Are Canadian Banks the Best Way to Invest in Financials?

If it seems as if the U.S. banking industry is prone to crises and panics, it’s because it is. Since the mid-1800s, the U.S. has experienced no fewer than 14 banking crises, including a few in my lifetime. Meanwhile, the last Canadian banking crisis happened more than 180 years ago.

In this Fool Live video clip, Industry Focus host Jason Moser and Fool.com contributor and bank stock expert Matt Frankel, CFP, discuss whether Canadian banks could be worth a look.

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Jason Moser: The next question that’s been voted up here, KD asks, “What are your thoughts on big Canadian banks?”

Matt, I’m just going to stop it right here. I don’t really know much about Canadian banks, so I’m going to go ahead and step out of this conversation and let you have it. But let me finish the question first.

“What are your thoughts on big Canadian banks all offer high dividends and seem to have long-run stable operations? How do they compare versus B of A (NYSE:BAC) or JPMorgan (NYSE:JPM)?”

I guess technically, isn’t TD Ameritrade, TD Bank (NYSE:TD), that’s a Canadian operation?

Matt Frankel: Yes. That’s what I was actually going to mention.

Jason Moser: I do know that, but you take it away, Matt.

Matt Frankel: Canadian banks definitely have a more stable history than American banks. I know this stat because I’ve done research on TD before. Over the past 180 years, the US has had 14 banking crises. The financial crisis of ’08-’09 was just the latest one. We’ve had 14 different banking crises. You remember the savings and loan crisis back when I was an infant?

Jason Moser: Back, yeah. I remember the early ’80s. I do remember that very well.

Matt Frankel: Yeah, I was like three.

Jason Moser: Well, I wasn’t.

Matt Frankel: The savings and loan crisis, going back for the early 1800s, there have been 14 of those. You know how many Canada has had? Two, and the last one was in 1839.

Jason Moser: They probably all apologized to each other for it too.

Matt Frankel: Canada’s latest banking crisis was over 170 years ago. So it’s a much more stable history. I would almost go so far as to say it’s a less greed-fueled bank culture.

Jason Moser: Well, that’s what it sounds like.

Matt Frankel: So there hasn’t been any needs for government bailouts of Canadian banks or anything like that. You do have the extra element of currency risk, which is important to mention because Canadian dollar and U.S. dollar are two different things.

I’ve been a TD shareholder, I’m currently not. I prefer TD Bank over any of the other major Canadian banks just because they have the U.S. exposure as well, and they’re growing in the U.S. When other banks are getting rid of branches and getting rid of customer service and stuff like that, TD is doubling down on that. They’ve longer hours than most banks. They’ll even let you bring your dog into their branch in most places, if you didn’t know that.

Jason Moser: I like that. What about two dogs?

Matt Frankel: There you go.

Jason Moser: Three dogs?

Matt Frankel: TD is my preference just because they have a ton of U.S. growth potential. I love the corporate culture of the bank. But Canadian banks in general have just been much more stable than U.S. banks.

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