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Days after Canadian Prime Minister Justin Trudeau said he would invoke emergency orders to crack down on demonstrators by freezing their bank accounts, five major Canadian banks went offline on Wednesday night, as customers reported their funds were unavailable, according to technology website Bleeping Computer.

Royal Bank of Canada (RBC), BMO (Bank of Montreal), Scotiabank, TD Bank Canada, and the Canadian Imperial Bank of Commerce (CIBC) were all hit with unexplainable outages on Wednesday evening. Users began reporting issues with banks around 1600-1700 ET, Downdector data showed.

Canadian Twitter users reported they couldn’t access their funds at the ATMs. One user took a photo of an error message at one of RBC’s ATMs that read, “Tap transactions aren’t available for this card.”

In response, RBC tweeted, “We are currently experiencing technical issues with our online and mobile banking, as well as our phone systems.”

“Our experts are investigating and working to get this fixed as quickly as possible, but we have no ETA to provide at this time. We appreciate your patience.”

BMO customers also reported issues. One customer said, “I’m having trouble and money transfer just auto gets rejected for no reason. Not going over my limit, all info is verified correct and receiving bank says no issues on their end.”

There were countless stories of banking customers who experienced trouble accessing their funds yesterday evening. No bank explained the source of the outrage, but essential to note the outage comes, as we said above, days after Trudeau invoked the Emergencies Act.

The power gives the federal government direct access to banks to force any business conducted with Freedom Convoy protesters and affiliates to freeze their bank accounts. Trust in the banking system among depositors is crucial to prevent bank runs. Freezing accounts of people linked to the protests can incite fear.

…click on the above link to read the rest of the article…

Canadian Banks Have an Outsized Impact on Global Fossil Fuel Financing

May 13, 2021

Canadian Banks Have an Outsized Impact on Global Fossil Fuel Financing

We pledged to reduce emissions by 30 per cent by 2030, but will financial institutions undermine this goal?

The Banking on a Better Future movement launched April 1. Photo by Joshua Best.

When 18-year-old climate activist Naisha Khan wants to start a conversation about how banking fuels climate change, she asks someone how they think their bank makes money to pay them interest each month.

If that person banks with any of Canada’s five largest banks, that money likely comes partly from fossil fuels. But Canadian banks don’t just make money from fossil fuels — they’re also financing the industry, big time.

Canada has pledged to cut its greenhouse gas emissions by at least 40 per cent below 2005 levels by 2030, but since the 2015 Paris Agreement the country’s five largest banks have poured $726 billion into fossil fuels, according to environmental advocacy organization Stand.earth.

That’s based on numbers from the Rainforest Action Network’s latest annual analysis of the world’s largest 60 banks.

Ranked by the amount of financing they’ve provided to fossil fuel companies since 2016, the Royal Bank of Canada comes in fifth in the world with US$160 billion. TD Bank is ninth at US$129 billion, Scotiabank is 11th at US$114 billion, the Bank of Montreal is 16th at US$97 billion and CIBC is 22nd at US$67 billion.

Stand.earth adds up this financing and converts it to Canadian dollars using the average exchange rate for the five-year period of C$1.28 to US$1.

When asked by the CBC why it continues to fund fossil fuel projects, RBC “reaffirmed its commitment to net zero emissions, including a promise of $500 billion in sustainable finance by 2025,” the broadcaster reported. “It said it was also the first bank to commit not to lend to resource projects in Alaska’s Arctic National Wildlife Refuge.”

…click on the above link to read the rest of the article…

“Psychologically, They’re Ill-Prepared” – Canadian Chaos Looms

April 11, 2019

“Psychologically, They’re Ill-Prepared” – Canadian Chaos Looms

Via Grant’s Almost Daily,

I’m your huckleberry

“U.S. hedge funds from time to time have appeared in this country over the last 10 years, with the same hypothesis of shorting Canadian banks, and it hasn’t worked out very well for them,” Brian Porter, CEO of the Bank of Nova Scotia, said yesterday. “There are always going to be those that take an opposing view, and we’ll prove them wrong over the long term.”

Gabriel Dechaine, banking analyst at the National Bank of Canada, likewise came to his industry’s defense in a note today:

“A trend that is making us believe that sector sentiment is becoming too bearish is the re-emergence of a vocal ‘short Canada’ investment crowd.”

Dechaine writes that a Stanley Cup victory for the woebegone Toronto Maple Leafs (last title, 1967) is more likely than a jump in loan losses.

One well-known investor is publicly taking the challenge: Steve Eisman, portfolio manager at Neuberger Berman and a protagonist in Michael Lewis’ The Big Short.

“Canada has not had a credit cycle in a few decades and I don’t think there’s a Canadian bank CEO that knows what a credit cycle really looks like,” Eisman, who is short various Canadian banks and mortgage lenders, fired back in an interview yesterday with BNN Bloomberg television.
“I just think psychologically they’re extremely ill prepared.”

While Canadian bank advocates and their skeptics exchange words, the formerly-white hot housing market is now in deep freeze. March sales in Vancouver collapsed by 31.4% year-over-year according to the local real estate board, the worst showing since 1986 and down 46% from the 10-year average for March. Prices also lurched lower, with the benchmark detached home price falling 10.5% year-over-year to C$1.44 million ($1.08 million). Things are more stable in Toronto, where March sales and benchmark prices were little changed from a year earlier, but those figures remain 40% and 14% below their respective levels from March 2017.

…click on the above link to read the rest of the article…

How Citizens Can Stop the Big Five’s Disastrous Fossil Fuel Funding

March 29, 2019

How Citizens Can Stop the Big Five’s Disastrous Fossil Fuel Funding

Canada’s major banks have financed $464 billion worth of fossil fuel projects since 2016.

‘What would happen if young Canadians started to pledge to never do business, including mortgages, with any bank that is investing in making their future worse?’ Photo by Jonathan McIntosh, Creative Commons license CC BY-SA 2.0.

My first bank account was with RBC, back when they were still into being called “Royal.” I didn’t so much as choose them as just follow my parents, like you do with the family toothpaste brand.

Today it turns out that RBC is doing more to undermine my son’s future than any bank in Canada.

I’ve long since switched to a credit union. I couldn’t stand the predatory profits Canada’s five big banks rack up each year, or that they pay their executives such exorbitant amounts of money — in 2018 the five CEOs took home $62 million between them. All while dinging their customers for service fees every chance they get.

But if you are a young person getting your first account you have another reason to dislike the big banks. They are not just betting against your future; they are actively working to make it worse.

A new international report Banking on Climate Change finds in the three years since the Paris Agreement was adopted, Canada’s big five banks have financed a staggering $454 billion worth of fossil fuel projects, with RBC leading the pack. This includes $160 billion of financing for the expansion of new fossil fuels both in Canada and around the world.

582px version of BigBanksChart.jpg — Source: Banking on Climate Change.

Scientists have told us we have less than 12 years to cut emissions almost in half, representing a dramatic reduction in fossil fuel use, to limit global warming to 1.5 degrees Celsius.

…click on the above link to read the rest of the article…

The ‘Big Short’ In Canada: Eisman Ups Bets Against “Big Six” Canadian Banks

March 21, 2019

The ‘Big Short’ In Canada: Eisman Ups Bets Against “Big Six” Canadian Banks

Over the last year, Neuberger Berman portfolio manager Steve Eisman – who gained notoriety beyond Wall Street thanks to ‘The Big Short’ and his portrayal by Steve Carrell in the movie adaptation – has taken seemingly every opportunity to talk his book, which apparently consists of concentrated bets against the financial systems of two developed nations: The UK and Canada.

Though UK banks largely bottomed out in October and have managed only a tepid rebound since, their Canadian peers have clawed back much of their losses from late last year. But this hasn’t shaken Eisman’s faith in his bet against Canadian banks, which is effectively a bet against the Canadian housing market (though Eisman doubts the fallout will be anywhere near as intense as the US housing market collapse that minted his reputation).

During an interview with the FT that was published on Thursday, Eisman explained that he’s simply betting on a “normalization of credit” in the Canadian economy, where lax lending terms fueled a housing bubble that has been tentatively acknowledged as a systemic risk by the Bank of Canada. For the first time ever, the central bank late last year even started buying mortgage bonds late last year to prop up the sliding Canadian housing market help increase the tradeable float of its benchmark securities

“I’m calling for a simple normalisation of credit that hasn’t happened in 20 years,” Mr Eisman told the FT, while declining to name the banks he is shorting, or the full extent of his positions.

…click on the above link to read the rest of the article…

Why Rising Mortgage Rates Threaten Canada’s Banks

October 1, 2018

Why Rising Mortgage Rates Threaten Canada’s Banks

Wolf Richter with Jim Goddard on This Week in Money:

Interest rates will continue to rise in the US and Canada. In both countries, potential buyers face affordability issues, which puts a damper on demand. But in Canada, variable-rate and adjustable-rate mortgages dominate (while ARMs are only 6% of all mortgage originations in the US), and currenthomeowners have to struggle with rising monthly payments of homes they bought at inflated prices. This has already started to happen. Here’s my take:

Home-equity-loan balances in Canada per capita are now 3.3 times what they were in the US during HELOC peak before it all collapsed. Read… HELOCs in the US & Canada: As “Scarred” Americans Learned Bitter Lesson, Canadians Went Nuts

Canadian banks set to reveal quarterly earnings amid housing & debt concerns

May 22, 2017

Canadian banks set to reveal quarterly earnings amid housing & debt concerns

Ratings agency Moody’s downgraded the credit ratings for Canada’s big banks earlier this month, citing concerns that over-stretched borrowers and high house prices have left lenders vulnerable to potential losses. (Dillon Hodgin/CBC)

The Canadian banks are expected to benefit from rising U.S. interest rates and fewer bad loans in the oilpatch as they start reporting their latest quarterly results this week, but analysts say worries about the housing market and consumer debt remain key concerns.

“The reality is that given all of the fears about the Canadian mortgage market, I think that even if the results are good, people will dismiss them as being backward-looking,” said analyst Meny Grauman of Cormark Securities.

The Bank of Montreal will kick off the earnings parade on Wednesday, followed by Royal Bank, TD Bank and CIBC on Thursday. Scotiabank will report May 30.

Edward Jones analyst Jim Shanahan said fee income from trading activities and other types of charges was a key driver of earnings growth last quarter.

That likely moderated during the second quarter, but a strengthening in net-interest margins — stemming from U.S. interest rate hikes in December and March — will likely pick up some of the slack, he said.

BMO and TD are most likely to benefit from the rate increases, Shanahan said.

The banks could also see some improvement in their loan loss provisions as stability has returned to the oilpatch.

“From a credit perspective we should see some continued improvement within the oil and gas portfolios,” Shanahan said.

However, analysts said concerns about high home prices, debt-laden consumers and a liquidity crisis at mortgage lender Home Capital Group could all weigh on the bank stocks.

…click on the above link to read the rest of the article…

“We Are All Doing It”: Thousands Of Canadian Bankers Admit Lying To Customers To Boost Sales

March 15, 2017

“We Are All Doing It”: Thousands Of Canadian Bankers Admit Lying To Customers To Boost Sales

Several days after shares of Canada’s TD Bank tumbled following reports that its employees were engaging in practices similar to those which led to a major scandal at Wells Fargo, which cost CEO John Stumpf his job and led to bonus clawbacks and numerous terminations over the practice of “cross-selling”, employees from all five of Canada’s big banks have flooded CBC’s “Go Public” whistleblower hotline with stories of how they too feel pressured to upsell, trick and even lie to customers to meet unrealistic sales targets and keep their jobs.

In nearly 1,000 emails, employees from RBC, BMO, CIBC, TD and Scotiabank locations across Canada describe the pressures to hit targets that are monitored weekly, daily and in some cases hourly. “Management is down your throat all the time,” said a Scotiabank financial adviser. “They want you to hit your numbers and it doesn’t matter how.”

The deluge is fuelling multiple calls for a parliamentary inquiry similar to that which followed the Wells Fargo revelations, even as the banks claim they’re acting in customers’ best interests, CBC reported, adding it has agreed to protect their identities because the workers are concerned about current and future employment.

Some examples:

An RBC teller from Thunder Bay, Ont., said even when customers don’t need or want anything, “we need to upgrade their Visa card, increase their Visa limits or get them to open up a credit line.” “It’s not what’s important to our clients anymore,” she said. “The bank wants more and more money. And it’s leading everyone into debt.”

A CIBC teller said, “I am expected to aggressively sell products, especially Visa. Hit those targets, who cares if it’s hurting customers.”

…click on the above link to read the rest of the article…

For Canada’s Banks This Is “The Next Shoe To Drop”, And Why It Will Drop This Spring

March 31, 2016

For Canada’s Banks This Is “The Next Shoe To Drop”, And Why It Will Drop This Spring

Roughly around the time the market troughed in early February, we asked “After The European Bank Bloodbath, Is Canada Next?” The reason for this question was simple: we said that “when compared to US banks’ (artificially low) reserves for oil and gas exposure, Canadian banks are…not.”

Stated otherwise, we warned that the biggest threat facing Canada’s banking sector is how woefully underreserved it is to future oil and gas loan losses.

We added that unlike their US peers, “Canadian banks like to wait for impairment events to book PCLs rather than build reserves, in effect throwing the entire process of reserving for future losses out of the window.”

We then cited an RBC analysis according to which a 7% loss reserve would be sufficient to offset loan losses in what is shaping up as the biggest commodity crash in history. We disagreed:

We wish we could be as confident as RBC that this is sufficient, however we are clearly concerned that if and when Canada’s banks finally begin to write down their assets and flow the impariments though the income statement, that things could go from bad to worse very quickly, and not necessarily because Canada’s banks are under or over provisioned, but for a far simpler reason – once the market focuses on Canadian energy exposure, it will realize just how little information is freely available, and if European banks are any indication, it will sell first and ask questions much later if at all.

However, indeed assuming a worst case scenario, one in which the banks will have to “eat” the losses and suffer impairments, then the question emerges just how much capital do these banks truly have, which in turn goes back full circle to our post from the summer of 2011 which led to much gnashing of teeth at the Globe and Mail.

…click on the above link to read the rest of the article…

New law proposed to shift bank failure risk from taxpayers

March 23, 2016

New law proposed to shift bank failure risk from taxpayers

Ottawa proposes ‘bail-in’ regime to force creditors to prop up failing banks

The Liberal government says it will create legislation that shifts some of the risk in a bank failure to creditors. (Canadian Press)

The proposed plan outlined in the federal budget released on Tuesday would allow authorities to convert eligible long-term debt of a failing lender into common shares in order to recapitalize the bank, allowing it to remain operating.

The plan is in line with international efforts to address the potential risks to the financial system from institutions that are deemed too big to fail, the budget document said.

The issue was at the heart of the 2008 global credit crisis, with various governments having to bail out systemically important institutions.

Canada, which escaped the crisis relatively unscathed, did not have to rescue any of its banks though they got billions in support during the crisis and the recession that followed. The government said it will introduce framework legislation for the plan, along with enhancements to Canada’s bank resolution toolkit.

When the Harper government floated the idea of a bail-in regime in 2014, Moody’s cut its ratings on Canadian banks.

Bank watch lists early warning sign of trouble for oil and gas industry

March 6, 2016

Bank watch lists early warning sign of trouble for oil and gas industry

Royal Bank, CIBC and Scotiabank each added 9 oil and gas firms to watch lists in recent quarterly earnings

In releasing their latest quarterly earnings, Royal Bank, CIBC and Scotiabank each added nine oil and gas firms to their loan watch lists, the latest sign of trouble in the oilpatch.

In releasing their latest quarterly earnings, Royal Bank, CIBC and Scotiabank each added nine oil and gas firms to their loan watch lists, the latest sign of trouble in the oilpatch. (Larry MacDougal/Canadian Press)

Gordon Sick, a finance professor at the Haskayne School of Business at the University of Calgary, said many energy companies are struggling and likely behind in their loans.

“There’s a lot of them who are potentially in default,” said Sick. “The banks in Canada are potentially looking at some hits.”

Royal Bank’s watch list grew after it did a name-by-name stress test on its oil and gas portfolio, said chief risk officer Mark Hughes.

“Following this stress test, we’ve seen a small increase to our oil & gas watch list for closer monitoring,” Hughes said in an email.

One step before ‘impaired’

The watch list has the banks keeping a close eye on the companies, and is one step before impaired status when a bank considers the loan at risk of default.

Scotiabank said five per cent of its energy portfolio was on the watch list and it moved four loans to impaired status in the first quarter. CIBC said it impaired one loan.

…click on the above link to read the rest of the article…

These Are The Two Canadian Banks Most Exposed To A Severe Oil Shock According To Moody’s

February 22, 2016

These Are The Two Canadian Banks Most Exposed To A Severe Oil Shock According To Moody’s

Two weeks ago we asked if, in the aftermath of the dramatic selloff suffered by European banks over commodity exposure concerns, whether Canadian banks would not be next in line. The reason was that according to an RBC report, while US banks had already taken significant reserves against future oil and gas loans, roughly amounting to 7% of their exposure, Canadian banks were stuck in denial.

As RBC grudgingly noted, “The small negative moves in credit would normally not even “register” were it not for plenty of evidence of issues surround the oil and gas sector and the impact it could have on the oil producing provinces in Canada.” Yes, well, China already advised its media to stick to “positive reporting” – sadly for the energy-rich or rather energy-por province of Alberta it is now too late.

As for ths reason for this surprising reserve complacency, RBC said the following:

Canadian banks like to wait for impairment events to book PCLs rather than build reserves (called sectoral reserves in the past) for problematic industries.

In other words, let’s just wait with the reserves until the losses are already on the book: hardly the most prudent approach which may be why today, with its usual several week delay, Moodys opined on which Canadian banks it views as most susceptible to a “severe oil slump.”

As quoted by to Bloomberg, Moody’s said that “Canadian Imperial Bank of Commerce and Bank of Nova Scotia would be nation’s hardest hit lenders if the oil slump became sharply worse, while Toronto-Dominion Bank would best be able weather a worsening rout.”

“The prolonged slump in oil prices will increase the financial stress on oil producers and the drillers and service companies that support them, as well as on consumers in oil-producing provinces,” Moody’s said.

…click on the above link to read the rest of the article…

After The European Bank Bloodbath, Is Canada Next?

February 8, 2016

After The European Bank Bloodbath, Is Canada Next?

Back in the summer of 2011, when we reported that Canadian banks appear dangerously undercapitalized on a tangible common equity basis…

… the highest Canadian media instance, the Globe and Mail decided to take us to task. To wit:

Were the folks at Zerohedge.com looking at the best numbers when they argued that Canadian banks were just as levered as troubled European banks?

In a simple analysis that generated a great deal of commentary, a blogger at Zerohedge.com, an oddball but widely followed financial site, suggested that Canadian banks were as leveraged as European banks because they have low ratios of tangible common equity to total assets.

But there’s an argument that looking at that ratio is the wrong way to judge a bank’s strength because it ignores the composition of the assets.

Sadly, the folks at Zerohedge.com were looking at the best numbers, and even more sadly, in the interim nearly 5 years, Canada’s banks took absolutely no action to bolster their capital ratios; in fact, these have only deteriorated.

The Globe and Mail, however, was right about one thing: the TC ratio did not capture the full risk embedded in Canadian bank balance sheets: it was merely a shorthand as to how much capital said banks have in case of a rainy day.

Sadly for Canada, it’s not only raining, it’s pouring for the country’s energy industry, a downpour which is about to migrate into its banking sector. Which is why it is indeed time to take a somewhat deeper dive into the Canadian banks’ balance sheets, where we find something very troubling, and something which prompts us to wonder if the time of freaking out about European banks is about to be replaced with comparable panic about Canadian banks.

The following chart from an analysis by RBC shows that when compared to US banks’ (artificially low) reserves for oil and gas exposure, Canadian banks are…not.

…click on the above link to read the rest of the article…

BMO, RBC, TD Bank Downgraded Over Economic Growth Concerns

January 30, 2015

BMO, RBC, TD Bank Downgraded Over Economic Growth Concerns

TORONTO – Barclays has downgraded the stocks of three of Canada’s biggest banks, citing concerns about the country’s economic growth.

Analyst John Aiken has downgraded Bank of Montreal (TSX:BMO), Royal Bank of Canada (TSX:RY) and TD Bank (TSX:TD) to underweight, from equal weight.

Aiken says consumer borrowing, the main profit driver for the Canadian banks, is likely to slow down even more than previously expected.

He says the sharp decline in the price of oil will be a negative for the country overall, with the potential for recession in Alberta offsetting any of the benefits, such as lower gasoline prices.

Aiken also says the Bank of Canada’s surprise interest rate cut on Jan. 21 will put pressure on the commercial banks’ lending margins, which will hamper their earnings growth.

The central bank reduced its overnight lending rate to 0.75 per cent from one per cent and Canada’s biggest lenders have only partially passed along the savings, reducing their prime lending rates by only 15 basis points instead of the full 25.

Aiken wrote in a commentary that Barclays doesn’t anticipate a “significant uptick” in demand for consumer loans and said it’s likely the banks margins will be squeezed incrementally.

“As a result, our reduced estimates imply low single-digit earnings growth for 2015. ”

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