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Big banks refocus on retail operations

Canadian banks are sharpening their focus on their cornerstone
retail operations as they ride out the credit storm, top executives at
a banking conference in Montreal suggested yesterday.

But critics worry renewed focus on traditional banking means
ordinary customers will pay for at least part of the banks’ investment
missteps. Thomas Velk, a banking expert at McGill University, said
retail consumers should brace for wider spreads between the amount
banks pay on deposits and the amount they charge for loans.

Tsur Somerville, a professor with the Sauder School of Business in
Vancouver, said Canadians are already feeling the pinch of higher
mortgage rates because most opt for the fixed-rate variety.

Somerville points to a "widening spread" between the five-year fixed
mortgage rates and five-year bonds as a sign the banks are shunning
real estate risk.

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