Canada Banks Fall Behind U.S., Europe Lenders in Strength Gauge
- Once world-beaters, Canada lenders become laggards on capital
- Top U.S. and European banks surpass Canada on capital measure
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Canada’s banks, touted as the world’s soundest for eight straight years by the World Economic Forum, have become laggards to global peers on a key gauge of their ability to absorb losses.
The leverage ratio, a standard introduced globally by the Basel Committee on Banking Supervision after the 2008 financial crisis, measures Tier 1 capital as a percentage of total assets. After once boasting world-beating capital levels that helped them weather the crisis and even expand as some global competitors retrenched, Canadian banks’ advantage has dissipated under the new rules.