Canadian banks not the best?

Remember all that talk about how Canadian Banks were the envy of the world?  Well it turns out to be maybe not so true, at least according to a ranking by The Banker magazine.  No Canadian bank made it into the top 30 banks in the world in terms of capitol strength.  Our friends at CIBC did however manage to make the list of banks with the worst losses, coming in at number 15.

The bank posted losses of C$1.46-billion and C$1.1-billion in the first two quarters of 2008 alone as CIBC took the brunt of the U.S. credit crunch.

The bank did come in 71st in the overall rankings, down two spots from last year.

Still, CIBC’s losses pale in comparison with the mammoth US$59.3-billion shortfall suffered by the Royal Bank of Scotland that landed it the dubious honour of top spot on the list.

Rounding out the top three is a pair of American banks, with Citigroup down US$53-billion and Wells Fargo & Co. close behind at US$47.8-billion.

Well, you know what they say: Flaherty will get you nowhere.

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Ahab
Ahab
11 years ago

No, that’s the true strengh of the RE market, not the banks. Making a government insured loan is a no-lose proposition for the banks, and the risky loans are almost all insured. The banks aren’t stupid (well CIBC is stupid, but they are prevented from making stupid loans on Canadian RE). The taxpayers are holding the bag, not them.

You're ignoring commercial real estate.

doug r
doug r
11 years ago

Another 7 US banks failed Thursday:
http://www.fdic.gov/bank/individual/failed/bankli

patriotzed
patriotzed
11 years ago

other ted:

The difference is if I think the stock market is overvalued I can short sell (or implement an equivalent option strategy) and make a bundle if I'm right.

I can also sell off my stock holdings in any amounts I like if I feel they are getting overpriced.

You can't do that with RE. If stupid people are willing to pay too much, there is nothing smart people can do but wait for prices to fall.

other ted
other ted
11 years ago

patriotz says

"And I really don’t care what a magazine survey says, I care what the market says, and BMO for example has recently traded at twice its low of $25 earlier this year. All the banks have also had sold-out issues of new preferreds in the last few months. This is money talking.

"

Good point but some bulls will point out that thet don't care what we say but what the market says about real estate.

asalvari1
asalvari1
11 years ago

Vansanity,

Thats fine, nobody knows either. Don't beat yourself on this, just try not to bet on particular outcome.

Anonymous
Anonymous
11 years ago

Yeah, but come on, how likely is it that rates will go up to 4 percent…oh shi….

patriotzed
patriotzed
11 years ago

observer: The only way to determine the true strength of Canadian banks is to see what would happen if a sizeable percentage of their RE loans (not insured by CMHC) defaulted. No, that's the true strengh of the RE market, not the banks. Making a government insured loan is a no-lose proposition for the banks, and the risky loans are almost all insured. The banks aren't stupid (well CIBC is stupid, but they are prevented from making stupid loans on Canadian RE). The taxpayers are holding the bag, not them. Any sensible person should be up at arms at our "Conservative" government for allowing this idiocy to go on, in the face of the consequences seen south of the border. Getting rid of the 0/40 (which they instituted in the first place) is just window dressing. And I really don't… Read more »

Vansanity
Vansanity
11 years ago

“But we don’t have a lot of [wiggle] room,” Morettie said. “We can go up to four percent, but then we’re done.”

This is particularly scary considering variable rate mortgages (on average) were around 5.60% waaaayyy back in good ol' November of '07!

I keep hearing a lot about deflation, inflation, hyperinflation and stagflation… each with its own impact on interest rates. I don't have a clue what to expect anymore.

Bilbo Bloggins
Bilbo Bloggins
11 years ago

Skye (#4) – we're also more expensive than the OC (Orange County) and Hong Kong, but then again we the OWE-lympics.

zoogle
zoogle
11 years ago
gvrdpropertyowner
gvrdpropertyowner
11 years ago

“But we don’t have a lot of [wiggle] room,” Morettie said. “We can go up to four percent, but then we’re done.” Ladies and gentleman you are witnessing the birth of the sub-prime borrower who will become the third wave of foreclosures. Wave-one of foreclosures, over-extended (negative cash flow) investors after the Olympics- where are all the foreign buyers that my real estate agent told me would come and buy my condo? Wave-two (this is actually sad) unemployed people who just can't make that $4000.00 a month mortgage payment. The sub-primers will become the third-wave after the rebound in the world economy causes interest rates to rise- of course, B.C.'s lagging economy will still be in recession. This article posted by Ulsterman, provides evidence that sub-prime doesn't cause bubbles- or collapses- bubbles cause sub-prime. Run out of legitimately qualified buyers… Read more »

Ulsterman
11 years ago

This is the problem… First-time buyers profiled in the Georgia Straight this week http://www.straight.com/article-237609/firsttimer… Here are a few choice excerpts: "What really helped? The 2.75-percent interest rate they were offered. It ultimately allowed them to move from a $1,800-a-month apartment into their own home. “But we don’t have a lot of [wiggle] room,” Morettie said. “We can go up to four percent, but then we’re done.” XXXXXXXXXXXXXXXXXXXXXXX "Similarly, the executive director of the Mortgage Brokers Association of B.C. said interest rates are not something to worry about. “I don’t think anyone wants to see what happened in 1981,” Tamera Olsen told the Straight. “The lenders are aware; they don’t want to see anyone lose their homes.…What I’m hearing is that any increase in rates will be gradual. Very gradual.” She also said that 10 years is too far away to… Read more »

VultureBoy
VultureBoy
11 years ago

Interesting, but I have seen other articles which place Chinese banks in the very high risk category. They are financing companies which do not even return their cost of capital. Such companies will not exist forever. The accounting standards for Chinese banks have much to be desired too.

observer
observer
11 years ago

The only way to determine the true strength of Canadian banks is to see what would happen if a sizeable percentage of their RE loans (not insured by CMHC) defaulted. This is what brought down the banks in other countries so until something like that were to happen here, one can't really make a fair comparison.

Brittanny
Brittanny
11 years ago

It was greedy banks who lead the way of this ultimate financial armaggedon, and then supported by the lolly gagging gov't.

Adb
Adb
11 years ago

EB: deflation as a cash-rich buyer is sweet…the long-term results (lower wages, more debt,etc.) … scary as hell.

more thoughts about Canadian banks:
http://marketdepth.typepad.com/marketdepth/2009/0

EB
EB
11 years ago

You don't think deflation is scary, kids?

Anonymous
Anonymous
11 years ago

"Flaherty was great on SCTV but he sucks as a finance minister."

Count Floyd apparently can't count 😆

ABC
ABC
11 years ago

Canadians in a lot of debt? See here:

http://worthwhile.typepad.com/worthwhile_canadian

pricedoutfornow
pricedoutfornow
11 years ago

Re: Honolulu…that reminds me of about two years ago when a client of ours came back from travelling in the US-he commented that houses in Kamloops were more expensive than houses in Phoenix. Jeepers! How can anyone deny a bubble with info like that?

Skye
11 years ago

I've been spreading the news around town that Honolulu is now more affordable than Vancouver. People's jaws drop. The message is starting to sink in. I think we bears underestimated how many people were waiting in the sidelines for any sign of a drop to jump in head first.

best_place_on_meth
best_place_on_meth
11 years ago

Flaherty was great on SCTV but he sucks as a finance minister.

buff_butler
buff_butler
11 years ago

"Flaherty will get you nowhere"

lol… awsome.

visitor
visitor
11 years ago

yeah, best place on earth, best real estate, best banks, eventually all myths shall be broken to pieces…Why do all countries with big neighbours have this huge inferiority complex, I dont know. Canadians just BE HUMBLE and all will be fine.