Canada’s banks, recognized as the world’s strongest after a year of record profits and rising share prices, will begin to show the effects of a slackening in domestic consumer lending when they report first-quarter results next week.
Canadian banks, bolstered by profits per employee 31 percent higher than U.S. lenders, added more than 2,800 workers in the most recent quarter while Bank of America Corp. and Washington Mutual Inc. shed thousands of jobs.
Royal Bank of Canada, the nation’s largest lender by assets, is nearing a deal to buy Ally Financial Inc.’s Canadian operations for more than $4 billion, CNBC reported, citing unidentified people familiar with the matter.
Royal Bank of Canada, the country’s largest lender, expects “no impact” on its U.S. businesses if the Federal Reserve imposes tougher capital rules for foreign banks, Chief Executive Officer Gordon Nixon said.
Ally Financial Inc., the largest U.S. auto lender, enlisted Cerberus Capital Management LP’s Lenard Tessler to help oversee turnaround efforts and salvage the government’s $17.2 billion investment, four people with knowledge of the matter said.
Toronto-Dominion Bank, the last publicly traded lender rated Aaa by Moody’s Investors Service, was among six Canadian banks placed on review by the ratings firm, which cited high consumer-debt levels and housing prices.
Canadian banks are underperforming global counterparts by the most in a year as record consumer debt and a housing market that’s vulnerable to a correction weakens their earnings prospects and risks a credit downgrade.