The Finance Owl

Banks – Loans – Mortgages – Money

Canada’s Big Five Banks Problem

Posted by theaccountant November - 8 - 2009 - Sunday

Canada’s big five banks have recently been apparently experiencing a very unusual financial problem. It seems that the five big banks of Canada have built up such a sizeable sum of capital reserves that the banks are purported to be struggling to know what to do with any capital excesses.

The Canada big five in question are Scotia bank, Toronto-Dominion, Bank of Montreal Royal Bank of Canada and the Canadian Imperial Bank of Commerce.  The prudent actions taken by these Canadian banks have made them very strong relative to a large number of other global banks.

It appears that the Canadian banks have made it through the recession so far without the cash injections needed by their European and United States competitors. It appears that the prudent approach taken by the Canadian banks has proved to be a very successful approach so far. The Canadian banks have been far less impacted by the sub-prime credit crisis due to a much smaller exposure. This will prove an excellent case studies for many business schools, it will be of special interest to various business schools across the United States and Canada, due to the history that exists between these two countries.

One of the largest credit rating agencies, Moodys, has made their view of the relative strength of the Canada’s big five banks abundently clear.

In conclusion, Canada’s big five banks certainly have a problem that they need to consider. It is however very different to the problems faced by most of their European and United States banking competitors.

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