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On Dec 6th, I wrote a post titled The Best Banks of the World 2008 in my TFS site which discussed the top banks in the world. The Banker Magazine presented awards to the best banks in each individual country. In this post let me mention a few banks that won the awards in countries they operate in other than their own home country. Many of the multi-national banks today have huge presence in other countries and in some places they are better than the local domestic banks. The Banker magazine selected these banks based on many factors like growth,technology, strategy and a questionnaire that banks were asked to submit.

1. Argentina - The Best Bank in Argentina is Banco Santander Rio. This bank is a subsidiary of one of the largest banks in Spain - Banco Santander (STD). Banco Santander Rio used to be called “Banco Río”.STD has huge presence in other Latin American countries like Brazil, Mexico, Chile, etc. as well but they were beaten by other banks in those countries.

2. Belize - The Best Bank in Belize is ScotiaBank Belize. This bank is a unit of The Bank of Novo Scotia (BNS) of Canada. BNS is the only Canadian bank to that has a significant interest in Latin American banking. In addition to winning the award, ScotiaBank won the top bank award in the following countries as well:

• Costa Rica - ScotiaBank
• Guyana - ScotiaBank
• Turks & Caicos - ScotiaBank
• Canada - ScotiaBank

So Scotia Bank of Canada won the award in 4 countries other than Canada.

3. South Africa - The Best Bank is Standard Bank Group. Recently Business Week had an article which talked about how South African companies excel in growing in other African countries. Specifically they mentioned the Standard Bank. It won the award for the best bank in the following countries also:

• Malawi
• Namibia
• Swaziland
• Botswana
• Democratic Republic of Congo
• Tanzania
• Zimbabwe

4. Colombia - The Best Bank is BBV Colombia. This bank is a subsidiary of Banco Bilbao Vizcaya Argentaria(BBV) of Spain. BBVA also won the award for Paraguay and Venezuela as well. However in its home country Spain, the best bank award went to Banco Santander.

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Over 350 American Depository Receipt (ADR) stocks are listed in the ADR.com website. Out of this, just ten stocks ended the year 2008 with a positive return.

Best ADRs in 2008:

Sociedad Quimica y Minera de Chile (SQM) is a producer of fertilizers and nitrates in Chile. As the Ag stocks took off last year and reached peaks early this year, SQM reached a high of over $50. Demand for fertilizer have since fallen off the cliff and hence SQM is trading half its peak price. This stock is a good long-term value play but I believe one can enter at lower levels. Surprising to see five Japanese companies made it to this list.

None of the Bank ADRs ended the year even with a slight increase. This shows the severity of the current credit crisis and its impact on most of the countries of the world. The craze for emerging market equities have died down as well.This is especially true with the BRIC countries as the commodity prices have plunged.

Not one ADR from Europe made it to the list. At the beginning of the yea, Europeans were gloating that they were different from the US financial system and that they will not be affected by the subprime mess. Alas we know what happened with the European markets. They fell harder than the US markets. German bankers who boasted that they were very conservative in their lending and followed “traditional” banking practices. While that may be true, German banks invested in many of the derivative products for their high returns and got burned just like their US counterparts. The banking systems of UK, The Netherlands, Belgium, France, Spain, etc. all were proven to be as shaky and greedy as the US ones. The regulatory authorities of European financial system were sleep at the wheel as well.

Overall global diversification did not help US investors in 2008. Hopefully ADRs will perform better in 2009.

written by admin

A few years ago The Republic of Ireland had one of the fastest growing economies in Europe. Then growth slowed and in the past two years or so the Irish economy stagnated and growth came to a standstill.

Irish stocks have been hit pretty hard as well in 2008 - especially the banks. As of market close today, the Bank of Ireland (IRE) is down an incredible 92.11%, Allied Irish Banks (AIB) is down 89.79% and Anglo Irish Bank (AGIBY) is trading at a $0.20 (yes thats right its just 20 cents) a share from much higher levels in the beginning of the year.

On Dec 22, the Government of Ireland announced capital infusions into the three banks amounting to 5.5 Billon Euros. As per the plan, the government will invest:

2.0 Bil. Euros each in IRE and AIB

and

take a 75% stake in Anglo Irish Bank - effectively nationalizing it.

The above data clearly shows that the supposedly safe Ireland banks were not immune to the global slowdown. A while ago Irish banks and banks from other European countries boasted that they had no or little exposure to the sub-prime crisis in the USA. That did prevent them from falling since their domestic markets cratered. Residential, Commercial Property loans went bad just like in the US.

The closed-end fund “The New Ireland Fund” (IRL) is also down over 75% this year.

So investors interesting in gaining some exposure may want to wait for a while before investing in Irish stocks. In addition to the world economy getting back on its feet, one has to monitor the domestic economy especially he housing sector.

written by admin