The collapse of Silicon Valley Bank has stoked fears in some investors regarding potential risks to Canadian banks, but one analyst said the nation’s banks are largely insulated.
Mike Rizvanovic, an analyst at Keefe, Bruyette & Woods, said in a note to clients Sunday that Canadian banks are predominantly shielded from issues that contributed to the collapse of the U.S.-based bank.
“Let’s just call it less hot money coming into the Canadian banking sector than what we saw with some of these small regional lenders that are very focused on a specific niche part of the loan market in the deposit market,” he said, adding that Canadian banks are generally more conservative. However, shares for Canada’s big six banks were trading lower on Monday morning, with Bank of Montreal shares dropping around five per cent at one point.Canada’s banking sector does not face significant risks related to its deposit base, which remains “well-diversified across industries,” Rizvanovic said in the note.DEPOSIT RUNOFF ISSUES
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