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Facebook suspended by all Canadian Banks


in a move that happens to highlight the ‘Canadian way”, Canadas banks collectively suspended use of Facebook in July.

Canadian lenders Royal Bank of Canada (TO:RY), Toronto-Dominion Bank (TO:TD), Bank of Nova Scotia (TO:BNS), Bank of Montreal (TO:BMO), National Bank of Canada (TO:NA) and Canadian Imperial Bank of Commerce (TO:CM) all said they will pause advertising on Facebook platforms in July.
Desjardins Group, Canada’s largest federation of credit unions, also said on its website on Thursday it will pause advertising on Facebook and Instagram for the month “barring any exceptional situations where we need to communicate with our members or clients.”
Most cited their commitments to inclusion and diversity.

Reuters Canada

By Nichola Saminather
TORONTO (Reuters) – Canada’s biggest lenders confirmed on Friday they had joined a widespread boycott of Facebook Inc (O:FB) begun by U.S. civil rights groups seeking to pressure the world’s largest social media platform to take concrete steps to block hate speech.

More than 400 brands have pulled advertising on Facebook in response to the “Stop Hate for Profit” campaign, begun after the death of George Floyd, a Black man who died in police custody in Minneapolis on May 25.

Canadian lenders Royal Bank of Canada (TO:RY), Toronto-Dominion Bank (TO:TD), Bank of Nova Scotia (TO:BNS), Bank of Montreal (TO:BMO), National Bank of Canada (TO:NA) and Canadian Imperial Bank of Commerce (TO:CM) all said they will pause advertising on Facebook platforms in July.

Desjardins Group, Canada’s largest federation of credit unions, also said on its website on Thursday it will pause advertising on Facebook and Instagram for the month “barring any exceptional situations where we need to communicate with our members or clients.”

Most cited their commitments to inclusion and diversity.
Facebook has opened itself up to a civil rights audit and has banned 250 white supremacist organizations from Facebook and Instagram, a spokesman said by email. Its investments in artificial intelligence mean it finds nearly 90% of hate speech it takes action on before users report it, he added.
BMO said it is continuing its “ongoing dialogue with Facebook on changes they can make to their platforms to reduce the spread of hate speech.”

RBC said one way to help clients and communities is to stand against “misinformation and hate speech, which only make systemic racism more pervasive.”

Written by Colin Henderson

July 3, 2020 at 14:15

Posted in Uncategorized

The Canadian Police are helpless in the face of the chip card offerring from Canadian Banks.


The best they can do is come up with a statement like this.

Police warn of Toronto debit card skimming scam

Urging retailers to pay close attention to their point-of-sale (POS) devices, Toronto and Peel Regional Police announced newly discovered technology used in the scams Thursday.

Pay close attention?  How many merchants lock their devices away at night I wonder?

Just to be clear, here is the issue that I have been ranting about ever since the early days of chip card planning at the bank where I worked.

There is no issue with chip cards per se.  Consumers can feel safe with those.  The problem is the compromise that the banks agreed to by retaining the mag stripe.  The crooks are able to copy the mag stripe, create a new card and use it in the US or Canadian merchants who are still using old technology.

The retention of the mag stripe was a bad idea in 2003 when we first spoke about this.  But today it makes no sense.  I recently had a card cancelled and replaced.  The reason is that I used it at a compromised merchant.  So many customers were affected they had not even had time to call me.  It was highly inconvenient, yet the apologists for the retention of the mag stripe promoted it in favour customer satisfaction.  The opposite is happening.

I have always believed that customers armed with chip card only cards would seek out merchants with the proper terminals and merchant conversion would be faster.

I will continue to rant about this until I get a card with chip only.

Written by Colin Henderson

May 31, 2012 at 22:40

Posted in Uncategorized

New CCPA report | Several Canadian banks drew government support (in 2009) whose value exceeded the bank’s actual value


I have written here at length about Canadian banks and how the world impression that they are industry leading in strength is at best coloured by superb behind the scenes co-operation between the banks, the government and the Bank of Canada.  The biggest example I could write about was the 2008 freeze on interbank and inter institutions derivatives hastily forced on the banks in 2008.

Purdy Crawford/ Pan Canadian Investments: The Canadian government did presciently freeze $35 billion in derivatives back in 2007.

But if you flip through the Canadian Banks search on this blog there is a general theme that Canada’s banks are not materially better capitalised than other banks in the world.  And now we have the ammunition many of us knew existed but had no evidence.

Todays bombshell from the Canadian Centre for Policy Alternatives, authored by chief Economist David McDonald, provides clear evidence of the extent of Government assistance to the Canadian banks during the crisis.  The amount of that assistance is $114bn.  This is several times total Canadian Bank equity.

The report begins;

The official story of the 2008 financial crisis goes like this: American and international banks got caught placing bad bets on U.S. mortgages and had to be bailed out. But not in Canada. Through the financial crisis, Canadian banks were touted by the federal government and the banks themselves as being much more stable than other countries’ big banks. Canadian banks, we were assured, needed no such bailout.

However, in contrast to the official story Canada’s banks received $114 billion in cash and loan support between September 2008 and August 2010. They were double-dipping in not only two but three separate support programs, one of them American. They continued receiving this support for a protracted period while at the same time reaping considerable profits and providing raises to their cE Os, who were already among Canada’s highest paid. In fact, several banks drew government support whose value exceeded the bank’s actual value. Canadian banks were in hot water during the crisis and the Canadian government has remained resolutely secretive about the details.

Now some details;

CCPA Report (pdf)

The first point of interest in the report is the extent of support as a percentage of the banks’ market capitalisation.  This one should be read in the context of the high leverage that banks enjoy courtesy of government support through deposit insurance and liquidity advances from the Bank of Canada on a day to day basis.

In the reports own words;

Three of Canada’s banks—ciBc, BMO, and Scotiabank—were at some point completely under water, with government support exceeding the value of the company. In March 2009, ciBc stood out for receiving support worth almost one and a half times the value of all outstanding shares. It would

have taken less money to have simply bought all the shares in CIBC instead of providing it with support.

image

The irony of CEO remuneration during this period is not lost on the report;

To top it off, the CEO of each of Canada’s big banks ranked among the highest paid 100 CEOs of Canada’s public companies and at the height of government support between 2008 and 2009 each CEO of each bank received raises in total compensation. For instance, Edmund Clark of TD Bank saw his overall compensation jump from $11.1 million in 2008 to $15.2 million in 2009.

The total support to Canadian banks and the surprise that CMHC was the primary conduit.

image

Individual bank support;

RBC

image

TD

image

Scotiabank

image

BMO

image

CIBC

image

And the reports conclusion which most would support;

A healthy financial system cannot be based on massive government support for which the details remain secret. It is only through an honest and transparent examination of what occurred and how it can avoided in the future that a stronger financial system can be built, which is in everyone’s best interest.

Relevance to Bankwatch:

This is a stellar piece of work and probably the best report on the Canadian bank system of the 2008 banking crisis.  Recommended reading for anyone interested in banking and how it really works.  There is no magic Canadian bullet.

Written by Colin Henderson

April 30, 2012 at 21:04

Posted in Uncategorized

Canadian Banks getting much more engaged in social media all of a sudden


Canadian Banks never really got engaged in blogs, but all of a sudden four are now engaged in Twitter at different levels and with different approaches that clearly reflect their risk profiles and willingness to engage in the medium.

craigsebastiano Craig Sebastiano

@BMO just started using #Twitter yesterday. @TD_Canada, @CIBCnews and @RBC are also tweeting but #Scotiabank is not

@BMO is the latest to join beginning earlier this week on 17th January.  Its obviously very early, but I was impressed with this tweet.

BMOBMO BMO

@CatheP sorry to hear you’ve been a victim of identity theft. If you DM me your contact info I’ll have someone contact you asap.

Relevance to Bankwatch:

You can infer, from reading the four banks that are there, the degree of control from Corporate Marketing versus customer focussed folks.  As I say, it is too early to infer much, but that tweet about identity theft is dead on for this medium.  It does not impart any confidential information, yet reuses the medium (DM me your contact info) chosen by the customer to develop a solution.  Nice.

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Written by Colin Henderson

January 20, 2011 at 16:32

Posted in Uncategorized

New stress tests coming for Canadian banks


Following up on yesterday’s post there are now indications that Bank of Canada and the banking regulator OSFI are working on a new set of bank stress tests.

OSFI, BoC working together on bank stress tests | financialpost.com

Rather than relying on the banks own internal tests OSFI and the central bank have created a "macro" test, Mr. White said, adding that the work has put this country at the forefront of macroprudential testing.

Some analysts argue some of the results of Canadian bank stress tests should be made public in the interests of transparency. But according to Mr. White, such public disclosure puts pressure on regulators to present institutions in the best possible light.

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Written by Colin Henderson

January 11, 2011 at 15:43

Posted in Uncategorized

Canadian Banks have a Productivity Gap relative to the US


Following up on the previous post covering the Bank of Canada’s view that Canadian Banks do not have a productivity gap [pdf 19 pages] relative to US Banks, here is the basis for that contention within a 2006 report.

The conclusion copied here in whole is in my view, woefully misleading and contradictory. It reads to me like someone with political motivations has turned facts into something that meets policy objectives. Analysis to follow.

This work examines the efficiency and productivity of Canadian and U.S. banks in three ways.

First, we compare key performance ratios and find that (i) the average Canadian bank employee produces more assets than the average U.S. bank employee, and (ii) in terms of producing net operating revenue, Canadian and U.S. bank workers are similarly productive.

Second, we investigate whether there are economies of scale in the cost functions of Canadian banks and a sample of U.S. BHCs. We find larger economies of scale for Canadian banks than for the U.S. BHCs. This suggests that Canadian banks are less efficient with regard to the scale of their operations and would have more to gain in terms of efficiency benefits from becoming larger.

Third, we measure cost-inefficiency in Canadian banks and in U.S. BHCs relative to the domestic efficient frontier in each country (the domestic
best-practice institution). We find that Canadian banks are closer to the domestic efficient frontier than are the U.S. BHCs, and that they have moved closer to that efficient frontier over time.

Overall, these results do not suggest relative efficiency or productivity gaps in the Canadian banking industry. On the contrary, Canadian banks compare generally favourably.

Finally, as noted above, legislative and regulatory changes have benefited efficiency in Canadian financial services. This shows the importance of removing any remaining restrictions that inhibit competition and efficiency, but provide little (or no) benefit in terms of financial soundness.

Some facts from their report:

  • Expense ratio Canada – 67 cents per dollar of revenue
  • Expense ratio US – 59 cents per dollar of revenue
  • Assets per employee Canada – $6.1M
  • Assets per employee US – $4.1M
  • operating revenue per employee US/ Canada same at $0.3M

This from the report:

Our analysis indicates that the difference in the expense ratios can be currently attributed to a higher labour cost component (wages and benefits) at Canadian banks. However, this differential does not imply disparities in productivity, which concerns how much output is produced per unit of input (typically, labour).

Relevance to Bankwatch:
Translation. Bank of Canada views Canadian Banks as productive by taking the narrow view of relative employee output. However that view excludes the overall budget of banks that includes real estate, and technology. The latter points explain the overall expense disparity per dollar of revenue earned at a significant 8 cents.

In other words productivity is a measure of investment not of employees. That is the entire point of automation. This further explains the contradictory point in he Tim Lane Kingston speech that wrote off StatsCan concerns for Canadian Bank productivity.

Productivity is a measure of inputs (expenses) and outputs (revenue). Any narrower view does a disservice to the country and the Banks, covering over potential areas for concern. Banks in Canada cover a large geography with relatively small population and while internet adoption is high the related savings in real estate and technology efficiency have yet to be achieved.

Written by Colin Henderson

August 29, 2009 at 17:25

Posted in economy

Tagged with , , ,

Canadian banks will require more capital to remain within targets


The IMF have released their working papers following their analysis of Canadian Banks.  Notwithstanding the positive comments about Canadian banks financial position entering the crisis, there remains potential for a requirement for increased capital as negatives in Canada could decrease bank capital by 2.5% – 3.5% over next year or two.

The IMF employed the American stress test approach to Canadian banks in this exercise.

Here is the current position:

can banks IMF

There are two ratios being watched – Tier 1 and Total Capital.  In a nutshell and worst case scenario, IMF are saying if 2.5% or 3.5% is taken off either ratio, most banks risk being below the Canadian targets shown at the foot.

The potential negatives on bank capital were recognised as:

  1. Western Canada house values having some more downward corrections anticipated.  Eastern Canada is about right in their view.
  2. collapse of auto sector
  3. variances in commodity prices
  4. continued high unemployment

The external influences on Canada are summarise in this graphical story line.  Here is the full paper.  Canada: 2009 Article IV Consultation—Staff Report cr09162

can external imf1

can external imf2

Written by Colin Henderson

May 25, 2009 at 10:37

Posted in Canada, economy

Tagged with

What makes Canadian Banks different in this crisis? | OECD


This 21 page document reviews the circumstances prior to the crisis of Canadian Banks and other OECD Banks.  The relative abundance of retail deposits (compared to more volatile wholesale deposits)  seems to have been key for the resilience of Canadian banks, supplemented by a risk averse financial culture.

The differences from the summary were as follows – Canadian Banks were:

  1. better capitalised
  2. Capital ratios before the crisis were a key determinant of bank performance
    during the turmoil; and Canadian banks had ample capital

  3. more liquid
  4. Compared to OECD peers, Canadian banks had slightly above-average balance
    sheet liquidity

  5. enjoyed relatively more retail deposits
  6. During a liquidity crisis, access to stable funding is key to survival; Canadian
    banks had a high ratio of retail to wholesale deposits

In addition and as discussed here before, the risk tolerance in Canada is much lower than elsewhere, and this manifests across several areas, highlighted in the report.

7. Regulatory and structural factors contributed to the resilience of Canadian banks by reducing their incentives to take risks. Canadian capital requirements are significantly more stringent than Basel minima (national targets of 7 percent for tier 1 capital and 10 percent for total capital,  versus 4 and 8 percent prescribed by the Basel Accord).

Banks are also subject to a maximum assets-to-total-capital multiple of 20 (corresponding to a leverage ratio of 5 percent). Besides providing an enhanced cushion, stringent capital requirements have beneficial incentive effects: they impede rapid balance sheet growth, restrict wholesale activities, and limit foreign expansion to niches where banks have clear competitive advantage not related to low cost of capital.

Notable structural factors in Canada include high franchise values, a mortgage market characterized by prudent underwriting, and an overall prudent and conservative culture in the financial sector. Limited exposure to U.S. assets was a key additional factor behind the resilience of Canadian banks to the crisis.

Canada: Selected Issues | OECD

Written by Colin Henderson

May 22, 2009 at 20:17

Posted in Bank+of+Canada, Canada

Canadian banks prove envy of the world | ft.com


Following the Presidents visit to Canada today, Canadian banks and the Canadian system continue to get attention.

Canadian banks prove envy of the world | ft.com

“Canada has shown itself to be a pretty good manager of the financial system in ways that we haven’t always been here in the United States,” Mr Obama told a Canadian broadcaster.

The president spent Thursday in Ottawa meeting Stephen Harper, Canada’s prime minister, to discuss the economy, trade and the environment, in addition to any talk surrounding the strength of Canada’s banks.

In large part because of their conservative culture, one that depends heavily on a vast and stable retail branch network, and a clubby working relationship, Canada’s banks have remained the strongest in the G7 and, according to an October report by the World Economic Forum, the soundest in the world.

Written by Colin Henderson

February 20, 2009 at 02:52

Posted in Uncategorized

Tagged with

Canadian Banks 2008: Perspectives on the Canadian banking industry | PWC


Aside from the press release that I just shot down in flames, I have to say the 92 page document behind the release is quite a different story and clearly worth the read, something I will do tomorrow. Its just very annoying when PR departments try to take one thing, and make it something else.

The report is very detailed, and contains clear comparisons between the Canadian Banks, winners and losers. This will support another post later.

Canadian Banks 2008: Perspectives on the Canadian banking industry

This publication provides an analysis of the 2007 financial results for the Canadian banking industry. In addition, it examines the challenges that lie ahead: how can banks be part of a sustainable future, how can they attract and retain the best talent, and how can they streamline the regulatory burden? It also addresses the demographic and regulatory changes that will affect the bottom line not just in 2008, but in the years to come.

Written by Colin Henderson

March 16, 2008 at 23:56

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