Published March 4, 2009

OCBC, UOB join DBS on global safe banks list

But investors urged to view ranking with caution, consider other factors too

By JAMIE LEE

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SINGAPORE'S Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB) have made it to the Global Finance list of the world's 50 safest banks - joining DBS Group Holdings.

New York-based Global Finance magazine is publishing a mid-year update of the listing for the first time because of the turmoil in the world's banking industry.

Others in the latest list include France's Caisse des Dep´ts et Consignations, Bank Nederlandse Gemeenten from the Netherlands and Landwirtschaftliche Rentenbank.

The three banks from Europe were among the top five in the list this year and in 2008.

The magazine ranked 500 banks globally based on their long-term credit ratings by agencies such as Fitch Ratings, Standard & Poor's, as well as Moody's.

The ranking also took the banks' asset size into account.

UOB and OCBC joined the list at 37th and 38th position respectively. About 10 positions higher was DBS at 28th place. DBS was 41st last year.

But managing director of NetResearch Asia, Kevin Scully, said the results of the survey should be cautiously looked at.

'Given how the rating agencies have rated some of the sub-prime assets and some major corporate failures in the past, I think we should view that with some caution,' he told BT.

'You should be looking at tier-1 capital ratio, the quality of the assets, vis-a-vis the asset cycle and at how aggressive they are, and you should look at the structure cost-income ratios,' he added.

'There are a lot of other ratios to use, not just credit ratings.'

Fourth-quarter results from all three banks here fell short of analysts' estimates and analysts are expecting higher provision charges for soured loans.

A Bloomberg poll showed that most analysts have issued 'hold' ratings for OCBC and UOB.

As for DBS, the 23 analysts polled are comparatively split among 'buy', 'hold' and 'sell' calls.

Banks that dropped off from last year's list include Royal Bank of Scotland, which was at 19th place, Citi, which was ranked 31st in 2008, and Bank of America. The latter was formerly at 44th place.