Jim Hawthorne

Canadian Banks May Be Risk-Averse, But They're Not Immune

A Very good analysis of what is right about Canadian Banks and the weaknesses of Canadian analysts. Thank you!

While Canada remains dependent on the US economy (and who is not?), Canada has also made strong efforts to de-couple from strict dependence on the US over the last 15 years, with considerable success. The danger is that there has been a 'new' dependency on the Pacific Rim to replace it.

Canadian currency is much more 'resource-industry dependent' than it is dependent upon government programs, policy or manipulation. As go basic materials, so goes the Canadian economy and with it, the Canadian banks. It is a truism that Canada's economy is much less 'Financialized' than that of the US and as such is more independent of the machinations and risks of that sector in the US.

It is also true that while US banks contract and struggle to raise capital, Canadian banks have generally been expanding their global reach and diversification.

Your recommendation to pause until the depth and breadth of the Canadian recession is determined before rushing to invest in Canadian Banks is very timely and reasonable.