The special October issue of Global Finance magazine features this year’s World’s 10 Safest Banks alongside the magazine’s popular Best Bank awards. This is the 16th edition that the magazine has published a list of the largest and safest banks in the world ranked according to their creditworthiness.

The creams of the crop

Here are the world’s top 10 safest banks for 2008: France’s Groupe Caisse des Depots, the Netherlands’ Bank Nederlandse Gemeenten, Germany’s Landwirtschaftliche Rentenbank, the Netherlands’ Rabobank, Germany’s Landeskreditbank Baden-Wuerttemberg-Foderbank, United Kingdom’s Lloyds TSB, France’s BNP Paribas, Belgium’s Dexia, the American bank Wells Fargo, and Germany’s NRW Bank.

These banks were recognized at an awards ceremony in Washington D.C. On October 13, which coincided with the annual meeting of the World Bank/International Monetary Fund?

How the banks were selected?

The World’s Top 10 Safest Banks were ranked based on a comparison of their long-term credit ratings. The Global Finance used the ratings from Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s. The banks were also selected based on total assets of the world’s 300 largest banks.

Holding companies were rated rather than subsidiary banks where possible. Government import-export finance entities were also not included. Banks were also rated based on asset size within each rank set. The ratings were published with the permission of the three ratings agencies.

Top banks listed in the US

Of the ten banks that figured in the list, Wells Fargo, Lloyds TSB, and BNP Paribas are listed in the United States. In September Lloyds announced a deal to acquire HBOS plc, UK’s largest mortgage lender, for $21.8 billion (£12.2 billion). The bank will offer a share of 0.605 for every 1 HBOS share. The bank sold preference shares for £1 billion and ordinary shares for £4.5 billion. Its current yield is 12.76%

Last October, Wells Fargo announced to acquire the North Carolina-based Wachovia (WB) Charlotte, for $15.1 in stock. On November 7, the raised $11B in a stock offering to fund the deal. Its current yield is 3.99%. BNP Paribas, France’s banking giant trades on the over-the-counter derivatives market and pays a 7.21% dividend. In the third quarter of 2008, the bank’s profit plummeted 56%.

Strong credit quality

According to Joseph D. Giarraputo, Global Finance publisher, "These banks have demonstrated an appropriately prudent approach to risk in providing international financial services." He adds, "More than ever customers are viewing strong credit quality as an important feature of the banks with which they do business."