7 Canadian banks get negative outlook

Standard and Poor’s have downgraded their outlook for 7 Canadian banks from stable to negative.

And what has motivated this downgrade?

High housing prices and consumer debt.

Now you can bet that S&P are aware of the CMHC and the backdoor bank bailout, but when things get this out of balance there is a spill-over effect.  If you can’t pay the mortgage you probably aren’t paying the credit card bill either, and there’s no CMHC buying up credit card debt.

“A prolonged run-up in housing prices and consumer indebtedness in Canada is in our view contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks,” the rating agency stated in its decision. “Growing pressure on banks’ risk appetites and profitability arising from competition for loan and deposit market share could also lead to a deterioration in our view of industry risk.”

The seven Canadian banks with a negative outlook are:

-Bank of Nova Scotia
-Central 1 Credit Union
-Home Capital Group Inc.
-Laurentian Bank of Canada
-National Bank of Canada
-Royal Bank of Canada
-Toronto-Dominion Bank

Full article in the Globe and Mail.

 

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watson
Guest
watson

@VMD: She did’nt swindle the money… she ate it!

Romeo Jordan
Guest
Romeo Jordan

Thanks VMD, great stats.

Bummer….sales not low enough, listings not high enough…..

YET!!!

But it’s on its way.

Its still many moons before we can say “I told you (fucking lemmings) so….”

It will come. And it’s going to taste great, a dish best served cold.

ScubaSteve
Member
ScubaSteve

I bet REBGV posts their stats late Friday to avoid any weekday press, hoping that the story sort of goes away over the weekend, or gets picked up by weekend news (that no one watches).

VMD
Member

July 2012 Sales:
YoY: -16%
MoM: -9%

Months Inventory:

2012-07: ~8.5
2012-06: 7.8
2012-05: 6.3
2012-04: 5.9
2012-03: 5.3
...
2011-07: 5.9
...
2008-07: 8.8
Turkey
Guest
Turkey

@patriotz: Yup. I’m hesitant to make a prediction, but anyone expecting a flood of oh-my-god listings will be disappointed.

In my bailiwick, the strathcona bunker bellwether (still here, for now; $859k asking) appears to have been pulled. Another couple of Strathcona properties have dribbled off the market, either sold or pulled. There are still more red dots than six months ago, but things are looking pretty stagnant.

Small consolations: all 5 “Strathcona Edge” properties are still listed, and this ridiculous $1.5e6 listing continues to languish. Plus, there are a lot of houses being fully gutted and renovated within earshot; one wonders how many of them will be listed this fall.

It’s going to be a long, slow bleed. Painful, too, although not for those of us who saw it coming.

Romeo Jordan
Guest
Romeo Jordan

Hi Patriotz,

I think buying fear has seeped into the market…but sellers are still (by and large) oblivious…by sellers, I mean folk that think they are long term investors but are not, and when they realize that they are down 15% top line and that this translates into a total equity wipeout (and some residual debt to boot, after they sell) then they hit the bid and head for the exits like a bunch of fucking lemmings.

What are you, some kind of muppet? I figured you knew this already.

Get with the program.

patriotz
Member

@Romeo Jordan:
The masses (assuming you mean the majority of homeowners) won’t be participants in the upcoming bust just as they weren’t in the US.

As in the US, the participants will be speculators, HELOC addicts, and maxed-out recent buyers. And only the first group will sell when prices are seen to be falling. The last two will hold on to their houses to the bitter end.

rp1
Guest
rp1

#47 @Anonymous: “Is this some sort of sarcastic and cynical pessimist contest? The more sarcastic, cynical and pessimistic the comment, the more up-votes?”

The problem today is that no matter how cynical you are, it never seems to be enough.

Romeo Jordan
Guest
Romeo Jordan

Thanks Paul….

Well, listings pace is somewhat tepid….at this point, we need some FEAR to permeate the seller/specuvestor psyche…..what will be the trigger? Or will the Chinese water torture method do the trick….hmmm.

paulb
Member

New Listings 186
Price Changes 137
Sold Listings 106
TI:19188

Weekly office stats up http://www.paulboenisch.com

Romeo Jordan
Guest
Romeo Jordan

Update:

The masses (en mass) will not hit the panic button until we breach 12MOI city wide (I expect this to happen before year end) and prices are already off 20% (basic averages).

It’s coming you muppets, I told you it would be worth the wait.

Don’t be shocked to see the simple average fall 50% over 24 months.

Yalie
Guest
Yalie

@Anonymous:

Is this some sort of sarcastic and cynical pessimist contest? The more sarcastic, cynical and pessimistic the comment, the more up-votes?

As opposed to what, the mainstream media? Where only the most dishonest, uber-optimistic, real-estate-only-goes-up, FIRE industry pumping “news” gets published?

Anonymous
Guest
Anonymous

@ Anonymous. What a horribly cynical outlook on the contributors and readers of this blog! I voted you up for it.

SKS
Guest
SKS

Is this some sort of sarcastic and cynical pessimist contest? The more sarcastic, cynical and pessimistic the comment, the more up-votes?
_______

Its as realist contest, not a pessimist contest? If you choose to stick you head in the sand in lotus land, that is your prerogative….the rest of us are just trying to figure out how to walk over you…

Anonymous
Guest
Anonymous

Is this some sort of sarcastic and cynical pessimist contest? The more sarcastic, cynical and pessimistic the comment, the more up-votes?

Navin R. Johnson
Guest
Navin R. Johnson

@rp1:

Inflation keeps going and cash will be worth shit…

Bo Xilai
Guest
Bo Xilai

@Anonymous:
Just wait until all the Special Purpose Investment Vehicles blow up. These are creations of the Chinese municipalities for borrowing purposes. They are generally “backed” by marginal assets. They were created because municipalities are limited in the borrowing abilities. All that “flush with cash” will become cash that’s flushed down the toilet…

Chabar
Guest
Chabar

@VMD:

Just looking into her face, I wouldn’t give her to park my bike not to mention to mange some assets.

vangrl
Member
vangrl

my guess

73 sales today

VMD
Member

@T:
speaking of “the wealth trap known as F.I.R.E.”
news today:
BCSC alleges million-dollar fraud by financial adviser

rp1
Guest
rp1
@T: “their wealth is built on massive debt. European and US Debt. You don’t think trade deficits just happen do you?” If the US borrows money and buys Chinese goods, new money is created in China to facilitate the production of those goods and that wealth is *real*. Once goods are produced and money changes hands, a transfer of wealth is accomplished. I.e. if the US defaults, you’re not going to see the wages of Chinese workers somehow clawed back. So there has been a lot of wealth created in China. What is of deep concern is that there has also been a lot of speculative debt created in China, and a lot of malinvestment. Those losses will ultimately be paid by households somehow. So you have dishonest accounting. It’s kind of like how governments in Canada keep taxes very… Read more »
rp1
Guest
rp1

@Anonymous: “China is flush with cash.”

Not really. Households have savings, but a lot of that has gone into real estate. Chinese businesses, local governments, and state owned enterprises are all highly leveraged.

Anonymous
Guest
Anonymous

@Bo Xilai: “China’s wealth is built on nothing but a state-sponsored Ponzi scheme fuelled by massive debt.”

Massive debt by the western consumer maybe. China is flush with cash.

T
Guest
T

@35 Bo Xilai

As much as I dislike China for their human rights, environmental record and neighborly policies, their wealth is built on massive debt. European and US Debt. You don’t think trade deficits just happen do you?

When you say state sponsored ponzi scheme, did you mean fractional reserve banking, floating currencies and Q.E. infinity? We’re here on this site because of our disdain for government interference in the market. China is just catching up to what the west has been doing ever since the end of WW2. Enslaving their population in the wealth trap known as F.I.R.E.

Anonymous
Guest
Anonymous

@gokou3: “Lack of differentiation == reduced pricing power, that is.”

Having easy comparables it is a double edged sword. On the way up it helped pump prices. On the way down it works in reverse.