The World Economic Forums recently-released Global Competitiveness Survey offers a bundle of indicators to show the health of a countrys institutions. One of those is the perceivedsafeness of banks. WEF used its executive opinion survey to ask in general, how do you perceive the soundness of banks? So the measure isn’t based on any objective economic or accounting measure, but rather by the perceptions of the population.
The survey showed that people in the UK and US really don’t trust their banking systems after the 2008 financial crisis. The UK was ranked 89 and the US came in at 49, below Honduras, Namibia and Peru.
We looked only at the 34 OECD (Organisation for Economic Co-operation and Development) countries, which are all considered relatively developed economies with democratic systems.
11. Czech Republic — The Czech banking sector is unusual in that foreign-owned lenders dominate the industry, but consumers don’t seem to mind, ranking them the 11th safest in the world.
10. Switzerland – Although it scrapes into the top 10, people are losing faith with Swiss banks. The country’s centuries-old tradition of banking secrecy is being rolled back, while the Swiss National Bank lost $51 billion this year as it abandoned its cap on the Swiss franc.
9. Slovakia — Much like in the Czech Republic, foreign banking groups dominate Slovakia’s finance industry, making up 90%. Austrian and Italian banks are the biggest players.
8. Israel — In at number 8, Israel hasn’t had a big banking crisis since 1983, which forced the government to step in. The state still remains a large shareholder in many private banks.
7. Luxembourg — It’s no surprise Luxembourg scores highly, as the country is famous for its financial sector. Its Banque et Caisse d’Épargne de l’État is ranked as the ninth-safest bank in the world.
6. Chile — Chile’s banking sector is a good example of the positive effects of a crisis. The country’s economic growth collapsed 13% in 1982 after a huge banking meltdown. New laws introduced in the 80s and 90s mean that now Chile has one of the strongest financial sectors in the world.
5. Norway — In at number five, Norway suffered a banking crisis in 1991 which saw two of its big four lenders collapse. The government stepped in and changed laws to stabilise the sector. Yn gve Slyngstad, CEO of Norges Bank Investment Management, is pictured below.
4. Finland — Finland’s banking sector is dominated by co-operative and savings banks, which take little risk. The country’s central bank governor, Erkki Liikanen, below, has led the way on proposals to split investment banking and deposit taking activities at European lenders.
3. Australia — A small group of four major banks divide up most of Australia’s banking sector, while foreign banks are tightly regulated, making sure the system is sturdy.
2. New Zealand — At number two, New Zealand’s banking sector is dominated by a group of five financial players. Decent profits and growth without too much competition has seen the sector thrive.
1. Canada — Canadian banks have long been a byword for stability. The country has had only two small regional bank failures in almost 100 years, and had zero failures during the Great Depression of the 1930s.
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