Moody's Investors Service has downgraded the long-term credit ratings of six Canadian banks, including Toronto-Dominion, Bank of Nova Scotia, Bank of Montreal and CIBC. National Bank and Desjardins were also downgraded.
The ratings agency lowered each of its ratings one notch, citing high levels of consumer debt and high home prices as threats to the Canadian economy. Moody's had put all six banks under review in October.
Canadian consumer debt has risen to a record-high 165 per cent of
disposable income in the third quarter of 2012, up from 137 per cent in
mid-2007. Bank of Canada governor Mark Carney has repeatedly warned
about these levels, but they remain stubbornly high.
Finance Minister Jim Flaherty was quick to reiterate his confidence in Canada's banking system.
"For five years in a row, the World Economic Forum has ranked
Canada's banking system as the soundest in the world," Flaherty said in a
statement, adding that even after the downgrades, "Moody's rating of
Canadian banks continues to be among the highest in the world."
Read more: Moody's downgrades 6 Canadian banks - Business - CBC News
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