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Banks Can Meet Their Responsibilities: Scotiabank CEO

Rick-Waugh-ScotiabankScotiabank CEO Rick Waugh reminded everyone Tuesday that banks have an inherent responsibly to lend judiciously. Regulators shouldn’t have to apply more pressure for banks to comply with this duty.

“I agree with our government,” said Waugh. “It’s up to the banks themselves—not government or regulators—to manage our risks and advise our customers appropriately,” he added.

“Likewise, it’s the responsibility of government to set fiscal and monetary policies, and the level of interest rates, according to prevailing conditions.”

Scotiabank-HQWaugh made these statements at Scotiabank’s annual meeting on Tuesday. It was a refreshing dose of common sense and accountability—in contrast to bank executives like TD CEO Ed Clark.

For some time now, Clark has been campaigning for tighter mortgage rules, such as 25-year maximum amortizations. Moreover, he has called on Ottawa to impose these rules, and to do so for all banks simultaneously—presumably because TD doesn’t want to lose market share by taking its own medicine unilaterally.

As for Waugh, he added:

  • “The current concerns about Canada’s housing market are reason for caution but not pessimism.”
  • “We keep a very close eye on our mortgage portfolios, and in Scotiabank they are in good shape.”
  • “…Canadian household balance sheets remain solid, and our housing market is supported by strong fundamentals. Supply is balanced and Canadian banks finance largely on presales and cash equity, where loan-to-value ratios show our customers have true equity.”
  • “Our customer delinquency rates are well within parameters.”
  • “We can and will manage through any potential (housing) problems.”

Waugh also told Reuters that the recent 2.99% mortgage rate battles did not “fundamentally” increase risks to the housing market. He cited credit card lending as a bigger area of concern.

Sources: BNN, Reuters

Rob McLister, CMT