Global Banks: The Weakest of Them All

By Weiss Ratings

NEW YORK ( TheStreet) -- Weiss Ratings issues ratings for the world's largest banks --adding coverage of 200+ global financial institutions. Using the same quantitative analysis that it applies to domestic institutions, Weiss evaluates five major components of a bank's finances -- capital, asset quality, earnings, liquidity and stability -- to determine an overall Weiss Financial Strength Rating, which ranges from A (Excellent) to E (Very Weak).

According to Weiss' latest study, the world's weakest banks are concentrated in Europe and Asia, while the strongest global financial institutions are based in Latin America, the Middle East and North America. And, some of the weakest banks in the world are among the largest. Perhaps "too big to fail" means too big to manage in adverse times ... maybe in good times too ... we'll have to watch and see.

Deutsche Bank-RG ( DB)

Weiss Financial Strength Rating: D (Weak)

Headquarters: Germany

Germany's Deutsche Bank, the largest bank in the world with total assets of $2.8 trillion as of December 31, 2011, is rated D (Weak) by Weiss due to its weak capital position and poor profitability. Its low 1.8% tangible common equity ratio, a measure of capital, is just one-fifth the industry average of 8.4%. In addition, Deutsche Bank earned a return on assets of only 0.1%, a fraction of the industry average of 0.9%. Both figures suggest that the bank has a significantly higher probability of future financial difficulties.

Barclays PLC ( BCS)

Weiss Financial Strength Rating: D- (Weak)

Headquarters: U.K.

U.K.-based Barclays PLC, tied for seventh largest bank in the world with total assets of $2.4 trillion, is rated D- (Weak) by Weiss. The bank suffers from weak asset quality, poor profitability and low capital. Barclays' nonperforming loans represent 37.2% of its core capital, which is well above the industry average of 31.5%. Barclays also reported return on assets of 0.2%, well below the industry average of 0.9%.

Royal Bank of Scotland ( RBS)

Weiss Financial Strength Rating: D- (Weak)

Headquarters: U.K.

The Royal Bank of Scotland, tied with Barclays for seventh largest global bank with $2.3 trillion in assets, is also rated D- (Weak) by Weiss Ratings. Again, the primary contributor for the bank's weak rating is its poor asset quality. Royal Bank of Scotland's delinquent loans represent nearly 53% of its core capital, which is dramatically worse than the industry average of 31.5%. In addition, the bank reported negative return on assets of -0.2%, well below the industry average of 0.9%.

View the slide show on the World's Weakest Banks.

Credit Agricole (ACA.PA)

Weiss Financial Strength Rating: E (Very Weak)

Headquarters: France

Credit Agricole, the second largest bank in France with assets of $2.2 trillion, is rated E (Very Weak) by Weiss Ratings. The bank's meager capital position, weak asset quality and poor profitability are primary factors behind Weiss' evaluation. With a tangible common equity ratio of 1.2%, Credit Agricole is well below the industry average of 8.4%. Nonperforming loans to core capital of 34.7% was worse than the average of 31.5%. Operating income to total assets was also very weak at 0.1% with global average benchmark of 0.8 percent.

Bank of America ( BAC)

Weiss Financial Strength Rating: D+ (Weak)

Headquarters: U.S.

The largest U.S.-based global bank considered weak by Weiss Ratings is Bank of America (BAC), the tenth largest bank in the world with assets of $2.1 trillion. The bank reported return on equity of -1.5% for 2011, which is well below the industry average of 10%. Bank of America's reduced profitability due to prior bad loans and restructuring of nonperforming businesses is the primary factor in determining the D+ rating.

In Winners and Losers in the Great Global Banking Crisis of 2012-2013, we partner with our sister company, Weiss Research, to combine the global bank ratings with recommendations from the editor of the Safe Money Report, Mike Larson.

More from Stocks

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz

Video: This Startup Connects Buyers and Sellers of Legal Marijuana

Video: This Startup Connects Buyers and Sellers of Legal Marijuana

Dow, S&P 500 and Nasdaq Tumble After Trump Calls Off North Korea Summit

Dow, S&P 500 and Nasdaq Tumble After Trump Calls Off North Korea Summit