Moody’s gives banks ‘negative’ outlook

TORONTO — Moody’s Investor Services has cut its outlook for the Canadian banking system to negative because of an expected reduction of government support for the sector, but says it still believes the individual banks and the overall system are among the strongest in the world.

The outlook change is based on the Canadian government’s plans to shift more burden to the banks’ creditors — and away from taxpayers — in the event of a major financial crisis like the one in 2008-09, Moody’s analyst David Beattie said Tuesday.

But he said there’s no reason for the public to be alarmed by the “negative” outlook that Moody’s put on the banking system, replacing a “stable” outlook that had been in place since August. “The Canadian banking system remains one of the highest-rated banking systems in the world,” Beattie said.

All of Canada’s big banks are in the double-A range on the Moody’s scale, which goes from triple-A at the top to default at the bottom.