Author Topic: "Canadian Banks are the Only Sector to Outperform Berkshire Last 25 Years"  (Read 12945 times)

rb

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They'll get a stern talking to. Maybe a slap on the wrist or two. It won't be anything really material or have long term effects.

I do hope they stop with the upselling nonsense. I'm tired of getting counseled every time I'm in the branch. No. I would not like a $30 a month chequing account! Thank you very much!


StubbleJumper

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They'll get a stern talking to. Maybe a slap on the wrist or two. It won't be anything really material or have long term effects.

I do hope they stop with the upselling nonsense. I'm tired of getting counseled every time I'm in the branch. No. I would not like a $30 a month chequing account! Thank you very much!


Agreed, there won't be any meaningful adverse outcome for TD.  The regulators at OSFI might get a little bit pissy with them, but that will blow over pretty quickly.

The legal aspect is even less relevant in Canada for TD than for WFC in the US.  In theory, it might be possible for a group to get a class certified to sue TD, but in Canada, it's really tough to get a settlement for anything more than actual economic losses, which will be very small. 

As with WFC, almost nobody is going to bother moving their business away from TD.  It's too much of a pain in the ass, and there are too few people directly affected to have a meaningful impact on TD's business.

Perhaps a few executives will be shit-canned, but that'll be about the extent of the damage.


SJ

scorpioncapital

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What is the difference between this and communism? Can't sue, no free market? Sure, USA is not capitalist either but it seems to be more toward that end of the spectrum than Canada.

rb

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What is the difference between this and communism? Can't sue, no free market? Sure, USA is not capitalist either but it seems to be more toward that end of the spectrum than Canada.

Well the ability to own capital property for one.

As SJ pointed out, you can sue but mainly for redress. So you won't see the crazy awards that sometime happen in the US. Siskinds is probably working right now at getting a class ready.

StubbleJumper

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What is the difference between this and communism? Can't sue, no free market? Sure, USA is not capitalist either but it seems to be more toward that end of the spectrum than Canada.


In Canada, if you are the victim of a tort, you can definitely sue.  In general, you should only expect to receive an award equivalent to your demonstrated economic losses, plus your litigation costs.  Unlike the United States, punitive damages are very unusual in Canada.

So is that a good thing or a bad thing that punitive damages are rare?  In the US, there have been some pretty high profile cases of class action suits with damages that are eyeboggling, particularly the $4.9 billion award against General Motors to the families of six people who were killed by exploding fuel tanks.  Awards with large punitive damages certainly result in companies being more careful, but it does encourage people to treat relatively minor incidents as "lottery tickets" resulting in a bit more of a litigious society.  So is that good, bad, or some of each?


SJ

Uccmal

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What is the difference between this and communism? Can't sue, no free market? Sure, USA is not capitalist either but it seems to be more toward that end of the spectrum than Canada.


In Canada, if you are the victim of a tort, you can definitely sue.  In general, you should only expect to receive an award equivalent to your demonstrated economic losses, plus your litigation costs.  Unlike the United States, punitive damages are very unusual in Canada.

So is that a good thing or a bad thing that punitive damages are rare?  In the US, there have been some pretty high profile cases of class action suits with damages that are eyeboggling, particularly the $4.9 billion award against General Motors to the families of six people who were killed by exploding fuel tanks.  Awards with large punitive damages certainly result in companies being more careful, but it does encourage people to treat relatively minor incidents as "lottery tickets" resulting in a bit more of a litigious society.  So is that good, bad, or some of each?


SJ

God only knows.  I am not going to step out too far here.  Not being a lawyer and all.  In Canada, if you sue someone and lose you can be on the hook for nearly all of their defense costs.  This serves as a major impediment to starting a lawsuit. 

In the US the defendant has to pay their own defense costs thus reducing the risk to the plaintiff.  A major structural difference.  The defendant in the US can countersue but chances are the original plaintiff doesn't have any money - why else would they be suing. 
« Last Edit: March 14, 2017, 02:35:43 PM by Uccmal »
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Shane

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I'm unfamiliar with these banks, but the comments on this thread have piqued my interest.

Looking at ROE, it seems that over the past 20 or so years Royal Bank of Canada has topped all of the others (TD, BNS, BMO).  The second place would go to BNS.  Can anyone who follows these banks comment on why that is the case?

rb

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I'm unfamiliar with these banks, but the comments on this thread have piqued my interest.

Looking at ROE, it seems that over the past 20 or so years Royal Bank of Canada has topped all of the others (TD, BNS, BMO).  The second place would go to BNS.  Can anyone who follows these banks comment on why that is the case?
To give you a bit of equivalence. TD is like WFC (in more ways than one it seems). It started a transformation with a new CEO in 2003. It's been retail focused and customer friendly. Very good risk management. Expanded a lot in the US mainly east coast.

RBC is kinda like JPM. It has a large retail business in Canada but they like to be the big boy and do flashy deals. So for the past decade or so they've focused a lot on investment banking and wealth management. They wanna become a big global investment bank.

BNS is pretty conservative in it's Canadian operation. It's also pretty international. In that it has a large Latin American and Caribbean operation. I sold my BNS stock a few years back because in my opinion their risk management in Lat-Am has deteriorated. Also has less investment  banking than RBC or TD and they own the former ING direct discount bank in Canada.

SharperDingaan

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In the Cdn system, when there is miss-selling; it's typically dealt with behind closed doors.
Facts to find out how extensive it is across the industry, identify the standouts, determine root causes, and come up with an approach. You are then informed as to what the minimum is that you're going to do to correct it, & you're expected to do better than this. How, is up to the bank.

So .. when employees feel that things are so bad, that they have to essentially 'whistle blow to the media'; it is akin to the red light going off over the goalie net. And this from Canadian employees, in a conservative bank?; it is highly likely that it is not disgruntled employees.

We know that prior to the 2006 banking crises, many banking employees around the world were raising flags that things were seriously 'off'. The warnings were ignored, because it wasn't convenient; & we got a decade of continuous bail-out instead. In Canada, those warnings get taken up behind closed doors.

Its a strong system, & it works very well; but it's everyone's responsibility.

SD
 
         

Uccmal

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I'm unfamiliar with these banks, but the comments on this thread have piqued my interest.

Looking at ROE, it seems that over the past 20 or so years Royal Bank of Canada has topped all of the others (TD, BNS, BMO).  The second place would go to BNS.  Can anyone who follows these banks comment on why that is the case?
To give you a bit of equivalence. TD is like WFC (in more ways than one it seems). It started a transformation with a new CEO in 2003. It's been retail focused and customer friendly. Very good risk management. Expanded a lot in the US mainly east coast.

RBC is kinda like JPM. It has a large retail business in Canada but they like to be the big boy and do flashy deals. So for the past decade or so they've focused a lot on investment banking and wealth management. They wanna become a big global investment bank.

BNS is pretty conservative in it's Canadian operation. It's also pretty international. In that it has a large Latin American and Caribbean operation. I sold my BNS stock a few years back because in my opinion their risk management in Lat-Am has deteriorated. Also has less investment  banking than RBC or TD and they own the former ING direct discount bank in Canada.

TD Waterhouse should ring a bell for any investor in NA. 

RBC is like JPM and they are huge.  A little overpriced at the moment.  I have been selling my shares down a bit.  I did as well on RBC as I might have on BAC without the baggage. 

As to scale the collective big 5: RBC, CIBC, TD, BNS, and BMO fall somewhere between a half to a third the size of JPM, WFC, or BAC.  They are bigger than nearly all regional US banks. 

They are protected by Cdn. legislation, but are also expected to provide for Canadians.  They are huge employers, and have some of the best private sector jobs in Canada, with good pensions, reasonable pay, and good job security.  Generally they promote young people within.  It is sort of a tacit agreement between our government and the banks.  You provide for Canadian's, dont be too obnoxious, and we will protect you with legislation. 

Part of the reason they have been so well run during the period in question is that they had their day of reckoning in the eighties and nineties.  We had back to back bad recessions in the early 80s, and the late 80s into the mid 90s.The banks had to belt tighten big time.  Then came the US mortgage crisis which served up a warning to them.  I cant speak to their risk management right now.  Its likely gotten sloppy like JPM, or WFC were sloppy in 2007.  But not like Countrywide or Washington Mutual.

In a severe downturn globally they will get hit the same as anyone else.  A mortgage crisis in Canada is unlikely.  House prices in Toronto are nuts but that doesnt necessarily put the big banks in any serious jeopardy.  The riskier mortgages are held by other non- bank entities.  Chances are, if/when there is a major downturn in CDn. house prices they will each take some writedowns, dust themselves off, tighten up their lending a bit and carry on. 

None of this implies that I would buy their stock right now though.  But them, I am not buying anything.  I figure sometime in the next couple of years I will get any one of them at two thirds, or even one half of todays price. 
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