* RBC CEO says single solution unlikely to be successful
* RBC CEO calls for co-ordinated intervention
* RBC CEO defends sales practices following media reports
(Adds comments by RBC CEO)
By Matt Scuffham
TORONTO, April 6 Royal Bank of Canada
Chief Executive Officer Dave McKay warned on Thursday that
overheating housing markets could inhibit Canada's economic
growth, and he urged the federal and provincial governments to
work together to address the issue.
Toronto home sales and prices surged in March, an industry
report showed on Wednesday, fueling fears of a real estate
bubble in Canada's largest city and raising expectations that
the province of Ontario would soon act to cool the market.
British Columbia enacted a 15 percent tax on foreign buyers
last year, and some economists have suggested that similar
measures may be necessary in Ontario.
"Any single solution is unlikely to be successful on its
own," McKay said at RBC's annual meeting.
"A complex problem like this requires a multi-faceted
solution, which addresses supply constraints and speculative
forces and is mindful of the rate environment, which can be a
With even mainstream Canadian economists calling the Toronto
market a bubble and Finance Minister Bill Morneau saying
national policies are not the best tool to tackle a local
problem, the pressure is now on Ontario.
"We would welcome any effort by the three levels of
government to coordinate their interventions, and to do so
reasonably quickly," McKay said.
Owning a home has become "a distant dream" for many
Canadians, particularly in Toronto and Vancouver, he said,
citing "persistent" supply-and-demand imbalances in those areas
as well as low interest rates and speculative activity.
"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," he said.
McKay defended the bank's sales practices following media
reports that staffers, pressured to meet targets, had opened
accounts for consumers without their consent.
"The media reports over the last few weeks characterize an
environment that is not consistent with our experience, our
culture, or our values," he said. "It is not the RBC that I
know, that our clients know, or that I have grown up with for
nearly three decades."
Canada's financial watchdog is investigating sales practices
at the country's banks and expects to conclude its probe by the
end of the year.
McKay said that of the 2.4 million accounts RBC opened last
year, fewer than 0.05 percent of customers raised concerns about
the way theirs were opened.
(Reporting by Matt Scuffham; Editing by Chizu Nomiyama and Lisa