How Were Canadian Banks Unscathed by the Crisis?

While we all were hiding under our desks, something was going on at Canada’s largest chartered banks. They were deftly swinging into preservation mode. Think about the brutality of the past twelve months for both the economy and the financial services industry, and then pull up a share price chart for the Big 6 banks.

The stock prices of all but one of the six are up over the past twelve months. Plus the dividends have continued without a haircut, unlike at Bank of America (BAC), Citibank (C) and WellsFargo (WFC) for example.

The TSX is down about 24% during the same timeframe, and the performance of the Dow Jones 30 is no different.

Amazing. Credit also goes to the unheralded regulators, but investors shouldn’t ignore what’s been accomplished by the collective management teams over the past year.

Comments

[Mark in Indpls:]

Am I missing part of this article, or is this just a single thought? I don't get it.

Jul 22 07:55 AM

[ilovesum:]

the canadian govt didn't force the banks to take risky loans and allow subprime , teaser morgages etc , so it was the reasonable regulations that prevented it.
nor did the canadian system force banks to take govt money(tarp) or buy failed banks at inflated prices (merril lynch) with a shotgun
also the price of oil didn't collapse until 2008 which meant positive gdp and some economic activity. the usa had a meltdown in 2007 , a year earlier .
since oil is back around $60 the canadian govt is talking about a positive gdp for this year and economic recovery
so yes, the canadian banks faired better than many others but there were economic and regulatory factors involved.
sometimes its more a matter of avoiding dumb things than trying to fix them after and wonder why we did it in the first place

Jul 22 09:45 AM

[a. palmer jr.:]

Several American banks are in good shape too. Not so sure about the FDIC though...they've paid out a lot of money on failed banks. The bad thing here in the US is that even the good banks don't pay very good interest because...they don't have to. The good (smaller) banks
did the prudent things without anyone telling them they had to. Most people with any intelligence at all wouldn't lend money to someone whom they knew wouldn't pay them back, that is unless they were a relative.

Jul 22 10:01 AM

[Brian L.:]

Exactly this article is nothing!!!!! Thanks for that. Too many internet authors with no journalism ability.

Jul 22 11:16 AM

[john s. gordon:]

canadian banks are conservatively managed by competent teams who do not engage in self-delusion. it makes all the difference.
> jack

Jul 22 12:34 PM

[biomedlives:]

The argument that "The US government made me do it" doesn't hold water. The leaders of American financial institutions were paid big bucks to steer their companies through difficult times like the last few years, and they failed miserably. Note that some institutions, like Hudson City, have managed to come through in good shape so far, even though they were operating in the same regulatory environment as Citicorp, WaMu, Wachovia,...


On Jul 22 09:45 AM ilovesum wrote:

> the canadian govt didn't force the banks to take risky loans and
> allow subprime , teaser morgages etc , so it was the reasonable
> regulations that prevented it.
> nor did the canadian system force banks to take govt money(tarp)
> or buy failed banks at inflated prices (merril lynch) with a shotgun
>
> also the price of oil didn't collapse until 2008 which meant positive
> gdp and some economic activity. the usa had a meltdown in 2007 ,
> a year earlier .
> since oil is back around $60 the canadian govt is talking about a
> positive gdp for this year and economic recovery
> so yes, the canadian banks faired better than many others but there
> were economic and regulatory factors involved.
> sometimes its more a matter of avoiding dumb things than trying to
> fix them after and wonder why we did it in the first place

Jul 22 01:55 PM

[Diegojames:]

Canada has the best banks in the world. They learned their lessons years ago.
Now we have a president who is going to settle insurance claims, claims of petulant college professors, and silly police officiers.

America what next? Thanks for our young men and women who keep us safe from terrorist while we fight like rich brats among the balance of powers....Pelosi... Obama...reid appears to have hidden and Dodd finally made sense.
Energy and commodities....and a slump in August before a rally in NOvember????

Jul 23 08:55 PM

[Angry Banker:]

ilovesum's comments were right on point. Having been in banking 20 years, I have seen tremendous pressure by the U.S. government to engage in the practices the ilovesum notes above. As for the highly paid executives, if they don't do what the regulators tell them to do, then the bank gets a poor CRA rating or some other regulatory action, which results in the highly paid executive losing his/her job. They don't get to just "steer through" the regulatory regime.

On Jul 22 01:55 PM biomedlives wrote:

> The argument that "The US government made me do it" doesn't hold
> water. The leaders of American financial institutions were paid
> big bucks to steer their companies through difficult times like the
> last few years, and they failed miserably. Note that some institutions,
> like Hudson City, have managed to come through in good shape so far,
> even though they were operating in the same regulatory environment
> as Citicorp, WaMu, Wachovia,...

Jul 25 04:33 AM