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Rating agency Moody’s has downgraded its outlook on Canada’s banking system.
Rating agency Moody’s has downgraded its outlook on Canada’s banking system.
(MIKE SEGAR/REUTERS)

Betting against Canadian banks is always a bad idea

Are the world’s bank watchers re-evaluating their long love affair with Canadian financial institutions?

It certainly appears that way, if the latest downbeat assessment from Moody’s Investors Service is anything go by.

The big bond-rating agency has changed its outlook on Canada’s banking system to negative from stable on the grounds Ottawa has no appetite to bail out too-big-to-fail institutions using taxpayers’ money in the event of a crisis. Instead, the government is proceeding with a so-called bail-in strategy that could force bondholders to shoulder part of the burden of any future restructuring.