Banking in Canada

facade in Amherst, Nova Scotia. This structure was erected in 1907. Banking in Canada began to migrate in earnest from colonial overseas banking operations to a local banking system with the founding of the Bank of Montreal in 1817. Other banks soon followed and began business, and after a lengthy approval process began unregulated banking business. These institutions issued their own local bank notes as currency. However throughout the 1850s and early 1860s a number of bank failures caused a loss of confidence in bank notes. The passing of The Provincial Notes Act in 1866 allowed federal and provincial governments to begin to introduce their own notes. With the Canadian Confederation taking place in 1867, the new Dominion government gained complete control over currency and banking. was also an important milestone in banking and monetary governance. ==Ranking with other countries==

A survey conducted by the World Economic Forum called the Global Competitiveness Report of twelve-thousand corporate executives, in 2008, concluded that Canada has the best banking system in the world, receiving a score of 6.8 out of possible seven. The Canadian banking system has long been regarded by industry experts to be one of the strongest and most stable banking systems in the world. The Bank of Montreal has been paying dividends to share holders every year since 1829 ( years ago), Scotiabank since 1833 ( years ago), Canadian Imperial Bank of Commerce since 1868 ( years ago) and Royal Bank of Canada since 1870 ( years ago) respectively. ==Bank failures==

In Canada, only two small regional banks have failed since 1923 when the Home Bank of Canada failed. This was both Canadian Commercial Bank and Northland Bank in September 1985. To put this into perspective there were no bank failures in Canada during the Great Depression, World War II, the 1979 Energy Crisis, the Dot-com Bubble, the Sept 11th Attacks or the Subprime Mortgage Crisis. On June 4, 1996, the Calgary-based Security Home Mortgage Corporation closed its doors for good. About 2,600 Canadians discovered that their savings were not immediately available from their financial institution, in which they had entrusted a total of $42 million in deposits. ==Regulation==

Canada's federal government has sole jurisdiction for banks according to the Canadian Constitution, specifically Section 91(15) of The Constitution Act, 1867 (30 & 31 Victoria, c.3 (UK)), formerly known as the British North America Act, 1867. Meanwhile, credit unions/caisses populaires, securities dealers and mutual funds are largely regulated by provincial governments. The main federal statute for the incorporation and regulation of banks, or chartered banks, is the Bank Act (S.C. 1991, c.46), where Schedules I, II and III of this Act list all banks permitted to operate in Canada under these three distinct categories: • Schedule I: Banks allowed to accept deposits and which are not subsidiaries of a foreign bank. Examples include "The Big Five" banks (as mentioned below); associated brands of the Big Five such as Tangerine and Simplii Financial; and smaller second-tier banks such as National Bank of Canada, and Laurentian Bank of Canada. Because the Schedule I banks are not subsidiaries of any foreign bank, they are the true domestic banks and are the only banks allowed to receive, hold and enforce a special security interest described and provided for under the Bank Act whose authority stems from the Bank Act. The financial groups are also governed by regulatory bodies (bank regulators, securities regulators, insurance regulators, etc.) in each country in which they operate. == Largest banks ==

Big Five The top five Canadian banks are collectively referred to as the "Big Five" due to their dominant position and significant influence within the country's banking and financial industry. This term has been used for many years to characterize these major banks, and it highlights their substantial market share and impact on Canada's economy. The financial sector of Canada is especially concentrated in these banks, which has been seen as a result of protectionist policies of the government and the country's small and dispersed population. These banks grew at an extraordinary rate of 10.7 percent per year, on average, from 2008 to 2018 compared with 3.64 percent for the five largest U.S. banks. While most Canadian banks operate only within Canada, the Big Five are best described as Canadian multinational financial conglomerates that each have a large Canadian banking division. Big Six When people talk about Canada's Big Six banks, they are including National Bank of Canada, which following its merger with Canadian Western Bank has a national footprint. Despite being a multi-regional player, National Bank is the country's sixth-largest bank. Other large banks (excluding Big Six) == Importance of Canada's financial institutions ==

Domestic systemically important bank (D-SIB) A domestic systemically important bank (D-SIB) is a bank that could disrupt the domestic economy should it fail. Canada's Big Six are designated as D-SIBs. D-SIBs are so important to the functioning of the financial system and the economy that they cannot be wound up under a conventional bankruptcy and liquidation process should they fail. The failure of any one of Canada's D-SIBs, with the potential loss of financial services, even for a short period of time, could have a serious impact on Canada's economy. Desjardins The Autorité des marchés financiers, which oversees Quebec's financial sector, designated Desjardins Group as a D-SIB. Global systemically important bank (G-SIB) A global systemically important bank is bank whose systemic risk profile is deemed to be of such importance that the bank's failure would trigger a wider financial crisis and threaten the global economy. The Basel Committee has developed a formula for determining which banks are G-SIBs, deploying criteria including size, interconnectedness and complexity. National regulators subject banks determined to be G-SIBs to stricter prudential regulation such as higher capital requirements and extra surcharges, or more stringent stress tests. In Canada, the Office of the Superintendent of Financial Institutions designated Royal Bank of Canada and Toronto-Dominion Bank as G-SIBs as well as D-SIBs. == Business lines of banks ==

While most Canadian banks operate only within Canada, the Big Five are best described as Canadian multinational financial conglomerates that each have a large Canadian banking division. In fiscal 2007, RBC's Canadian segment called "Personal Financial Services" (the segment most related to what was traditionally thought of as retail banking) had revenue of only CAD$5,082 million (or 22.6%) of a total revenue of CAD$22,462 million. Canadian retail operations of the Big Five comprise other activities that do not need to be operated from a regulated bank. These other activities include mutual funds, insurance, credit cards, and brokerage activities. In addition, they have large international subsidiaries. The Canadian banking operations of the Big Five are largely conducted out of each parent company, unlike U.S. banks that use a holding company structure to hold their primary retail banking subsidiaries. ==2008 financial crisis==

During the peak of the 2008 financial crisis, the Bank of Canada, along with the Canada Mortgage and Housing Corporation and the US Federal Reserve provided up to $114 billion of liquidity support to Canadian banks. Of this amount, $69 billion was part of the CMHC mortgage insurance program, a facility set up in 1954 to handle such situations. The World Economic Forum, In the 2010-2011 report Canada ranked 1st in the "Soundness of banks" indicator ranking as the world's soundest banking system for six consecutive years (2007–2013) according to reports by the World Economic Forum. Released in October 2010, Global Finance magazine put Royal Bank of Canada at number 10 among the world's safest banks and Toronto-Dominion Bank at number 15. ==Dispute resolution==

Since the late 1990s, dispute resolution across the sector was directed to the independent As reported in The Globe and Mail in 2018, "[t]he Canadian Foundation for Advancement of Investor Rights (FAIR) has compared ADRBO unfavourably with OBSI," noting a statement from FAIR that they "have serious concerns about the conflicts of interest, misaligned incentives, and level of transparency and accountability at ADRBO". In 2021, concerning an incident where TD Bank was able to find records that RSP funds has been transferred out of a customer's account, but not find records as to where they had gone, Duff Conacher, cofounder of accountability group Democracy Watch, observed that "most of Canada's big banks are avoiding accountability by essentially policing themselves when it comes to consumer complaints." ==See also==