Canada’s banks must contend with regulatory reform measures aboard because staying competitive globally requires expanding operations into foreign markets, according to Capco, a leading global provider of consulting and managed services to the financial services industry.

The issue is likely to be at the forefront as the Group of Twenty (G-20) Finance Ministers and Central Bank Governors plan to meet in Toronto this month.

"Canadian banks cannot sit idle or they will be marginalized," said Ido Gileadi, Partner and Canadian Region Leader, Capco.

"In order to maintain their position internationally, Canadian banks must acquire or enter new markets in the United States and globally. However, doing so will subject them to a different regulatory landscape than they currently operate under in Canada -- this will have a significant impact they must be prepared to deal with."

Areas that need addressing include capital requirements, tax issues, embedded capital, bailout funds and resolution regimes “living wills.”

"Going into the G20 summit, Canada is ratcheting up the agenda to deliver its opposition to the International Monterary Fund over proposed global safeguards pronouncing its steady state through the financial crisis," said Gileadi.

"Looking back, Canadian banks were well capitalized and avoided the financial crisis while others leaned heavily on their government's rescue packages. A key question looking ahead is: 'Can Canada influence the world forum toward financial reform by virtue of its safe lending achievements?'"

According to Capco, strong cross-border coordination of regulatory reform is critical for financial transparency and market liquidity.



Source: Capco