Moody's Investors service downgrades 6 Canada banks
The ratings affect Toronto-Dominion Bank, Scotiabank, Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank and the Desjardins caisse populaire.
Moody's vice president David Beattie noted Monday that the banks still rank among the highest-rated banks in the world.
TD is the highest rated at AA1 among the six (down from AAA). Bank of Nova Scotia and Desjardins drop to AA2 (from AA1), CIBC, BMo and National slip to AA3 (from AA2).
Canada's commodity-rich economy has fared better than other nations, and its banks have long been rated among the soundest in the world. There was no mortgage meltdown or subprime lending crisis. But there are fears of a housing bubble fueled by historic low interest rates.
Beattie noted Canadian household debt to personal disposable income reached a record 165 percent, up from 137 percent as of 30 June 2007. He also said home prices have also increased by about 20 percent since November 2007.
“The Canadian consumer is leveraged almost to the extent that the US consumer was ahead of the housing crash down there some years ago,'' Beattie said.
Canadian Finance Minister Jim Flaherty responded with a statement saying the financial sector is “sound and well regulated'' by the federal government.
“Our government has taken aggressive and proactive actions since 2008 to protect the Canadian housing market and curb personal debt. We will continue
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