Canada Banks, Mortgage Insurers Can Weather Shock: Moody’s

  • Moody’s sees C$18 billion system losses in U.S.-style crisis
  • RBC would have highest losses, while CIBC capital hit hardest

Canada’s big lenders and mortgage insurers would be able to absorb an estimated C$17.6 billion ($13.7 billion) in losses from a U.S.-style housing shock, due to government guarantees for home loans, lower subprime lending and less repackaging of mortgages for investments, Moody’s Investors Service said Monday in a report.

Royal Bank of Canada would face the biggest hit, with C$2.87 billion of losses, followed by Toronto-Dominion Bank with C$2.64 billion, according to stress tests by the New York-based ratings company. Canadian Imperial Bank of Commerce, which has the largest relative exposure to domestic mortgages, would have the biggest drop in regulatory capital among the seven largest lenders tested, with its Common Equity Tier 1 ratio dropping by 120 basis points, Moody’s said in the report Monday…

Canada Banks, Mortgage Insurers Can Weather Shock: Moody’s

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