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Desjardins CEO wants Ottawa to stop calling banks a 'bad industry'

Desjardins president and CEO Guy Cormier opposes the characterization of banks as a
Desjardins president and CEO Guy Cormier opposes the characterization of banks as a "bad industry." (THE CANADIAN PRESS/Jacques Boissinot) (The Canadian Press)

Desjardins Group CEO Guy Cormier says he’s tired of Ottawa casting Canada’s banks as a “bad industry” guilty of lining its pockets in a tough economy.

The head of the Quebec-based lender says banks protected the financial health of Canadians during the pandemic by extending mortgage payment periods and offering support to small businesses.

“We thought it was our role,” Cormier told an audience at a Canadian Club Toronto event on Monday. “I think the reward was to receive an extra tax after, because we are supposedly a financial institution making so much money, and we are an industry that is making so much money.”

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Ottawa plans to roll out new taxes on banks and insurers. According to the Parliamentary Budget Officer, a pair of new levies could generate $5.3 billion over five years. Finance Minister Chrystia Freeland defends the hikes, noting federal government aid during the pandemic helped insulate the banks’ balance sheets, allowing for significant profits.

Meanwhile, recent financial filings from Canada’s big banks show spiking expenses, rising capital requirements, and higher provisions for potentially bad loans. In October, RBC Capital Markets analyst Darko Mihelic flagged a potential “payment shock” for mortgage holders as a risk for Canadian banks.

The Canadian Bankers Association has accused Ottawa of “singling out the banks” as it attempts to support lower-income Canadians coping with high inflation.

Asked if he opposes the federal government’s tax measures, Cormier says no.

“I’m not in opposition to what they present,” he said. “I applaud when I see the government trying to help every one of us to behave, and act in a long-term perspective. That’s shared prosperity. But when we are shifting to a message that is, ‘We are a bad industry. We’re making too much money,’ I’m not there yet.”

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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