Regulatory strictures have forced European banks to shape up, with positive results for many.
Throughout 2018, the European banking sector continued to restructure and adopt regulatory reforms. Many institutions exhibit improved stability as a result, which resulted in rating-agency upgrades and some shifts in our Europe Top 50 rankings.
Banks near the top of the 50 Safest European Banks rankings remain largely unchanged. However, improved credit fundamentals for a number of institutions brought on rating agency upgrades that are reflected in our 2018 rankings.
Strongly rated Swedish banks Swedbank and SEB rose to 15th and 19th, respectively, following upgrades from Moody’s Investors Service. Moody’s also upgraded BNP Paribas and Societe Generale in France after the banks each announced plans to issue around €10 billion ($11.5 billion) in debt to increase loss-absorbing capacity. Consequently, BNP rose to 27th and Societe Generale rose to 35th. Also, Groupe BPCE and banking subsidiary Natixis rose five spots each following upgrades, also from Moody’s.
Some European banks have made progress shifting their balance sheets to reduce problem loans and initiated strategies to increase profitability. Their improved risk profiles, in many cases, have been the result of regulatory requirements that have improved bank funding and boosted capitalization.
In response to the EU’s Bank Recovery and Resolution Directive, for example, banks have implemented plans involving the issuance of subordinated debt that complies with a minimum threshold that could be converted to equity or written down—providing greater loss protection to senior creditors in a stress scenario. Compliance is required beginning in January 2019. Certain jurisdictions are taking additional steps to improve the resilience of the banking sector, and regulatory stress tests examining a range of factors under adverse scenarios continue to contribute to the sector’s improved operational and financial profile.
German banks are well represented, with seven entities among the European Safest 50. The German banking sector is highly fragmented, with hundreds of small retail banks. For example, DZ bank is the central institution for the Genossenschaftliche Finanzgruppe, which includes Volksbanken and Raiffeisenbanken; while Sparkassen-Finanzgruppe is the central institution for the Landesbanken and Sparkassen. Among the Swiss banks, UBS rose to 22nd following an upgrade by Fitch. The bank continues to restructure its operations, particularly its investment bank, to achieve greater earnings stability.
UK banks HSBC Holdings and Standard Chartered face many challenges, particularly with achieving revenue growth and implementing cost efficiencies, illustrating the difficulty of managing large global franchises. Restructuring continues as the Bank of England has demanded that large banking groups ring-fence their retail operations through the creation of new bank subsidiaries. Furthermore, the impact of Brexit—particularly a “hard” Brexit—could constrain profitability. Downgrades from Moody’s sent both HSBC and Standard Chartered down in the rankings, with HSBC falling three spots. Standard Chartered was also impacted by a clarification regarding holding company versus lead bank (see methodology for details), falling to 43rd.
Last year, a score of 12.5 was enough to get on the list of the European Safest 50. This year, due to upgrades, the required point threshold rose to 14 points. Consequently, KBC Group, Belfius Bank, Nykredit Realkredit and La Banque Postale missed the cut; while ING Bank Slaski in Poland benefited from a Moody’s upgrade, earning a place at 48th.
|
Europe’s Top 50 Safest Banks |
|---|
|
Rank |
Company Name |
Country |
Fitch |
Moody’s |
S&P |
Total Score |
Assets ($ Mil.) |
Statement Date |
|
1 |
KfW |
Germany |
AAA |
Aaa |
AAA |
30 |
566,486 |
31-Dec-2017 |
|
2 |
Zuercher Kantonalbank |
Switzerland |
AAA |
Aaa |
AAA |
30 |
167,945 |
31-Dec-2017 |
|
3 |
Landwirtschaftliche Rentenbank |
Germany |
AAA |
Aaa |
AAA |
30 |
108,711 |
31-Dec-2017 |
|
4 |
L-Bank |
Germany |
AAA |
Aaa |
AAA |
30 |
84,640 |
31-Dec-2017 |
|
5 |
BNG Bank N.V. |
Netherlands |
AA+ |
Aaa |
AAA |
29 |
167,932 |
31-Dec-2017 |
|
6 |
Nederlandse Waterschapsbank |
Netherlands |
NR |
Aaa |
AAA |
29 |
101,924 |
30-Jun-2017 |
|
7 |
Kommunalbanken |
Norway |
NR |
Aaa |
AAA |
29 |
47,738 |
31-Dec-2017 |
|
8 |
NRW.BANK |
Germany |
AAA |
Aa1 |
AA— |
26 |
175,242 |
31-Dec-2017 |
|
9 |
Banque et Caisse d’Epargne de L’Etat |
Luxembourg |
NR |
Aa2 |
AA+ |
24.5 |
54,305 |
31-Dec-2017 |
|
10 |
Caisse Des Depots et Consignations |
France |
AA |
Aa2 |
AA |
24 |
207,623 |
31-Dec-2017 |
|
11 |
DZ BANK Deutsche Zentral-Genossenschaftsbank |
Germany |
AA— |
Aa1 |
AA— |
23 |
606,359 |
31-Dec-2017 |
|
12 |
Svanska Handelsbanken |
Sweden |
AA |
Aa2 |
AA— |
23 |
336,116 |
31-Dec-2017 |
|
13 |
Deutsche Apotheker- und Aerztebank |
Germany |
AA— |
Aa1 |
AA— |
23 |
49,583 |
31-Dec-2017 |
|
14 |
Banque Cantonale Vaudoise |
Switzerland |
NR |
Aa2 |
AA |
23 |
46,602 |
31-Dec-2017 |
|
15 |
Swedbank |
Sweden |
AA— |
Aa2 |
AA— |
22 |
268,778 |
31-Dec-2017 |
|
16 |
SFIL |
France |
AA— |
Aa3 |
AA |
22 |
71,010 |
31-Dec-2017 |
|
17 |
Banque Pictet & Cie |
Switzerland |
AA— |
Aa2 |
NR |
21.5 |
29,711 |
31-Dec-2016 |
|
18 |
Nordea Bank |
Sweden |
AA— |
Aa3 |
AA— |
21 |
697,527 |
31-Dec-2017 |
|
19 |
SEB |
Sweden |
AA— |
Aa2 |
A+ |
21 |
310,925 |
31-Dec-2017 |
|
20 |
HSBC France |
France |
AA— |
Aa3 |
AA— |
21 |
200,935 |
31-Dec-2017 |
|
21 |
Sparkassen-Finanzgruppe (Sparkassen) |
Germany |
A+ |
Aa2 |
NR |
20 |
1,235,669 |
31-Dec-2017 |
|
22 |
UBS |
Switzerland |
AA— |
Aa3 |
A+ |
20 |
939,089 |
31-Dec-2017 |
|
23 |
Rabobank |
Netherlands |
AA— |
Aa3 |
A+ |
20 |
723,167 |
31-Dec-2017 |
|
24 |
DNB Bank |
Norway |
NR |
Aa2 |
A+ |
20 |
326,832 |
31-Dec-2017 |
|
25 |
OP Corporate Bank |
Finland |
NR |
Aa3 |
AA— |
20 |
73,635 |
31-Dec-2017 |
|
26 |
LGT Bank |
Liechtenstein |
NR |
Aa3 |
A+ |
18.5 |
42,708 |
31-Dec-2017 |
|
27 |
BNP Paribas |
France |
A+ |
Aa3 |
A |
18 |
2,350,929 |
31-Dec-2017 |
|
28 |
Banque Federative du Credit Mutuel (BCFM) |
France |
A+ |
Aa3 |
A |
18 |
742,605 |
31-Dec-2017 |
|
29 |
HSBC Holdings |
United Kingdom |
AA— |
A2 |
A |
17 |
2,521,771 |
31-Dec-2017 |
|
30 |
Credit Agricole |
France |
A+ |
A1 |
A |
17 |
2,114,568 |
31-Dec-2017 |
|
31 |
ABN AMRO Bank |
Netherlands |
A+ |
A1 |
A |
17 |
471,530 |
31-Dec-2017 |
|
32 |
BNP Paribas Fortis |
Belgium |
A+ |
A1 |
A |
17 |
331,311 |
31-Dec-2017 |
|
33 |
Nationwide Building Society |
United Kingdom |
A |
Aa3 |
A |
17 |
305,263 |
30-Sep-2017 |
|
34 |
BGL BNP Paribas |
Luxembourg |
A+ |
A1 |
A |
17 |
59,522 |
31-Dec-2017 |
|
35 |
Societe Generale |
France |
A |
A1 |
A |
16 |
1,529,261 |
31-Dec-2017 |
|
36 |
Groupe BPCE |
France |
A |
A1 |
A |
16 |
1,510938 |
31-Dec-2017 |
|
37 |
Natixis |
France |
A |
A1 |
A |
16 |
623,620 |
31-Dec-2017 |
|
38 |
Danske Bank |
Denmark |
A |
A1 |
A |
16 |
570,183 |
31-Dec-2017 |
|
39 |
SBAB Bank |
Sweden |
NR |
A1 |
A |
15.5 |
50,793 |
31-Dec-2017 |
|
40 |
Lansforsakringar Bank |
Sweden |
NR |
A1 |
A |
15.5 |
38,381 |
31-Dec-2017 |
|
41 |
EFG Bank |
Switzerland |
A |
A1 |
NR |
15.5 |
30,971 |
31-Dec-2017 |
|
42 |
Banco Santander |
Spain |
A— |
A2 |
A |
14 |
1,732,154 |
31-Dec-2017 |
|
43 |
Standard Chartered |
United Kingdom |
A+ |
A2 |
BBB+ |
14 |
663,752 |
31-Dec-2017 |
|
44 |
Erste Group Bank |
Austria |
A— |
A2 |
A |
14 |
264,637 |
31-Dec-2017 |
|
45 |
Ceska Sporitelna |
Czech Republic |
A— |
A2 |
A |
14 |
62,431 |
31-Dec-2017 |
|
46 |
Coventry Building Society |
United Kingdom |
A |
A2 |
NR |
14 |
57,522 |
31-Dec-2017 |
|
47 |
Komercni Banka |
Czech Republic |
A— |
A2 |
A |
14 |
47,158 |
31-Dec-2017 |
|
48 |
ING Bank Slaski |
Poland |
A |
A2 |
NR |
14 |
36,197 |
31-Dec-2017 |
|
49 |
SpareBank 1 SR-Bank |
Norway |
A— |
A1 |
NR |
14 |
26,401 |
31-Dec-2017 |
|
50 |
Banque Palatine |
France |
A |
A2 |
NR |
14 |
17,711 |
31-Dec-2017 |
|
Asset figures from Fitch, Moody’s, and company reports. Ratings valid as of Aug. 17, 2018. |
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