31/03/2016

For Canada's Banks This Is "The Next Shoe To Drop", And Why It Will Drop This Spring - by Zero Hedge

Jeff Fitchett: Canadians, like most other people in the world today, should be concerned with their banking system.  Our economy is based on a bubble of debt that is in the process of popping.  

Courtesy of Zerohedge
Roughly around the time the market troughed in early February, we asked "After The European Bank Bloodbath, Is Canada Next?" The reason for this question was simple: we said that "when compared to US banks' (artificially low) reserves for oil and gas exposure, Canadian banks are...not."

Stated otherwise, we warned that the biggest threat facing Canada's banking sector is how woefully underreserved it is to future oil and gas loan losses.
We added that unlike their US peers, "Canadian banks like to wait for impairment events to book PCLs rather than build reserves, in effect throwing the entire process of reserving for future losses out of the window."

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