The vaunted Canadian banking system has been shaken. It survived the test, but not without exposing some weaknesses.
A country that lost no banks during the 2008 financial crisis nearly lost one during the wee hours of Monday, May 1, when the Office of the Superintendent of Financial Institutions was on standby to take over Home Capital Group Inc., a Toronto-based lender of subprime mortgages that was experiencing a run on its deposits. At the eleventh hour, Home Capital managed to secure a $2 billion line of credit from a pension fund. The terms were onerous, but Home Capital was alive, as was Canada’s two-decades-long streak of avoiding bank failures.
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