Teutonic Knight

Canadian Banks Have a Fruitful Friday Despite Dubai

British banks have the lion share of exposure because of the geopolitical factor - the UAE did not become independent from Great Britain until 1971. Because of this lineage, the British are much more closely tied to this Gulf state from a heritage standpoint, and consequently the most heavily impacted.

Bank of Nova Scotia the Loser as Big Six Report Quarterly Results - Desjardins

FP Trading Desk -

Interesting article and quite illuminating as well.

A while ago, I responded to another SA article asking about why that author would place BNS ahead of the other Big 5's so to speak.

Her view was that BNS has a more focused portfolio in the Caribbean and in South America, which she felt would be less prone to losses compared with exposure in the North American markets.

Now according to your reports, BNS obviously did not fare as well as had hoped.

Would you care to enlighten me as to why BNS appeared to have suffered more than its share of bad loans compared with the other Big 5's?

Thank you in advance.
Teutonic

Canada's Financial System: How Is It Still Stable in This Crisis?

I guess another way of paraphrasing the "Common Sense" is that you would never have let yourself be "backed into a corner" in any given situation, be it signing out a mortgage, politicking in your workplace, taking on a new assignment, accepting a promotion, investing, and other aspects of life, etc. Keep this golden rule in mind and get yourself out of trouble often.

Canada's Financial System: How Is It Still Stable in This Crisis?

Canada gets a lot of mention on TV almost on a daily basis during the winter months as that "Cold Air from Canada..."

Canada's Financial System: How Is It Still Stable in This Crisis?

David -

Good summary and I would concur with all your eight points.

As a former Canadian citizen, I would venture to add perhaps a possible 9th point. Back in the eighties, I recall there was a magazine article jokingly comparing American and Canadian life-styles in the most "common" kind of cars they would drive, and it postulated, by support of then statistics, that the "average" Canadian would and could afford a Ford Pinto, compared with something like a Pontiac or a Buick Century for the American counterpart. Perhaps that would shed some light about the subtle differences between these two most wealthy neighboring countries in the world.

And so my point is that there seems to be less temptation for going overboard in leveraging assets, to the point of being akin to gambling, which in my view was actually what happened in our debacle (Bursting of the Bubble is the right word).

Teutonic

Canada vs. U.S. - Whose Banks Are Safer?

Responding to Jake's question, the Canada Deposit Insurance Corporation (CDIC) a Crown Corporation (similar to our now conservatory FNM, FRE), insures deposits up to C$100K per person.

I concur with the author's assessment. However, taking a cue from a recent related SA article, for those who contemplate Canadian bank stocks as a dividend play on a long-term basis, be aware that the Canadian government unilaterally withholds15% tax at the source.

Would the extra paper work with claiming foreign tax credit worth the trouble? Besides, going with the old saying, where there is peril, there lies opportunity. I for one would take a second look at some conservative American banks too.

Six Canadian Banks That Should Reward Long Term Investors

Elaborating on Prudentinvestor's comment above, there are several concerns with the Canadian economy going forward, listed as follows:

1) Oil will likely stay low for the foreseeable future. At one time late in 2007 the Canadian Dollar traded above par against the U.S. Dollar because of oil. The meteoric rise of the oil sands prospect had since dimmed as the break-even mark for production is around $33. If oil hovers around $30 to $40 dollars for several years, oil sands would not be profitable.

2) The U.S. is of late hyping to going "Green". You saw the dramatic drop of unsolicited retail catalogs hitting your mailbox these days, and corporations are striving to improve their image in cutting back printing papers. Newspapers reading appear to be in continuing decline and so will demand for newsprint. These new trends do not bode well for Canada's timber industry.

3) As related by Prudentinvestor, mining a center-piece of the Canadian economy will be hit hard. Nortel was "squeezed" out to BK, and autos are under extreme pressure.

4) Mega Metropolis like Toronto and Vancouver traditionally act as magnets of Hong Kong immigrants, and those influx of capitals will be slowed as the global malaise sinks in. Of late, Toronto and Vancouver real estates attracted new investors from Mainland China, whose new found wealth and prosperity are taking a breathing null.

Consequently with less money around in private enterprise, and less revenues for the governments, the scope and depth of the downturn remains uncertain; consequently my view is that the banking industry will not see a spectacular rise in new business.

Canada on My Mind: 5 Stock Updates

Vivian,

Thanks for your cue on BNS. It will certainly help. I have enjoyed reading your article.

Teutonic


On Jan 20 02:52 PM User 340983 wrote:

> dear Teutonic Knight from Canada
> our main reason for picking Scotiabank was its Latin American network.
> we set out to find a way to play South America, Mexico and the Caribbean
> with a 'safe' bank and picked BNS for that business.
> As for bank dividend rates, this is an area where there will be plenty
> of surprises, and not just in Canada, in the next few quarters.

>
>
> vivian lewis
> global investing editor

Canada on My Mind: 5 Stock Updates

Thanks for a good article. Question for the author and other readers who would chip in as well.

Although a detailed analysis and treatise would be out-of-scope in this forum, why would the author have picked BNS vice BMO, TD, or RY? The dividend rate of BNS is seemingly at the lower end of the Big 4 at this moment. Would the author think the BMO or RY would likely cut dividends?

Thank you in advance for your response. As a former citizen of that lovely country, Canadian stocks are always on my mind.