Canada’s top banks got a “negative” ratings from ratings agency S&P over concerns about the federal government’s stance on possible bailouts in the future.
The decision is taken on the concern that the government might be reluctant to “bail out” top banks with tax-payers money if another financial meltdown (similar to 2008-2009) happens in the future. This virtually takes away the “too big to fail” status from the banks and make them susceptible to liquidation in another event of financial meltdown.
“The outlook revision reflects our expectation of reduced potential for extraordinary government support,” wrote credit analyst Lidia Parfeniuk in a note released Friday (8th Aug 2014).
The negative outlook covered all of the major Canadian Banks – Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD Canada Trust), Bank of Nova Scotia (Scotia Bank), Canadian Imperial Bank of Commerce (CIBM), Bank of Montreal (BMO) and National Bank of Canada (NBC).
This is important to note that Canadian Banks are counted among the world’s most stable banks. Despite the downgrades, the TSX financial sector was ahead 0.55 per cent on Monday, with all of the major bank stocks higher.
Speaking to the Greater Moncton Chamber of Commerce, Finance Minister Joe Oliver today highlighted the many benefits of the Harper Government’s Economic Action Plan 2014 for New Brunswick and the rest of Canada. He also reaffirmed the Government’s top priority of creating jobs and economic growth through low taxes and enhanced trade, while remaining on track for a balanced budget in 2015.
Quick Facts about Economic Action Plan 2014
- Since the Government introduced the Economic Action Plan to respond to the global recession, Canada has performed better than most developed countries.
- Both the International Monetary Fund and the Organisation for Economic Cooperation and Development expect Canada to be among the strongest growing economies in the Group of Seven (G-7) over this year and next.
- New Brunswick will receive $860 million over 10 years in dedicated federal funding, including $390 million under the New Building Canada Fund and $470 million under the federal Gas Tax Fund.
- On June 20th, the Prime Minister announced that New Brunswick’s Propel ICT has been chosen to advance in the selection process under the Canada Accelerator and Incubator Program.
- Under the Canada Research Chairs program, the Government provides annual support totaling $1.3 million for 10 leading researchers based in Moncton post-secondary institutions.
“To keep New Brunswick and Canada strong, we must build on our firm economic and fiscal fundamentals, and a track record that is the envy of many other countries. Honouring this commitment, including a return to budgetary balance in 2015, will help foster a growing, healthy economy that creates stable, well-paying jobs, right across this country.”
– Joe Oliver, Minister of Finance
Download full economic budget plan 2014.