Why are the debt to equity ratios so high for banks compared to other companies generally?

April 16th, 2010

A web user asks, For example, the net gearing ratio (debt-to-equity) for banks like ANZ or NAB are in the high numbers (1000 something %). Why is this? How does this high ratio indicate how the bank is performing financially compared to other companies within the industry or to other companies generally?

Can you help them out? Post your advice!

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Why are the debt to equity ratios so high for banks compared to other companies generally?

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