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Canada Letter
The country’s financial stability, and the high profitability of its banks at a time when those in the U.S. are in turmoil, comes from strong regulations.
By Ian Austen
If inflation and rising interest rates weren’t enough to cause anxiety about the global economy, bank failures, or near collapses, have been added to the mix. But once again, Canada’s banking system has come out, so far, looking reassuringly sober and stable.
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The current turmoil, of course, began with the collapse of Silicon Valley Bank. While the bank was never a household name, it was the financial force behind many tech start-ups, American and Canadian, and worked with them in unconventional ways. But its collapse, as my colleague Maureen Farrell writes, did not stem from the current turmoil in the tech sector. “It was complete and utter bad risk management,” one investor told her.
[Read: Mortgages, Wine and Renovations: Silicon Valley Bank’s Deep Tech Ties]
The dismal banking news continued through the week. In a fight for its life, Credit Suisse will borrow as much as $54 billion from the Swiss central bank. Eleven of the largest American banks joined together to infuse $30 billion into First Republic Bank, which is based in San Francisco.
[Read: Credit Suisse to Borrow as Much as $54 Billion From Swiss Central Bank]
[Read: Wall Street’s Biggest Banks Rescue Teetering First Republic]
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