Ian Bickis, The Canadian PressAs Canadian banks report Q4 hits and misses, portfolio manager Neela White says investors should consider keeping a mixed basket of bank stocks. TORONTO — It’s not every day, or even every decade, that a big foreign bank decides to have a go at Canada’s retail banking market.
But Spain’s Banco Santander — which has already shown an ability to attract customers, with more than 168 million of them worldwide — is poised to be among the few that have tried as it nears the all-clear to expand in Canada. A fresh international challenger has the potential to add competition to the country’s banking oligopoly, though experts warn it won’t be easy to shake up the status quo. “You’d think the Canadian banking market should be ripe for disruption, and yet that never seems to happen,” said Andrew Spence, author of the recently published book, “Fleeced: Canadians versus their banks.” The Canadian market, where the Big Six banks made about $54 billion in profits in 2024, should be tempting because it consistently shows margins well ahead of other regions, said Spence. On the crucial banking indicator of earnings relative to equity, Canadian banks have come in about 40 per cent higher on the ratio than U.S. banks over the past couple of decades, and around double what European banks manage. Canadian banks also make much more per client. RBC made $4.2 billion last quarter off its 17 million customers. Santander, meanwhile, made about $4.9 billion off 10 times more. The sector’s profits come in part through the numerous and hefty fees Canadians pay, which Spence said should take away some of the halo effect the banks have of avoiding past bailouts. “We didn’t have to use the state to stabilize the banking system because in a sense, as taxpayers, we’re bailing them out every da
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