And the World’s Strongest Bank is…

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June 16 (Bloomberg) –- Bloomberg’s David Ingles reports on which bank is the world’s strongest and how Asia’s financial institutions rank on the Bloomberg Markets list of the world’s strongest banks. He speaks to Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

All right.

Bloomberg markets.

Well it just released the latest list of the world's strongest bank and an asian bank once again tops the list.

We are talking about the third straight year asian has led.

It is quite interesting.

I looked over the history.

It hasn't been smooth.

It was a former money exchange counter right here.

62% of hsbc.

The reason we are seeing a majority back in the 1960's we had a property crash here in hong kong and you had a lot of these banks in trouble.

Hang seng was already a big player.

51 million hong kong dollars.

That was a majority state back then.

Why did it do so well?

Strong capital reserves.

The bank essentially building up their buffers.

Pairing back most of these dividends.

It is also very strong on the conservative part of the banking business.

We are talking retail, wealth management as well as corporate banking you put those together and we are talking over half of pretax profit and also it opened up the -- we have record low interest rates here.

That is your hurdle rate.

If you want to make a return on your cost of funding which is that low you do not have to be as aggressive.

You spoke with jim earlier on.

We listened to his thoughts.

Apparently it is his favorite.

I agree with you.

You have to have a return if you are an equity investor but you have to measure it the right way.

Return on equity but adjusted for leverage.

This is a bank with very strong capital base.

If you have a weak base you will always be higher.

If you do it on a conservative basis like that 25% and it is not just last year.

It is consistent.

You do not find that.

Certainly it is better than any bank in asia and of course better than any bank in the u.s. or europe.

The banks here in hong kong do have a geographic advantage being just so close to the chinese mainland.

You get a chunk of the trade flow and part of the wealth management business.

At the same time shielded from the slowing of the economy there.

You could pull back.

Hang seng, pulling back a bit.

As far as the aggressive expansion we see.

Jim also pointed out that hang seng provides the lowest fees around if you are a hong kong customer of the bank.

That is part of the attraction as well.

That was not part of our criteria.

What is the criteria?

We have a bunch of criteria.

Tier one capital.

20% went to nonperforming assets.

Potentially 80% of the criteria we used was basically how much buffers these banks have to save up for a rainy day.

Which of the other groups did well?

Asia did quite well.

German banks, nordic banks,

This text has been automatically generated. It may not be 100% accurate.


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