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Canadian banks relying more heavily on wholesale funding than global counterparts: Moody’s

“While it's true Canadian banks have a high reliance on wholesale funding, they also have high levels of less-confidence-sensitive funding and sticky retail deposits, which improves the system's overall funding profile," said David Beattie, a senior vice president at Moody’s.

Canada’s biggest banks are relying more heavily on wholesale funding than their global peers, a situation that tends to raise the risk of periodic difficulties in refinancing debt, according to Moody’s Investors Service.

However, the ratings agency says the large Canadian financial institutions offset these risks – which can also raise the risk of failure – through their funding mix and large holdings of high-quality liquid assets related to their capital markets operations.

“While it’s true Canadian banks have a high reliance on wholesale funding, they also have high levels of less-confidence-sensitive funding and sticky retail deposits, which improves the system’s overall funding profile,” said David Beattie, a senior vice president at Moody’s.

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