Don’t worry if you’re invested in the Canadian banks. BNN reports the following figures on the Big 5 in light of the recent collapses in Merrill, Lehman and AIG:
(1) CIBC has the worst exposure to Lehman, at about $25 million, which is apparently not considered much.
(2) TD and Royal have said they have only “nominal” exposure, which is sort of like having “trace” amounts of snow.
(3) BMO’s levels of exposure are “not significant.”
(4) Bank of Nova Scotia had issued a $93 million loan to Lehman, but this was never drawn upon, and so is effectively zero exposure for the bank.
One good thing is that apparently the Royal Bank of Canada had “been working to reduce its risk relative to Lehman wherever possible for several months.” On the other hand, RBC Capital Markets analyst Andre-Philippe Hardy said that “while all banks have some such exposure, CIBC, followed by Bank of Montreal, would be the most exposed in Canada.” You can read the full article here.
It’s relatively common knowledge that in Canada, CIBC is one of the riskier banks, taking on more aggressive investment positions, while the Bank of Nova Scotia is considered the most conservative of the Big Five.
So for this sector which is already considered on the conservative side anyway – TD and Scotia have managed to continue to increase their dividends throughout the slump of the last year and a half – Bank of Nova Scotia might be a particularly good investment to look at if you still want some good financials exposure. And it’s also the most internationally-positioned of all the Canadian banks.
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