Bank CEO ‘increasingly concerned’ about overheated housing markets
TORONTO — Royal Bank’s top executive told shareholders on Thursday that he’s “increasingly concerned” about the Toronto and Vancouver housing markets and would welcome government interventions.
The rapid increase in housing prices in the two cities is the product of an “unhealthy combination” of factors, RBC chief executive Dave McKay said at the bank’s annual meeting in Toronto.
“All of these factors are mixing to push prices up to unsustainable levels, stressing household balance sheets and locking many people out of the housing market,” McKay said.
His comments follow local real estate reports this week that showed that the Greater Toronto Area’s average housing price in March was $916,567 — up 33.2 per cent from last year and just short of the Vancouver area average of $919,000.
McKay said that a single solution to the problems facing buyers in those cities is unlikely to be successful.
“But longer term, I believe all parties need to come together — governments, developers, realtors, banks, community groups and others — to accelerate our progress in finding policies and solutions for this issue,” McKay said.
At the meeting, McKay also highlighted the bank’s efforts to listen to client and employee feedback in the wake of news reports that alleged some employees at financial institutions broke the law in order to meet sales targets.
He said his bank surveys its employees and customers regularly and makes changes to its business practices based on the feedback it receives.
Questions about sales practices have dogged the chief executives of Canada’s biggest banks during this year’s shareholder meetings, following CBC reports in recent weeks that cited unnamed employees who allege they faced pressure from management to boost sales or risk losing their jobs.
McKay said that of the 2.4 million accounts the bank opened last year, less than 0.05 per cent of clients escalated a complaint about the way that the account was opened.
Meanwhile, at CIBC annual meeting, board chair John Manley said the bank has received no complaints from employees or customers that related to the types of sales practices described in the reports.
CIBC chief executive Victor Dodig said his bank is focused on meeting its clients’ needs.
“I always tell everybody — we need to do what is right for our clients,” Dodig said in Ottawa in response to a shareholder’s question during the annual meeting.
“The earnings will come if we do the right thing for our clients.”