TORONTO (Reuters) - Finance Minister Jim Flaherty said on Monday he was pleased that the country's large banks were "quite compliant" with international disclosure recommendations in their recent quarterly reports.
"I have their assurances that they will continue along that path," Flaherty said in a speech in Montreal.
He had urged Canadian bank executives in late April to quickly adopt leading disclosure practices as recommended by the Financial Stability Forum, a group of international regulators, central bankers and finance ministers.
In the wake of the credit crisis, the FSF suggested in mid-April that banks should provide more information about the value of their off-balance-sheet exposure and risks.
Canadian banks released their second-quarter financial results in late May.
"Our lead financial institutions have been responsive to the FSF suggestions," Flaherty told an economic conference.
Earlier in the day, Flaherty met with the CEOs of the large Canadian banks in Toronto to discuss how they were meeting the FSF's recommendations.
They also discussed ways to lower the Canadian banks' funding costs, which have gone up since credit markets were disrupted last summer.
"It is an issue that we've talked about more than once," Flaherty said about banks' costs.
"We don't come to conclusions at these meetings but we do have constructive discussions," he told reporters.
The Globe and Mail reported on Monday that the banks were pressing the Canadian government to expand the Canada Mortgage Bond program, which the Globe called a relatively cheap way for large and small financial institutions to fund their mortgage businesses. The government-backed Canada Housing Trust buys various mortgages from banks, pools them and then issues highly rated mortgage-backed bonds. It issued a record amount of Canada Mortgage Bonds in March.
Nancy Hughes Anthony, head of the Canadian Bankers Association, said the finance minister wanted an update from the banks on disclosure matter before he heads off to the G8 meetings in Osaka, Japan, this weekend.
"I think the banks got pretty good marks for being ahead of other banks around the world," in terms of FSF compliance, she said. This is partly because the Canadian institutions' fiscal yearends and annual meetings take place before bank meetings in other countries, Hughes Anthony said.
Some European banks are behind their U.S. peers in releasing adequate risk information, the FSF secretary general, Svein Andresen, told a conference last week.
In a speech to the Montreal economic gathering on Monday, Royal Bank of Canada chief operating officer Barbara Stymiest held out the Financial Stability Forum and its recommendations as an example of international cooperation, while warning against the "clamor" for increased regulation.
"We should be cautious about moving ahead precipitously with any type of prescriptive regulatory response that may be disruptive, overreaching and ultimately unnecessary down the road," Stymiest said.
The industry will make it through this severe credit crisis, she said.
"The risk is that by over-reacting to one particular set of circumstances, we set the stage for a whole new set of problems in the next cycle," Stymiest said.
Reporting by Louise Egan in Montreal and Lynne Olver in Toronto