RE:Another shoe drops... and a new twistWe will need to see how all this plays out. Not saying you are wrong.
Last year Canadian banks sold a record amount of bonds into the market to raise money which means that they are paying interest on these loans at rates below current market rates which is a good thing for the banks. The interest rate exposure/risk to these bonds rests with the buyers of these bonds not the banks themselves (they already got their money).
All of the Canadian banks have significant risk assessment departments and if you look at the Q reports by Canadian banks you will see a substantial portion of the report deals with risk assessment.
That said, the risk to owning bank stocks, rests with the potential for increased loan loss provisions if the recession that I am predicting comes to pass, contracting of P/E multiples due to higher interest rates, and less income from their capital markets (stock trading) departments in the event of less trading and lower stock market valuations in the event of a recession.
The situation with SVC etc was that these banks lent money to companies that were involved in risky activities. For example, SVB lent money to teck startups many of which are likely to fail and these loans were backed by deposits of rich people for which the bank had to pay interest on the deposits. As these startups had difficulty paying the interest on their loans this placed immense pressure on SVB to have income to pay the interest on its deposits and hence a big mismatch from a risk management perspective. As a general rule this is not the case with Canadian banks.
When I put all this together along with my scenario regarding a recession (probably in 3Q or 4Q), I am OK with overweighting banks right now as I have assessed the US situation as creating a short term buying opportunity for Canadian banks. I expect to reduce this overweight position sometime over the next couple of months and will underweight banks (along with with everything) else late in 2Q or early 3Q based on my overall market scenario. Of course this plan will change if there are major events causing my scenario to change.