Analysis: Canadian financials see opportunity in crisis

Tue Aug 16, 2011 3:18pm EDT
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By Cameron French

TORONTO (Reuters) - While U.S. and European financial institutions brace for another economic slowdown, Canadian firms are noticing the familiar scent of opportunity.

With strong balance sheets and encouraged by a relatively robust domestic economy, Canada's banks, insurers, and asset managers are on the lookout for appealing assets that may be shaken loose by financial uncertainty.

Toronto-Dominion Bank agreed on Monday to buy Bank of America Corp's $8.6 billion Canadian credit card portfolio, as the U.S. bank tries to rebuild its battered capital base to comply with Basel III capital rules.

Analysts and executives see similar opportunities popping up in coming months as troubled financial institutions sell subsidiaries to strengthen balance sheets.

"One man's waste is another man's treasure," said Edward Jones analyst Craig Fehr, who sees opportunities to "pick up some assets that just don't make sense going forward for other banks or financial institutions."

Canada's banks had a low global profile prior to the 2008 financial crisis, but have gained considerable status and clout since then, helped by strong balance sheets and a fortress-like position in a protected domestic market.

None of the country's lenders required a government bailout, and as U.S. and European banks struggled to recover, the Canadians feasted on discarded assets.

TD purchased troubled U.S. lender South Financial last year and recently closed a $6.3 billion purchase of Chrysler Financial. It continues to expand what is now one of the largest U.S. branch bank networks.   Continued...

<p>Two men walk down the street from the King and Bay intersection in the financial district in Toronto February 22, 2011. REUTERS/Mark Blinch</p>