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Six Canadian banks get a one-notch downgrade from Moody's as high levels of consumer debt and...

Six Canadian banks get a one-notch downgrade from Moody's as high levels of consumer debt and bubbly housing prices leave the lenders "more vulnerable than in the past." The agency also notes banks' reliance on "confidence-sensitive wholesale funding, which is obscured by limited public disclosure." Among those cut: BMO, BNS, CM, TD.
Comments (18)
  • Yet Moody's refuses to downgrade the U.S. credit rating, and dragged its feet downgrading U.S. banks prior to the last crisis. The Canadian consumer, homebuyer, taxpayer is not more leveraged than his/her U.S. counterpart.
    28 Jan 2013, 04:30 PM Reply Like
  • White,
    that's an old story, sinns of the past.
    It's the present that counts. And the present tells me commodities producing countries are not doing well, neither do their banks.
    In the meantime the general public are not yet aware of that paradigm shift and keep on spending and aggravating their debts.
    It looks ugly for the maple leaf. Speaking metaphore:
    http://huff.to/XOOEKV
    29 Jan 2013, 05:50 AM Reply Like
  • What a joke. I live in Canada and can assure you that the canadian view on debt is quite different. We routinely put down 30-50% down on our homes. Use lines of credit on secure assets as oppossed to credit cards. Have any of these so-called "analysts" ever been to Canada?
    28 Jan 2013, 05:39 PM Reply Like
  • kk,
    Aaaaah, what's a secure asset nowadays ? Homes ? They thought that in the US too.
    Apple ? Not anymore.
    Until yesterday, I thought gold was. At least that bears no cost to keep it.
    29 Jan 2013, 05:54 AM Reply Like
  • Canadian banks don't play fast and loose like their American counterparts. Thus you will never see a real estate collapse here like you did in the states. Would anyone like to argue about how Canada came through the 08-09 crash better then any other country? Primarily due to our strict lending practices.
    29 Jan 2013, 12:22 PM Reply Like
  • Shhhhh----just let American investors drive the price down so I can buy more shares:)
    28 Jan 2013, 05:56 PM Reply Like
  • They downgraded pretty much all the big banks? This is entertaining.
    28 Jan 2013, 07:26 PM Reply Like
  • gwen,
    they have every reason to.
    29 Jan 2013, 05:45 AM Reply Like
  • immediate thoughts are:

     

    1) this is a Buy Signal

     

    2) Maybe TD Bank should buy Moody's

     

    Seriously - I am absolutely no authority

     

    This downgrade was issued because of concern about the rise in the Canadian house hold debt to income ratio - and the Bank's exposure to it.

     

    However, much of the revenue from Canadian banks comes also comes from international operations - the States, Europe and Latin America.

     

    Also, Canadian Banks are presently buying international financial companies at bargain prices.

     

    Canadian banks have stable earnings growth - however, I think the real question is - Are they going to be able to sustain their earnings growth ?
    28 Jan 2013, 08:18 PM Reply Like
  • Uund,
    never catch a falling canadian knife.......
    29 Jan 2013, 05:44 AM Reply Like
  • The increased household debt/income ratio is an inevitable result of ultra-low interest environment. Canadian banks are still maintaining a favorable spread between mortgage and deposit sides. As mentioned by Uunderhill, several banks are buying international banks in order to boost retail deposits.

     

    I never invested in bank stocks. But if this downgrade drives the stock prices low enough, I wouldn't mind jumping in and make easy money (if the market doesn't crash :P).
    28 Jan 2013, 09:19 PM Reply Like
  • TD is solid, I also like BMO as it has lagged the group. Be careful on BNS, they now do more banking in central america then in Canada. Government regulation is what makes these banks so solid.
    28 Jan 2013, 10:06 PM Reply Like
  • and decent dividends too... LOL @ the comment about TD buying Moody's.... They should and then fire all of the "anylysts"
    28 Jan 2013, 10:07 PM Reply Like
  • Only problem in CDN banking industry is overvalued housing, that none of you have mentioned here...
    29 Jan 2013, 01:50 AM Reply Like
  • Terry,
    indeed, and that reminds me.......
    29 Jan 2013, 05:42 AM Reply Like
  • Again Moody's doesn't know what it is talking about!
    29 Jan 2013, 04:49 AM Reply Like
  • User,
    tsssss, tsssss, Moody's is always right, as we experienced in Europe.
    29 Jan 2013, 05:44 AM Reply Like
  • "Yet Moody's refuses to downgrade the U.S. credit rating, and dragged its feet downgrading U.S. banks prior to the last crisis."

     

    They are protecting Obama. Anything for Obama.

     

    If a Republican was in office, we'd be junk-bond grade by now. Which we deserve after Obama (and Bush) added mountains of debt to the federal deficit.
    29 Jan 2013, 07:11 AM Reply Like
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