Courtesy of Mish.
I have been saying for years that European banks are in far worse shape than US banks. We can now show that in chart form thanks to Ophir Gottlieb, CEO of Capital Market Labs.
Let's start with a visualization of the day: Worldwide Mega Cap Banks: Is Europe in Crisis?
If we take all of the banks in the world with market caps larger than $25 billion USD and then plot them with total assets on the x-axis and non-performing loans as a percentage of total loans, ALL of the top eleven are in Europe.
Click on any chart in this post for a sharper image.
Severe European Bank Crisis
Ophir Gottlieb expanded on the European bank crisis idea in this guest MarketWatch post yesterday: Opinion: European banks are Stuck in a Severe Crisis.
Big banks in Europe are riskier than anywhere else in the world.
They have higher non-performing loans, greater asset shrinkage, larger losses and higher debt-to-equity ratios. And European banks are bracing for even worse loan losses.
It’s the combination of those characteristics that lead to a crisis, and the eurozone essentially is in one today.
Non-performing loans over total loans
There are 200 banks in the world with market values of more than $5 billion, 48 of which are in Europe. The chart below plots non-performing loans over total loans on the y-axis and market capitalization (or value) on the x-axis for that population of banks.
If we take the population of world banks greater than $5 billion in market capitalization and select those with non-performing loans over total loans that are greater than 5% (worse than the Bank of America/Countrywide/Merrill Lynch combination), we are left with 24 banks. Twenty-one of those are in Europe.
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