As banks continue to adjust to increasingly unstable political environments, large-scale trade wars and, perhaps most importantly, post-financial crisis regulation, it is diligent to know which financial institutions remain secure in 2019.
For over 20 years, the authority on the world's safest banks has been Global Finance Magazine, with many of the same institutions consistently retaining their place on the list. The top-performing organisations are usually selected from 500 of the largest banks in the world, with the magazine taking into account their long-term foreign currency ratings as provided by S&P, Moody's and Fitch.
Based on these ratings, each bank is then accorded a score where ten points represent an AAA rating, nine points for AA+ and so on. Those banks owned by government import-export finance companies and other banks are never included in the ranking.
So, without further ado, here are the 10 safest banks in the world.
10. Caisse des Dépôts et Consignations (France)
The Caisse des Dépôts et Consignations (CDC) – also known simply as Deposit – is a public financial institution established in 1816. Headquartered in Paris, it is currently under the control of the French Parliament.
The CDC is commonly referred to as the investment arm of the French state and is, according to the French monetary and financial code, defined as a public group that serves the interest of the public, as well as a long-term investor.
9. Banque et Caisse d'Épargne de l'État (Luxembourg)
Founded in 1856, the Banque et Caisse d'Épargne de l'État (BCEE) (or Spuerkeess, as it is known in its native language) is a commercial bank founded and owned by the Luxembourgish government. Initially, it was incorporated as a savings bank, although over time, it expanded its competencies, undergoing a transformation by Grand-Ducal Decree to become a full-service banking institution in 1944.
Today, it performs all the functions associated with a commercial bank, including private and retail banking. Its total assets are just over €46bn ($51.2bn), making it one of the largest financial institutions in Luxembourg.
8. NRW.BANK (Germany)
Incorporated as NRW.BANK in 2002, this financial institution is known as the development bank of North Rhine-Westphalia and has headquarters in both Münster and Dusseldorf.
Legally, it operates as a public institution and is owned by the state of North Rhine-Westphalia. NRW.BANK offers structural support to the state's economic and political projects, and, despite strong criticism for its use of Credit Default Swaps (CDSs) (thought to be safe but actually illegal), the bank retains a top 10 spot on this list.
7. Kommunalbanken (Norway)
Based in the Norwegian capital Oslo, Kommunalbanken Norway (KBN) was initially founded in 1927 under the guise of its legal predecessor, Norges Kommunalbank, before establishing its current structure in 1999. It is wholly owned by the Norwegian government on behalf of the King of Norway.
Traditionally the country's leading credit provider for the local government sector, KBN is mandated to provide low-cost funding to Norwegian provincial authorities, as well as promote competition in the market. It is strictly regulated and lends only to Norwegian governmental authorities (at local, county and inter-municipal level), with total reported assets of around NOK457.7bn ($51bn).
6. Nederlandse Waterschapsbank (The Netherlands)
Formed in 1954, the Nederlandse Waterschapsbank (NWB) is a Dutch bank that, as its name suggests, initially specialised in providing financial solutions to provincial water boards within the Netherlands. More recently it has extended its services to other Dutch government departments and provincial authorities, such as public housing, education and environmental projects.
It is owned by a diverse array of Dutch government entities and, although it is a registered banking institution, extends its services only to the Dutch government – not to individuals or privately-owned organisations.
5. Bank Nederlandse Gemeenten (The Netherlands)
Another Dutch bank, Bank Nederlandse Gemeenten (BNG) was established in 1914 in The Hague as the Gemeentelijke Credietbank (Municipal Credit Bureau), before undergoing name changes in 1922 and again in the 1990s. It currently acts as both a bank and a Local Government Funding Agency.
Like NWB, BNG does not offer financing services to privately owned organisations; instead, it works exclusively with public or semi-public companies, such as provincial authorities, public housing agencies, public utilities providers and municipalities. When ranked using assets alone, it is one of the leading banks in the Netherlands, with 50% of the shareholding belonging to the Dutch state and the remainder belonging to provincial and municipal authorities.
4. L-Bank (Germany)
Built upon the promotional part of the former Landeskreditbank Baden-Württemberg, the L-Bank is officially the State Development Agency of the southern German state of Baden-Württemberg (who also act as the bank's guarantor). It is responsible primarily for the development of small and medium enterprises in that region.
Founded in 1998 and headquartered in Karlsruhe, it also provides financing solutions for construction and infrastructure projects, working with (rather than against) other commercial and savings banks in the area. It has also financed several technology hubs in Stuttgart, Mannheim and Tübingen.
The L-Bank is also noted for its valuable collection of antique instruments, as well as a winery in Karlsruhe and the Schloss Maurach, a Baroque castle in Birnau; indeed, its total assets as of January 2019 amounted to just under €70bn ($78.5bn).
3. Landwirtschaftliche Rentenbank (Germany)
Founded in 1949, the Landwirtschaftliche Rentenbank is renowned for providing low-interest loans to Germany's agricultural business enterprises and organisations, as well as its associated industries. As an indicator of its importance, it is protected by the German state through Anstaltslast, with the government acting as its guarantor.
It raises the majority of its funding through international capital markets, which is then invested into private businesses in the aforementioned agricultural sector (particularly those involved in organic and renewable energy projects), as well as in public projects in rural areas. It has also invested heavily in the German food industry.
As of 2019, the bank is under the supervision of Federal Financial Supervisory Authority and the German Central Bank (Deutsche Bundesbank), with assets of just over €90bn ($99.9bn).
2. Zürcher Kantonalbank (Switzerland)
Specialising primarily in mortgages, private lending, investment and pensions, the Zürcher Kantonalbank (ZKB) is one of the largest banks in Switzerland. It is owned by (and guaranteed against) the canton of Zurich, with the cantonal council supervising the bank's activities. Therefore, it operates independently under public law.
A mainstay of the Swiss banking industry (it has been in continuous operation since 1870), ZKB holds total assets of nearly CHF170bn ($173bn), making it the largest cantonal bank in the country.
1. KfW (Germany)
Established in 1948 under Marshall Plan funding, KfW is a state-owned development bank and is one of Germany's most significant.
It hosts several subsidiaries and group units, the largest of which is KfW Förderbank, the bank's promotional group, which provides financing for housing, environmental projects and, more recently, student loans. It also owns a funding group for small and medium enterprise businesses (KfW Mittelstandsbank), as well as a development group (KfW Entwicklungsbank), advisory services, and several corporate finance subsidiaries. KfW also holds shares in several major German corporations, such as Deutsche Post, Deutsche Telekom and Commerzbank.
Although it is acknowledged as the safest bank in the world, it is not without controversy, however. It infamously "accidentally" wired €300m to the doomed Lehman Brothers bank on the day it filed for bankruptcy, while, despite the dismissal of two board members for the "technical error", it somehow managed to repeat the trick in 2017, accidentally transferring €7.6bn to four other banks.
Number of banks appearing in the the top 50 (by country)
What are your thoughts on the list? Let us know in the comments below.
All currency conversions are conducted through XE. Rates are correct as of 27 August 2019.