The world economy continues to feel the ripple effects after U.S. authorities took over Silicon Valley Bank (SVB) last Friday.
SVB was the 16th largest bank in the United States, largely catering to startups and the tech industry in California. It was the largest U.S. bank failure since 2008. On Sunday, regulators also closed New York-based Signature Bank.
But in Canada, a bank hasn’t collapsed in nearly 27 years. While the risk of bank failure in Canada isn’t zero, many of the circumstances that led to the collapse of SVB don’t apply in the Canadian banking sector.
“No bank is immune to a bank run,” Western University’s Cristián Bravo, who is the Canada Research Chair in banking and insurance analytics, told CTVNews.ca over the phone Tuesday. “If everyone goes to the bank and tries to withdraw their money, that is going to cause a collapse.”
SVB had been heavily invested in government bonds and mortgage-backed securities. But as the U.S. Federal Reserve began to raise interest rates, these investments slowly began to lose their value.
“Now, this isn’t a new problem in banking and you can insure against this type of interest rate risk. Clearly SVB didn’t do that. And so this is as much the fault of regulators and stress-testers as it is of the bank itself. This is absolutely something that should have been foreseen,” David Macdonald, senior economist for the Canadian Centre for Policy Alternatives, told CTV News Channel on Tuesday.
SVB, facing a lack of liquidity, announced last Wednesday that it had sold off these investments at a loss and needed to raise capital to fill a massive hole in its balance sheet.
That triggered panic among depositors, resulting in a bank run. On Friday, U.S. regulators took control of the bank.
In the U.S., banks with assets of under US$250 billion are considered small banks and thus subject to looser liquidity requirements. But in Canada, Bravo notes that a bank would “need to be a lot smaller” in order to take advantage of lighter regulations.
The Canadian Bankers Association, the industry group representing the banking sector in Canada, released a statement Monday highlighting the stricter liquidity standards in Canada as a testament to “the resiliency of Canada’s banking system.”
“Canada’s banks are well-capitalized with robust capital ratios, have diversified business models and funding sources, and must meet rigorous liquidity standards set by federal regulators,” the association said. “The Canadian banking system is widely recognized for its prudent lending and risk management practices, diligent government oversight, and sensible regulation based on the core tenets of safety and soundness.”
Macdonald agrees that what happened to SVB is unlikely to occur in Canada.
“In the Canadian context, you know, we don’t really have this type of problem. Our banks are just better regulated, frankly. They’re better stress-tested. And so this type of interest rate risk may well decrease banking profits—that’s certainly a possibility in Canada—but we’re at no real risk of this type of collapse,” he said.
Another factor, Bravo points out, is that the banking sector in Canada is much more concentrated around the Bix Six banks. Small financial institutions do exist in Canada, but these are typically institutions like credit unions that serve consumers who hold deposits of $100,000 or less, which is the maximum amount that is insurable by the Canada Deposit Insurance Corporation.
On the other hand, the U.S. has a plethora of small- and medium-sized regional banks, many of which serve business clients holding more than US$250,000—the maximum insurable amount in the U.S. More than 97 per cent of SVB’s clients had deposits exceeding US$250,000.
“(SVB’s clients) were mostly companies with large amounts of money. So, it didn’t think much of them to get US$1 billion, US$2 billion, US$3 billion out,” Bravo said. “That’s not the case in Canada.”
Despite the fact that these depositors weren’t insured, the U.S. President Joe Biden’s administration announced Sunday his country would be guaranteeing all SVB deposits. The Office of the Superintendent of Financial Institutions, Canada’s banking regulator, also announced it would be taking control of SVB’s Canadian assets.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
