Canadian bank CEOs are urging the federal government to address internal trade barriers, re-evaluate tax policies, and streamline regulations. These calls come as the country’s leading lenders express concerns about the economic outlook due to tariff and trade risks. Despite exceeding first-quarter profit expectations, the big six banks have increased their provisions for credit losses, signaling a cautious approach to the uncertain economic environment.
This week, CEOs from Canada’s major banks, which dominate over 90% of the banking market and represent some of the largest publicly traded companies in the country, echoed similar sentiments during earnings calls. The catalyst for this collective concern is the looming threat of tariffs proposed by U.S. President Donald Trump.
Kevin Burkett, portfolio manager at Burkett Asset Management, which holds shares in Bank of Montreal, Royal Bank of Canada, and TD Bank, noted the significant influence of these CEOs. “The bank CEOs have a voice… (They) are opportunistically pushing for, principally, a reduction in regulatory burden,” he stated. The proposed tariffs could significantly impact growth, potentially leading to job losses and increased prices for goods in both the U.S. and Canada. This is particularly concerning given that approximately 75% of Canadian exports are destined for the United States.
TD Bank CEO Raymond Chun emphasized the need for collaborative action. “The current situation is also a clear signal that Canadian governments and businesses must pull together to remove the obstacles that hold back national productivity and strengthen our competitiveness,” he told analysts. Chun and other executives highlighted the importance of dismantling interprovincial trade barriers and expediting mineral, energy, and resource projects.
Royal Bank of Canada CEO Dave McKay echoed this sentiment, stating, “This is the chance for Canada to make structural improvements to the country’s economic productivity and competitiveness. This can drive future growth opportunities with significant benefits to Canadians amidst this uncertainty.” The focus is on enhancing Canada’s overall economic resilience and positioning the country for future growth.
National Bank of Canada CEO Laurent Ferreira advocated for a more proactive approach to deregulation. He urged the government to appoint a “head of deregulation” to eliminate unnecessary bureaucracy and reduce regulatory burdens, thereby safeguarding Canadian business ownership.
While navigating domestic challenges, Canadian banks have also pursued diversification strategies abroad. Three of the six major banks have expanded their retail operations in the U.S. Bank of Nova Scotia, previously focused on South America, has shifted its strategy by reducing its exposure in that region and investing in U.S. regional lender KeyCorp. This strategic pivot underscores the evolving landscape of international finance and the banks’ adaptation to changing market dynamics. Despite these efforts, the Bank of Nova Scotia’s success still hinges on robust trade relationships between the U.S., Canada, and Mexico.
In conclusion, Canadian bank CEOs are advocating for significant policy changes to address internal trade barriers and regulatory burdens. They believe these reforms are crucial for bolstering Canada’s economic competitiveness, particularly in light of current trade uncertainties. Their calls for action underscore the need for a proactive and collaborative approach between the government and the private sector to navigate the challenges and capitalize on the opportunities presented by the evolving global economic landscape.
