(Montreal) The Canadian banking system is solid, insists the President and Chief Executive Officer of Desjardins Group, Guy Cormier, but he recognizes that the economy is not immune to the consequences of the crisis of confidence that is shaking some institutions in the United States and Europe.
Before the recent headlines on the difficulties of Silicon Valley Bank, Credit Suisse, First Republic or Deutsche Bank, the Desjardins Group economist team was already anticipating a recession in 2023 due to rising interest rates.
There is a risk that a banking crisis will lead to a recession “stronger than we had anticipated”, explains Mr. Cormier, in an interview, Saturday, on the sidelines of the annual meeting of the Mouvement Desjardins. “It is clear that at that time, economic activity around the world will slow down and there, it could impact Canadian companies, it could impact Canadian financial institutions which could see loan losses adjusted to the rise. »
So far, the big boss of Desjardins Group says he is reassured by the latest developments. “What I welcome is really the speed of response from governments and banking authorities. We really see that there has been significant learning since the 2008 crisis. In a few hours, a few days, people wanted to secure citizens, members and clients of institutions and the financial system. »
The Mouvement Desjardins has well-stocked reserves to deal with possible headwinds, assures Mr. Cormier. He points out that the cooperative’s equity ratio is 21%, more than double the regulatory minimum. He points out that the Canadian banking sector as a whole is well regulated and is in a resilient financial position.
