Fitch Ratings says that banks are more likely to fail and be bailed out, than to default on their loans.

Fitch says in a new study that it has confirmed the conclusions of earlier research that found that “although with effect from the collapse of the Bretton Woods Agreement in 1973 the incidence of banking crises rose, bank defaults in the developed world did not.”

“The explanation is disarmingly simple,” said David Andrews, managing director in Fitch’s Financial Institutions group, “When they get into trouble, banks tend to be rescued or supported”.

The report concludes that in terms of both one-year and five-year averages, corporates are more likely to default than banks, and banks are more likely to fail and be supported than they are to default.

“Thus, contrary to the strongly held belief in some quarters that rating agencies’ default frequency rates are somehow equally applicable to all economic sectors everywhere, different economic and geographic sectors can have different default frequency rates for the same rating grades,” it notes.

“So long as states are capable of supporting and are willing to support banks, they will not default,” Fitch says. “But if, in particular, willingness weakens, the incidence of bank default will rise.”