Usd: The Flight To Safety May Need A Lifeboat

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Forex markets are rolling around from day to day at the beck and call of equity market direction, and the dollar is bought as a hedge against those negative stock days. But, the flight to safety may have to be reviewed, because overseas 'safety' may be far more appealing. Maybe the dollar, and Wall street with abide by new rules post-credit crisis.

The banking sector in the U.S. does not compare in any way to the ‘safety’ of overseas banks in regard to long term bank deposit and foreign exchange currency ratings, from Standard & Poors, Fitch, and Moody’s. The top 50 globally rated banks from the GFMag yearly 'Safe Bank' survey show some statistics that Stress Test followers may find surprising.

There are thirteen newcomers to the list; a 20% replacement ratio rate from 12 months ago. The highest ranking bank is Germany’s KFW, Singapore and Finland added major players to the list, with two of Singapore’s entrants matching Deutsche Bank and Bank of Montreal’s credit ratings. Span and Canada moved into the top ten with Banco Santander and Bank of Canada. Some casualties to the list include Citi, Bank of America, Barclays, and Royal Bank of Scotland.

The U.S. has no banks in the top 20, and just five banks in the top 50 list.

4 of the top 7 are German

9 of the top 10 are European

14 of the top 20 are European

5 of the top 20 are Australian or New Zealand

2 of the top 20 are Canadian

33 of the top 50 are European

France has as many top 50 banks as the U.S. and a far higher overall ranking with 3 of the top French banks within the top 20, and one, CDC, in at number 2 on the list. European and Australian banks dominate the overall rankings.

The five U.S. banks in the top 50 are Wells Fargo (21), US Bancorp (26), Bank of New York Mellon (34), JP Morgan Chase (45), and tied for 50^th with three overseas banks is BB&T.

Hmmmmm, the flight to safety, on a bed of green shoots. Looks as though the flight to safety may have to be re-written in the post-credit crisis environment.

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