Alexia AddonaJonathan Beaudoin

Yannick BérubéElric Boisvert

BANKING IN

CANADA

Brief Overview of Present System

Banking Structure: Bank of Canada &

Regulations Banking Practices: Retail Banking Wealth Management Brokerage Activities

Big 5 & Subsidiaries Second Tier Banks Other Financial

Institutions

OUTLINE

Extremely competitive industry.

Over 3,000 competitors. Some in niche markets, some

in all markets (like Big 5). Banks’ role is to channel funds

from individuals, institutions, etc., who have surplus funds to people who wish to use those funds.

Other roles: payment system, vehicle for Canadian monetary policy and as the federal government's instrument for some social and political policies.

Br ie f Overv ie

w

Mergers highly regulated and often turned down.

Example: 1990s RBC/BMO and CIBC/TD mergers.

Bank of Canada

CDIC

Chartered banks Big 5 and affiliates Second tier banks

Other financial institutions

Structure

The Office of the Superintendent of

Financial Institutions (OSFI)

The Bank of Canada

•Founded in 1935 in Ottawa •Public institution

• Independent from the government•Led by the Governing Council

The role of the BoC

“Bank of the commercial banks’’Controls inflationRegulation of the interest ratesSupplier of Canada’s bank notesFiscal agent of the Government of CanadaResearch on domestic and foreign financial markets

Lender of last resort

Regulations

Role of the Minister of FinanceCanada Deposit Insurance Corporation (CDIC)

Rules on capital, liquidity, and management of systematic risk

Bank Act

Retail Banking Bank executes transactions

with consumers Service offered: personal

loans, debit cards, savings account,etc

Wholesale Banking Deals with corporations and

other banks. Services offered: Currency

conversion, working capital financing, corporate loans, etc

Pract ices

Wealth Management Combination of financial

investment advice, accounting/tax services and legal planning for one fee.

Mutual Funds An investment vehicle that

is made up of a pool of funds collected from many investors for the purpose of investing in securities.

Goal is to earn capital gains

Pract i ces

(c td . )

Insurance A practice or arrangement by

which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.

Credit Cards A credit card is a payment card

issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them.

Brokerage Activities Brings buyers and sellers of

investments together. They charge a commission on every transaction.

Pract i ces

(c td . )

1. Royal Bank of Canada (RBC)

2. TD Canada Trust (Toronto-Dominion Bank)

3. Scotiabank (Bank of Nova Scotia)

4. Bank of Montreal (BMO)

5. Canadian Imperial Bank of Commerce (CIBC)

T h e

Big F i v e Schedule I banks

Operational head offices located in Toronto

Stable and Conservative Services offered by all

five: Retail banking, wholesale banking, wealth management, mutual funds, insurance, credit cards, brokerage activities, and have large international subsidiaries.

RBC is Canada’s largest bank by its assets and market capitalization.

One of the largest in the world based on market capitalization. (#12 with 99.63$US billion)

Operates in Canada, the United States, and 44 other countries.

Canada and U.S. operations: 81.8% of total revenue

Employs 79,000 full and part-time employees.

RBC

TD challenges RBC for largest bank in Canada, with a slight advantage in total assets (1.61 $US billion).

TD is ranked at #13 for largest bank in the world based on market capitalization, with 88.21$US Billion.

Operates mainly in Canada and United States: Canada: 66.1% of total

revenue United States: 26.4% of

total revenue Employs 78,748 full and part-

time employees.

TD

Scotiabank operates in the Americas, in Europe, in the Middle East, and Asia Pacific.

It has 4 diversified growth platforms:• International Banking (34.8%)• Canadian Banking (33.4%)• Global Wealth and Insurances

(19.1%)• Global Banking and Markets

(17.1%) Grew by 21% in 2013 by

acquiring ING Direct. Ranked at #24 for largest bank

in the world by market capitalization with 69.46$US billion.

Employs 83,874 full and part-time employees.

Scot iabank

The Bank of Montreal primarily operates in North America: • Second largest Canadian bank

by retail branches in North America.

• 97.1% of total revenue from Canada and US operations.

BMO’s main business segments:• Commercial Banking – Canada

(39%)• Wealth Management (21.2%)• BMO Capital Markets (21.1%)• Commercial and Personal

Banking - US (18.1%)• Corporate Services (0.6%)

Ranked at #42 for largest bank in the world by market capitalization with 45.56$US billion.

Employs 45,631 full and part-time employees.

BMO

CIBC operates in Canada, Europe, Asia Pacific, and the Americas, however 86% of its total revenue are from Canada.

CIBC’s main business segments:• Retail and Business Banking

(65%)• Wholesale Banking (17.7%)• Wealth Management (14.1%)• Corporate and Other (3.1%)

Ranked at #54 for largest bank in the world by market capitalization with 34.15$US billion.

Employs 43,039 full and part-time employees.

CIBC

Big F ive Subs id iar ies

  Royal Bank of Canada (RBC)

Toronto-Dominion Bank (TD)

Bank of Nova Scotia (Scotiabank)

Bank of Montreal (BMO)

Canadian Imperial Bank of Commerce (CIBC)

U.S. retail banking

RBC Bank *Note: Sold in June 2011

TD Bank None Harris Bank None*

Other major international retail banking operations

RBC Royal Bank of Canada and RBTT (Caribbean branches)

  Scotiabank International

  FirstCaribbean

Private banking

RBC Wealth Management

TD Waterhouse Private Banking

Scotia Private Client Group

BMO Harris Private Banking

CIBC Private Banking

Canadian mutual funds

RBC Funds and PH&N Funds

TD Mutual Funds

Scotia Mutual Funds

BMO Mutual Funds and Guardian Group of Funds

CIBC Mutual Funds

U.S. mutual funds

Tamarack Funds        

Canadian brokerage

RBC Direct Investing and RBC Dominion Securities

TD Waterhouse ScotiaMcLeod BMO InvestorLine and BMO Nesbitt Burns

CIBC Investor's Edge and CIBC Wood Gundy

Big F ive Subs id iar ies (Par t I I )

  Royal Bank of Canada (RBC)

Toronto-Dominion Bank (TD)

Bank of Nova Scotia

(Scotiabank)

Bank of Montreal (BMO)

Canadian Imperial Bank of Commerce (CIBC)

U.S. brokerage

RBC Wealth Management formerly RBC Dain Rauscher

TD Ameritrade (45%)

  BMO Harris Investor Services

 

International Brokerage

West Indies Stockbrokers Limited

TD Waterhouse (UK), TD Direct Investing International (LU)

     

Canadian insurance

RBC Insurance TD Insurance Scotia Insurance

BMO Life CIBC Creditor Insurance, CIBC Travel InsuranceCapital

marketsRBC Capital Markets

TD Securities Scotia Capital BMO Capital Markets

CIBC World Markets

Major custodial operations

RBC Dexia (June 27, 2012, RBC purchased the remaining 50% from Dexia)

      CIBC Mellon (50%)

Precious metals

    ScotiaMocatta    

ATB Financial Canadian Western Bank National Bank of Canada Laurentian Bank Desjardins Group (technically

not a bank but an alliance of credit unions)

HSBC Bank Tangerine Bank (formerly

ING)

Second T ier

Banks

Second tier banks are smaller, less successful banks than the main banks.

Credit Unions A credit union is a member-

owned financial cooperative, democratically controlled by its members, and operated for holding deposits, providing credit, and providing other financial services.

Many credit unions also provides services intended to support community development.

O t h e r F in a n c i a l I n s t i t u t i o

n s

Trust Companies A legal entity that acts as a

fiduciary on behalf of a person or business for the purpose of management and the eventual transfer of assets to a beneficial party.

There are often tax advantages associated with using trusts to transfer ownership of assets.

O t h e r F i n a n c i a l

I n s t i t u t i o ns

(ctd.)

Insurance Companies Insurance companies pool

risk by collecting premiums from a large group of people who want to protect themselves, loved ones against particular losses.

Insurance helps manage risk and preserve wealth

O t h e r F i n a n c i a l

I n s t i t u t i o ns

( c t d . )

Brokerages A brokerage acts as an

intermediary between buyers and sellers to facilitate securities transactions.

Commission on every transaction compensates brokerage companies.

A brokerage can either be full service or discount.

O t h e r F i n a n c i a l

I n s t i t u t i o ns

( c t d . )

Big Five Financial institutions also

include credit unions and brokerages as well as others, not only banks.

Many regulations to minimize risks and catastrophic outcomes.

Considered one of the safest banking systems in the world…

Now what?

Summary

Questions?