As regulators move to address the stunning collapse of Silicon Valley Bank, analysts say there is limited fallout risk for the Canadian financial sector.
"Not only should the failure of Silicon Valley Bank not have significant negative implications for our banks, but this crisis should actually be viewed as further vindication of the Canadian banking model," said Scotiabank analyst Meny Grauman in a client note Monday, highlighting the stability of Canada's diversified major banks.
The bank had a heavy lending focus on emerging technology and biotech companies, which experienced massive growth during the first two years of the pandemic before the sector pulled back. Tens of thousands of tech workers have been laid off in recent months, from both large and small companies, amid the downturn.
"Interest rates in all the countries have been going up, and I guess some banks are better at managing this change than other banks, and Silicon Valley Bank was obviously a bank that was very poor at managing this transition." It's part of a more conservative regulatory system in Canada that helped the country manage through the global financial crisis, and be pointed to as a model on how to prudently oversee its financial system.
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