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Canadian banks are expected to hold off on dividend increases again this quarter, a move that's prudent, but bound to disappoint some shareholders.

The prevailing wisdom on payouts was summed up Monday in a report by National Bank Financial analyst Robert Sedran, who said: "We believe banks will - and should - wait until loan losses have begun a sustainable decline before increasing their dividends."



However, anyone with exposure to the domestic banks - and that's all of us - should pause for a moment to consider the nightmare that continues to play out in U.S. financial services. If our biggest problem with banks is a conservative payout philosophy, we're in good shape.

Last Friday, U.S. regulators shut down five more banks. The Federal Deposit Insurance Corp. was now dealt with 120 U.S. bank failures in 2009: There is a sense that far more banks would have closed their doors if the FDIC could afford to move faster, as there are reportedly more than 400 institutions on the regulator's list of problem children.

Among the latest casualties are San Francisco-based United Commercial Bank, which TD Waterhouse noted in a report Tuesday ranked as the fifth-largest bank failure of the year. This one bank, which had $7.5-billion of deposits and $10.2-billion is expected to cost the FDIC about $1.4-billion.

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