Canada ranks as slightly riskier than the United States terms of their risk for sovereign downgrade, says BCA Research in a special report.

BCA says that the report reviews the vulnerability of these markets to rating downgrades, as well as focusing on the risks and potential costs associated with stabilizing their banking systems (after analyzing 150 banks around the world).

“A further loss of as little as 3% on total bank assets would wipe out most, if not all, of the remaining tangible bank capital in the countries we analyzed,” it says, adding that, “UK, Ireland, Denmark and Switzerland have the greatest risk of widespread nationalization (outside of Iceland).”

“When the other main factors that determine overall sovereign credit risk are included (e.g. economic structure and prospects, monetary flexibility, fiscal flexibility, and external liquidity dependence) Iceland, Portugal, Ireland, Spain, Italy and the U.K. are at the top in terms of the risk of downgrades,” it reports.

“The cost of cleaning up the U.S. banking system will also be painful, although the risk of a sovereign downgrade is less than in most of the other developed countries,” it adds.