Basel III Around the World: Americas

We look at how the tough, new Basel III rules may impact the largest banks in Canada, the US, Chile and Brazil

Jaime Peters, CFA, CPA 10 May, 2011 | 6:20AM

Read our analysis of the impact of Basel III elsewhere in the world.

Canada and Basel III
Canada's economy performed relatively well during the global financial crisis. It never experienced the shock to employment and real estate prices that afflicted the U.S. Consequently, its banks outperformed their global counterparts and its banking system's capital levels remained healthy throughout the crisis. While large Canadian banks faced challenging environments in their capital markets operations, only CIBC reported a yearly loss during the financial crisis.

Basel III will lower the capital ratios of the large Canadian banks. The top six banks in Canada all have substantial capital markets operations. Basel III will boost risk-weighted assets by attaching higher capital requirements to counterparty risk, inter-financial exposures, and trading and derivatives activities. Moreover, investments in other financial institutions will receive harsher treatment under Basel III than Basel II, resulting in lower levels of Tier 1 common equity.

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About Author

Jaime Peters, CFA, CPA  Jaime Peters, CFA, CPA, is a senior stock analyst with Morningstar.

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