Canadian banks will be expected to meet new capital requirements proposed by global regulators by 2012, according to Philippe Hardy, an analyst at RBC Capital Markets.
The Basel Committee on Banking Supervision will require lenders to have common equity equal to at least 7% of assets, according to risk, including a 2.5% buffer.
According to Hardy, most the banks are already headed in the right direction: Bank of Montreal already has a capital ratio of about 8.6%; Canadian Imperial Bank of Commerce is at 6.6%; Bank of Nova Scotia is at 5.8%; and Toronto-Dominion at 5%.
Ranked the world’s soundest for the past three years by the World Economic Forum, Canadian banks didn’t require any government bailout money during the financial crisis, and took only a fraction of the $1.3 trillion in global writedowns.
