Its banks are better capitalized than global peers and avoided many of the problems infecting other financial institutions, they say.
Here are some key differentiating factors:
Canada's federal regulator, the Office of the Superintendent of Financial Institutions, requires chartered banks to keep a minimum Tier-1 capital ratio of 7 percent, versus 6 percent in the United States.
Canadian banks' capital ratios are well above that minimum. The median Tier-1 capital ratio of the six biggest Canadian banks was 9.8 percent in the latest quarter, according to RBC Capital Markets.
Canada's five largest banks have branches in all 10 provinces, so their economic/credit risks are diversified (the sixth-largest operates mainly in the province of Quebec). No U.S. bank has branches in all 50 U.S. states.
Canada's largest banks contain both commercial and investment bank businesses, and OSFI has oversight over the entire entity. In the United States, investment banks have been separate from and regulated differently from commercial banks. The five major U.S. investment banks have this year either gone bankrupt, agreed to be acquired, or changed their banking structure to become commercial banks.
Canadian banks were conservative in approving mortgage loans. The Canadian Bankers' Association estimates that "non-prime" mortgages -- loans to customers who nearly qualify for prime mortgages as well as to riskier borrowers -- make up less than 5 percent of outstanding mortgages
Canadian borrowers are more likely to keep up their mortgage payments. The CBA says the rate of mortgages at least three months in arrears was 0.27 percent in July, near historic lows.
The Canadian Bank Act requires insurance on mortgage loans that exceed 80 percent of a home's value.
Canadian banks were the first in the world to adopt new risk-management rules under the Basel II capital framework.
By law, shares of large, publicly traded banks and insurance companies must be "widely held," which in effect prevents domestic mergers or foreign takeovers unless approved by the Canadian finance minister.
reuters.com
Toronto real estate. WHY CANADIAN BANKING SYSTEM IS STRONG
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