The US banking sector remains riskier than its peer group on most measurements, according to Standard & Poor’s.
Excerpts from Banking Industry Country Risk Assessment (BICRA): U.S.
We have reviewed the banking sector of the United States of America (AA+/Negative/A-1+) following the recent affirmation of the U.S. sovereign rating. We rank the U.S. in BICRA group ‘3′, along with countries such as South Korea, Denmark, Chile, New Zealand, and the U.K.
Our criteria define the BICRA framework as one “designed to evaluate and compare global banking systems.” A BICRA analysis for a country covers rated and unrated financial institutions that take deposits, extend credit, or engage in both activities. The analysis covers the entire financial system of a country while considering the relationship of the banking industry to the financial system as a whole. A BICRA is scored on a scale from 1 to 10, ranging from what Standard & Poor’s views as the lowest-risk banking systems (group ‘1′) to the highest-risk (group ‘10′).
The BICRA comprises two main areas of analysis–economic risk and industry risk–on which the U.S. scores ‘3′ and ‘4′, respectively.
Our economic risk score of ‘3′ reflects our opinion that the U.S. has “very low risk” in “economic resilience” and “intermediate risk” in terms of “economic imbalances” and “credit risk in the economy,” as our criteria describe those terms.
Our industry risk score of ‘4′ for the U.S. is based on our opinion that the country faces “intermediate risk” in its “institutional framework,” “high risk” in its “competitive dynamics,” and “very low risk” in “systemwide funding.”