Canada’s big five banks don’t expect to have any trouble meeting the proposed new capital requirements announced for global banks over the weekend.

Executives from each of the banks appeared at a financial services conference in New York Monday and, according to research firm CreditSights Inc., the proposed new requirements agreed to by the Basel Committee were the hot topic of the conference. CreditSights says that each of the banks presenting indicated that the new capital levels won’t be an obstacle.


It reports that Scotiabank, “emphasized that its capital ratios were high and high quality, and stated that it did not see any problem in meeting the new requirements.” The bank added that the prolonged phase-in period is about as good as could be expected.

CreditSights also says that Bank of Montreal “believes its capital levels remain strong and well-positioned to adopt the new rules, noting that the implementation of some of the proposals remain up to the discretion of national regulators.”

“Speaking to the potential effects of the new capital regime on M&A, BMO does not believe that ‘capital would be an impediment’ to acquisitions, depending on size. However, BMO noted that it was unlikely that Canadian regulators would pull back on its aversion to consolidation within the Canadian banking industry, so significant M&A activity would likely take place abroad,” it reports.

CreditSights says that CIBC commented on the recently-announced capital requirements, too, “stating that it is well capitalized and well-equipped to deal with the requirements.”

As for Royal Bank of Canada, the bank “stated that it was ‘encouraged’ by the announcement and was ‘very comfortable’ in meeting these new requirements within the time period.”

“That said, RBC noted that some of the details remain to be finalized, and there needs to be more clarity on some of the nuances of how the calculations are determined. RBC expects some of these details will be ironed out around the time of the G-20 meeting in November. RBC also noted that it was happy that some of the uncertainty surrounding this process had been removed,” CreditSights says. “Generally, it felt that the outcome of Basel 3 was favorable, and that it was well-positioned to adopt these rules.”

IE