BANKS from Western Europe, North America and Australia are now clearly outclassed by banks in emerging markets in Asia, Africa, Eastern Europe and Latin America. This is the striking conclusion of pioneering research for The Statement magazine across 1000 quoted banks in over 100 countries. The best-rated banks are found in South Africa, Saudi Arabia. Singapore, Indonesia, Philippines, India, Turkey, Poland, Serbia, Slovenia and Mexico.
The research is generated from the LAFFERTY 1000 global banking database, which scores the one thousand banks for quality across 21 metrics and rates them from 1-star for the weakest to 5-stars for the best. Other findings include:
· Only 5 of the 1000 banks receive 5-star ratings and all are based in emerging markets
· With three exceptions, the mainly universal banking giants of Europe, North America, Japan and China that are designated as “globally significant” by the Bank for International Settlements (BIS) are rated from poor to average at best.
· Italy’s UniCredit comes bottom of the group, with a 1-star rating.
These findings contradict the view, long held in the financial industry that the UK and the US are the leading countries for industry achievement.
The ranking rated Stanbic IBTC as the best bank in Nigeria· It is also one of the top 100 banks in the Lafferty global banking database.
The research stated that “Board diversity is a particular strength of Stanbic”.
The STATEMENT is a new Lafferty Group digital banking magazine. It is being established at the height of the economic, financial and human crises caused by the global coronavirus pandemic in order to help progressive banks and bankers find a new way ahead for the industry.
The magazine takes as its starting point the current state of 1000 of the world’s largest quoted banks and rates each of them for their quality and sustainability using 21 metrics – from financial performance to how they treat a range of stakeholders including staff, customers, the unbanked, regulators, the environment – and not least shareholders.
The bank quality rating system on which the database is anchored uses a heuristic methodology to analyse the signals that banks are sending out in their annual reports – intentionally or otherwise – and combines them to score the overall bank. It uses the annual report because of its unique status as the primary vehicle for management of a bank to communicate and account to shareholders and other stakeholders.
Michael Lafferty, chief executive of Lafferty Group said: “Banks from emerging markets are now setting the pace in world banking. They are more focused and unfettered by the mistakes that have done so much damage to Western banks. These mistakes include a misguided love affair with universal banking and the destructive ideology of shareholder value”.
Alexander Erickson, LAFFERTY 1000 Database & Research Manager added: “Emerging market banks are becoming key and prominent players in banking, particularly in areas such as financial inclusion, diversity and climate risk policy. This has opened up new doors and altered the course of research and data analysics”
– July 01, 2020 @ 16:35 GMT