Winter 2008 – Eight reasons Canadian banks will come out ahead

December 8, 2008

8 Reasons Canadian Banks Will Come Out Ahead

1. By law shares of large, publicly traded banks and insurance companies must be “widely held” which in effect prevents domestic mergers or foreign take-over’s unless supported by the federal finance minster;

2. Canadian banks were the 1st in the world to adopt new risk-management rules under Base1 and 11 capital framework

3. Canadian Bank Act requires mortgage default insurance on loans there equity is less than 20%

4. Canadian mortgage payments in arrears in July 2008 were running at historic lows…less than 1/3 of 1%….about 1/6 of what the US experienced in the depths of its 1990’s housing slump

5. Canadian banks approvals of “non prime” mortgages runs at about 5% the US at 23% in 2008

6. In Canada the Office of Superintendant of Financial Institutions oversees both commercial and investment banking, in the US only commercial banking has been regulated to the same degree

7. No US bank has branches in all 50 states all 5 major Canadian banks have branches in all 10 provinces thereby diversifying the risk geographically

8. In the latest quarter, the actual rate Tier 1 capital ratio for Canadian banks was 9.8%…63% above the required minimum