Top 10 Safest Banks in Europe: What Determines Their Stability?

There are a huge number of banks in Europe, and it considerably complicates the process of choosing a financial institution to get the services as all of them seem safe. You need to analyze tons of information to find the safest bank in Europe! However, it is hardly appropriate to deal with it on your own. You will need to study the credit ratings of international companies to get your bearings on the market, and we highly recommend entrusting this task to specialists who are well-versed in the banking sphere and will find a safe option for you.

Who Is Responsible for the Reliability of Banks in Europe?

The central banks of respective countries are responsible for making European banks safe and reliable. They establish mandatory requirements for all financial institutions on a legal basis to support the stability of the financial system. And if the banks fail to comply with them, they will not be considered safe and different methods of impact will be applied, including:

• bank audits
• change of bank management
• on-site control over the bank’s safe operation, etc.

European Central Bank

If we look at Europe, it is the European Central Bank (ECB) that plays an important role (in addition to central banks) in ensuring that the financial system is safe. ECB’s responsibilities include supervision over the largest banks in Europe in terms of operations, including:

• conducting stress tests to evaluate bank’s resistance to unfavorable scenarios
• maintaining a safe level of bank capital and liquidity

ECB also closely cooperates with national supervisory authorities to control small banks and coordinate crisis management measures.

European Banking Authority

The European Banking Authority (EBA) is one more institution that plays an important role in ensuring the reliability of banks in Europe and keeping their clients’ money safe. The EBA is an independent EU authority that ensures efficient and steady regulation and supervision of the banking sector in Europe. The European Banking Authority develops and supports regulatory and supervisory standards and guidelines, conducts stress tests of banks, and develops cooperation between national bodies to make sure the money on deposits is safe.

Main Criteria That Make Banks Reliable and Safe

There are a lot of criteria that help us evaluate the reliability of banks in Europe and in the world, and here are some of the most popular ones.

Sufficient Capital

Sufficient capital means that the bank can absorb potential losses using its own funds. The regulatory authorities usually require banks to keep up the minimum safe capital level to ensure their ability to withstand financial upheavals. The safe ratio is set by the central bank of each country depending on the internal economic situation.

Liquidity

Liquidity shows the bank’s ability to perform its obligations as they fall due. Banks in Europe have to keep up a safe liquidity level to guarantee that they can satisfy the depositors’ requests for funds withdrawal or any other demands.

Quality of Assets

The quality of assets at banks in Europe is the key indicator that keeps them financially safe. The banks that possess high-quality assets are safer and more likely to survive economic recessions and financial shocks. Poor-quality assets are outstanding credits and other liabilities. The more of them are due, the more reserves should be formed by the banks; it decreases their profitability and freezes the resources, making them less safe.

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Cost-Effectiveness

Cost-effectiveness is an important factor in evaluating whether the bank in Europe is safe. Financial institutions should generate enough profit to cover their expenses and create reserves to support future growth.

Management and Governance

Strong management and governance are decisive criterions that make a European bank safe in the long term. Efficient risk management, justified decision-making and transparent management structures are necessary to ensure that the financial institution is safe and successful.

Regulatory Requirements

Banks in Europe, just like their analogs in other countries, have to comply with a number of regulatory requirements. These include, for example, capital sufficiency and liquidity norms, rules of combating money laundering and consumer protection rights. Compliance with the specified requirements is of utmost importance to keep up the bank’s reputation and ensure it remains safe in the long term.

Credit Rating

Rating agencies assess the creditworthiness of banks in Europe and assign credit rating to each of them on the basis of financial stability, credit risk level, and other factors. High credit ratings show to what extent this financial institution can be considered reliable, safe, and stable. The best-known international rating agencies include Fitch Ratings, Moody’s Investors Service, and Standard and Poor’s.

Deposit Insurance

There are safe deposit insurance systems in all banks in Europe, and their main task is to protect the clients’ money in case of bankruptcy. These deposit guarantee funds are used to reimburse the clients’ funds in case of issues. In EU, the safe insurance system protects the clients’ deposits within EUR 100,000, in Switzerland – up to CHF 100,000, in Great Britain — up to 85,000 pound sterling.

Banks in Europe: International Reliability Ratings

Different ratings made up by reputable financial organizations will help you get your bearings and evaluate how safe a bank in Europe is. Here are some of the best-known ones:

Global Finance

The Global Finance edition publishes an annual rating of the world’s 50 safest banks. It is based on different factors, including long-term credit ratings of agencies, total assets, reputational factors, and other criteria that show whether this bank is safe.

The latest publication of the banks’ reliability rating by Global Finance was made at the start of November 2022. It was based on the analysis of the world’s 500 largest banks by the amount of assets and was calculated on the basis of long-term ratings in the foreign currency assigned by Fitch Ratings, Standard & Poor’s и Moody’s Investors Service as of August 31, 2022.

Top 10 safe banks in Europe according to Global Finance

As we see, Top 10 safe banks contain exclusively European banks, with German financial institutions visibly dominating the list.

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Safe Banks According to Forbes

It’s been the fourth time that Forbes has published its annual World’s Best Banks rating that includes 400 safe banks. The rating evaluates whether the financial institutions are safe by the quality of customer service, and also by such key indicators as trust, fees, digital services, and financial consultations. Statista also provides assistance in making a list of the best ones. The latter’s employees polled more than 45,000 clients that speak 14 languages all over the world to find out their opinion about the existing and past bank relations. 

Top-10 safe banks in Europe according to Forbes

Bank	Country
1822direkt	Germany
Alior Bank	Poland
Allianz Bank Financial Advisors	Italy
Allianz Banque	France
Argenta	Belgium
ASN Bank	Netherlands
Banca di Asti	Italy
Banca Mediolanum	Italy
Banca Popolare di Sondrio	Italy
Banca Sella	Italy

It is interesting to note here that the leading safe bank is a digital banking representative, 1822direkt by Frankfurter Sparkasse. It was founded in 1996, and it offers its customers a wide range of financial products and services, including current and savings accounts, credit cards, investments, and insurance products. The bank works 100% online and does not have any physical offices. Clients can access its services via website or mobile application. 

1822direkt’s first place in the safe bank rating is a very clear indicator of the global tendency for an increased popularity of digital banking. It is much more convenient for the customers to get safe service at any time in any place, without visiting the bank office. 

You’ve read some information about the most reliable and safe banks in Europe. To make the picture complete, please read our article about the Top 5 largest banks in Europe by total assets.

Do you want to know more about the safe banks in Europe where you can store your assets? Send your contact information to in**@***********rt.com, and out experts will contact you shortly to book a session.