It is being reported today in the Business Journal that the safest bank in the United States is Wells Fargo & Company (NYSE: WFC).According to Global Finance, which will publish its analysis, "World's 50 Safest Banks" in its April issue, international banks dominate the rankings, which show the effects of the sub-prime mortgage meltdown and credit crisis brought on by large Wall Street players. San Francisco-based Wells Fargo is the top-rated U.S. bank at No. 21. European banks now dominate the rankings, with only four U.S. banks among the listing.
This comes on the heels of Wells announcing a cut in its annual dividend by 85% so that it can conserve about $5 billion dollars over the next year. Wall Street must be interpreting this conservation of capital as the right move because the stock was trading up this morning. We'll see how it finishes against the backdrop of the overall market trading down for most of the morning after opening up.
This report made me curious about the other three banks, U.S. Bancorp (NYSE: USB), the Bank of New York Mellon (NYSE: BK) and JP Morgan Chase & Co. (NYSE: JPM) which are in order of the GB list.
Here is the list from last year, which had Wells on top last year too. The problem is at No. 31 where Global Finance listed Citigroup (NYSE: C) based on the previous 12 months performance, so going forward there have to be questions.
But when looking ahead, Wells is still offering about a 2% yield at today's share price.
UPDATE: The WFC closing price was $8.61, up $0.49, or 6.03%
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WFC and have open options as well. I have banking relationships with all four banks mentioned.
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Reader Comments (Page 1 of 1)
3-07-2009 @ 2:53PM
ian_tomlin said...
I would not trust that list to make investment decisions. RBS, Lloyds and HBOS were clasped amongst the safest banks in world in 2007. The shareholders have been wiped out by the government stealing equity priced at 1/10th of its market capital before the crash.