By Erica Alini - Monday, January 28, 2013 - 0 Comments
Credit rating agency Moody’s just downgraded by a notch the long-term ratings of BMO, ScotiaBank, Caisse centrale Desjardins, CIBC, National Bank and TD. RBC was spared.
The decision follows an identical move by Standard and Poor’s in December.
Here’s what Moody’s had to say about the rationale for the downgrade (the full press release is here):
High levels of consumer indebtedness and elevated housing prices leave Canadian banks more vulnerable than in the past to downside risks the Canadian economy faces:
By 30 September 2012, Canadian household debt to personal disposable income reached a record 165%, up from 137% as of 30 June 2007, as debt grew faster than personal incomes. Growth in consumer debt has been driven by rising house prices, which have increased by approximately 20% since November 2007.
Downside risks to the Canadian economy have increased:
Moody’s central scenario for Canada’s gross domestic product (GDP) is for it to grow between 2% and 3% in 2013, but downside risks have increased. The open, commodity-oriented economy is exposed to external macro-economic risks, which if they arise would have significant ramifications for the Canadian economy, and consequently its banks.
NBC, BMO and BNS have sizeable exposure to volatile capital markets businesses:
Moody’s believes that trading and investment banking activities expose financial firms to the risk of outsized losses and risk management and controls challenges, and leave them highly dependent on the confidence of investors, customers and counterparties.
Canadian banks’ have noteworthy reliance on wholesale funding:
The Canadian bank’s noteworthy reliance on confidence-sensitive wholesale funding, which is obscured by limited public disclosure, increases their vulnerability to financial markets turmoil.
Moody’s has removed systemic support from the ratings of all Canadian banks’ subordinated debt instruments that had benefited from support “uplift”:
The rating agency believes the global trend towards imposing losses on junior creditors in the context of future bank resolutions reduces the predictability of such support being provided to the sub-debt holders of the large Canadian banks given the Canadian regulators’ broad legislated resolution powers. The removal of support for subordinated debt is consistent with recent actions we’ve taken elsewhere, including in many European countries, reflecting the increased likelihood that sub-debt holders would be subject to burden sharing in the event support was required.
By macleans.ca - Monday, June 14, 2010 at 9:00 AM - 3 Comments
Our second annual survey of companies in Canada that prove it pays to have a conscience
For many successful companies, corporate social responsibility (CSR) is no longer just a boardroom buzzword, but a key to business. So, for the second year in a row, Maclean’s has partnered with Jantzi-Sustainalytics, a global leader in sustainability analysis, to present the country’s Top 50 Socially Responsible Corporations.
While the reasons each company was selected vary—from Gildan Activewear donating more than half a million dollars to Haitian relief efforts, to Loblaw’s commitment to acquiring all of its seafood from sustainable sources by 2013, to Nike making World Cup jerseys for nine national teams out of bottles found in landfills—the underlying goal is the same: make the world a better place. As well as the Top 50 list, which begins on page 42, we look into how CSR might help with major PR problems, like BP’s oil spill, and whether the recession made the business world any less socially responsible.
By macleans.ca - Monday, June 14, 2010 at 9:00 AM - 28 Comments
These companies have made doing good a big part of their business
Click on a company name for more details:
Ballard Power Systems Inc.
BMO Bank of Montreal
Brookfield Properties Corp.
General Mills Inc.
Gildan Activewear Inc.
H.J. Heinz Company
JPMorgan Chase & Co.
Kinross Gold Corp.
Loblaw Companies Ltd.
Nexen Inc. .
State Street Corp.
Sun Life Financial
Suncor Energy Inc.
Talisman Energy Inc.
TD Bank Financial Group
Westport Innovations Inc.
For the related article and methodology, The Jantzi-Maclean’s Corporate Social Responsibility Report 2010 click here.