There are certainly days when it feels as though we’ll never get off the hamster wheel of inflammatory headlines, and the situation with Silicon Valley Bank & Signature Bank has added fuel to the fire, in this regard.
As usual the media has had a field day emitting all kinds of rhetoric and fear-based language. Even here in Canada, it has been frustrating to see splashed across even the smallest of screens (such as office elevators), Global News headlines that read, “Fear spreads north as Canadians worry about our banks”. The more normally staid CBC has also been pushing anxiety-inducing language.
It’s hard for me to keep my cool when I read this sort of intentional negativity, when the facts aren’t presented with the same vigour or even at all.
Allow me to inject some sanity… Here in Canada, our big six banks are extremely unlikely to undergo a “liquidity strain”, that would in turn trigger asset sales, thereby creating unrealized losses. Unlike the two regional banks in the US (very concentrated geographically and by sector), Canadian banks have a very diversified depositor base – both geographically and by sector (i.e. not all IT), and most importantly, a very healthy liquidity coverage ratio.
For my clients, exposure to US Banks remains very light. Yes, if you hold the S&P500 Index, there is about a 10% weighting to financials, but the majority of that is in the biggest names – JP Morgan and so on.
If you’d like to learn more regarding what happened with these smaller banks in the US, and among other things, the lightening-quick response by the Fed, please read this commentary put out by our Global Portfolio Advisory Group: Market brief
I’m always happy to discuss any topic that may be on your mind, so don’t be shy – please reach out.
Libby
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