the Federal Reserve backed the rushed rescue of Bear Stearns through a takeover by rival JPMorgan Chase. This marked the first time the Fed has bailed out a brokerage firm since the Depression.
One can only guess what the outcome might have been if sovereign wealth funds from the Middle East and Asia had been unwilling to invest billions upon billions of dollars for stakes in troubled Western financial institutions. Forced resignations of dozens of senior executives and layoffs of tens of thousands of bankers already are a reality.
Increased regulatory oversight is likely as banks go back to the basics of more carefully assessing risks while strengthening their capital positions and tightening standards for lending and investments. Some products, such as securitizations, may never come back to the levels they reached before the crisis broke in August 2007. But newer, safer and more transparent ways of doing business almost certainly will emerge.
Global Finance has identified the best banks in 118 countries, as well as the best banks globally in 10 key banking categories. We have been presenting these awards since 1997.
In selecting this year’s winners, Global Finance’s editorial team as usual considered factors that range from the objective to the informed subjective. Objective criteria included growth in assets, profitability, geographic reach, strategic relationships, new business development and product innovation. Subjective criteria included the opinions of equity and credit-rating analysts, banking consultants and others in the industry, as well as corporate financial executives.
The winners are not always the biggest banks but, rather, the best banks—those with the qualities that corporations should look for when choosing a bank. These are banks with effective risk-management systems, excellent service and good corporate governance.
Within this listing of the World’s Best Banks we have included our April 2008 list of the Best Developed Market Banks and our May 2008 list of the Best Emerging Market Banks.