Banking in Canada

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The towers at Bay and King Street in Toronto are home to four of Canada's five largest banks.

Banking in Canada is one of Canada's most important industries with several banks being among its largest and most profitable companies.

It is dominated by a small number of large banks, with the six largest combining for 90% of the market share.[1] The two largest, the Royal Bank of Canada and the Toronto Dominion Bank are among the world's 25 largest banks.[2] It has been considered to be one of the safest and soundest banking systems in the world, and avoided major problems in the Financial crisis of 2007–2008.[3]

Canada's banks have high service levels and investments in technology. A report released by the office of the Minister of Finance in 2002 states "Canada has the highest number of ATMs per capita in the world and benefits from the highest penetration levels of electronic channels such as debit cards, Internet banking and telephone banking".[4] More recent data published by the World Bank shows that as of 2017 Canada has 227.82 ATMs per 100,000 adults, which ranks the country third worldwide.[5]

Early history[edit]

View of a Scotiabank 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.[6] 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[7] 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.[7] In 1871 the federal government passed the Bank Act which started the process of bringing all charted banks in the country under common regulation. The establishment of the Bank of Canada in 1935[8] was also an important milestone in banking and monetary governance.

Ranking with other countries[edit]

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.[9] 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.[10][11][12]

The Bank of Montreal has been paying dividends to share holders every year since 1829 (194 years ago),[13] Scotiabank since 1833 (190 years ago),[13] Toronto-Dominion Bank since 1857 (166 years ago),[14] Canadian Imperial Bank of Commerce since 1868 (155 years ago)[15] and Royal Bank of Canada since 1870 (153 years ago)[16] respectively.

Bank failures[edit]

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.[17] 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.[18]


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.[19] 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),[20] where Schedules I, II and III of this Act list all banks permitted to operate in Canada under these three distinct categories:

The bank regulator is the Office of the Superintendent of Financial Institutions (best known as OSFI),[21] whose authority stems from the Bank Act.[20] The financial groups are also governed by regulatory bodies (bank regulators, securities regulators, insurance regulators, etc.) in each country in which they operate.

Industry structure[edit]

First Canadian Place, headquarters of the Bank of Montreal

In everyday commerce, the banks in Canada are generally referred to in two categories: the five large national banks (the "Big Five") and smaller second-tier banks (notwithstanding that a large national bank and a smaller second-tier bank may share the same legal status and regulatory classification).

Big Five[edit]

The five largest banks in Canada are:

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.[22]

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.[23] 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.[24] 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.

Business lines and brands[edit]

Royal Bank of Canada Toronto-Dominion Bank Bank of Nova Scotia Bank of Montreal Canadian Imperial Bank of Commerce
Year Founded 1864 - Halifax, Nova Scotia 1955; Bank of Toronto 1857 and Dominion Bank 1869 - Toronto, Ontario 1832 - Halifax, Nova Scotia 1817 - Montreal, Quebec 1961; Canadian Bank of Commerce 1867 and Imperial Bank of Canada 1875 - Toronto, Ontario
Original Name Merchants' Bank of Halifax Bank of Toronto, Dominion Bank Bank of Nova Scotia Bank of Montreal Canadian Bank of Commerce and Imperial Bank of Canada
Head Office Montreal, Quebec;
Toronto, Ontario[25][note 1]
Toronto, Ontario Toronto, Ontario Montreal, Quebec Toronto, Ontario
Parent legal name Royal Bank of Canada Toronto-Dominion Bank Bank of Nova Scotia Bank of Montreal Canadian Imperial Bank of Commerce
Group brand RBC TD Bank Group Scotiabank Group BMO Financial Group CIBC
Canadian retail banking RBC Royal Bank TD Canada Trust Scotiabank BMO Bank of Montreal CIBC
Canadian direct banking Tangerine Simplii Financial - Formerly joint venture with Loblaws, PC Financial
U.S. retail banking RBC Bank[note 2]
City National Bank
TD Bank Scotiabank (active only in Puerto Rico and U.S. Virgin Islands) BMO Harris Bank CIBC Bank USA
Other major international retail banking operations RBC Caribbean[note 3] Scotiabank International CIBC FirstCaribbean
Private banking RBC Wealth Management TD Waterhouse Private Banking Scotia Private Client Group BMO Private Banking CIBC Private Banking
Canadian mutual funds RBC Funds and PH&N Funds TD Investment Services 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 Direct Investing and

TD Waterhouse

ScotiaMcLeod and Scotia iTRADE BMO InvestorLine and BMO Nesbitt Burns CIBC Investor's Edge and CIBC Wood Gundy
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 Scotialife Financial BMO Insurance CIBC Insurance
U.S. insurance RBC Insurance TD Insurance
Capital markets RBC Capital Markets TD Securities Scotia Capital BMO Capital Markets CIBC World Markets
Major custodial operations RBC Investor & Treasury Services CIBC Mellon (50%)
Precious metals ScotiaMocatta CIBC Precious Metals

*Marketing brands are shown rather than division names. For example, for internal and investor relation purposes, CIBC uses CIBC Retail Markets as a division name, but this does not normally appear in advertisements and does not feature prominently on account statements. Brand names are sometimes used across legal entities within a financial group. Intermediate umbrella brands (such as RBC Investments that includes the brands RBC Funds, RBC Action Direct, and RBC Dominion Securities) are not shown.

Second tier[edit]

Notable second-tier banks include Canadian Western Bank, National Bank of Canada, Laurentian Bank, HSBC Bank Canada (pending an acquisition by RBC[26]) and Tangerine Bank (formerly ING Bank of Canada and now a wholly owned subsidiary of Scotiabank). These second-tier organizations are largely Canadian domestic banking organizations or Canadian subsidiaries of foreign banks. Insurance companies in Canada have also created deposit-taking bank subsidiaries (for example Manulife Bank of Canada), and two notable non-bank consumer financial institutions are ATB Financial (a provincial financial institution owned by the Government of Alberta that operates similarly to a bank) and the Desjardins Group (an alliance of credit unions).

Between July and September 2016, three new domestic Schedule 1 banks (Wealth One Bank of Canada, Exchange Bank of Canada, and UNI Financial Corp) have begun operating in Canada with an additional fourth bank poised to announce its commencement in the following month. When the fourth bank begins operations (Impak Finance Inc), it will be almost a 15% increase in domestic banks from 27 to 31. The new banks have identified niches compared to the wider reach of the "Big Five". Wealth One Bank of Canada aims to service the country's growing Chinese Canadian population with full Mandarin and Cantonese supported speakers. Exchange Bank of Canada deals exclusively in foreign currency services on a wholesale level to financial institutions and businesses. UNI Financial Corp. was formed as Caisses populaires acadiennes become the first Canadian credit union to obtain a federal bank charter.[27]

Financial crisis of 2008[edit]

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.[28][29]

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.[30] 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.[31]

Dispute resolution[edit]

Since the late 1990s,[32] dispute resolution across the sector was directed to the independent[32] Ombudsman for Banking Services and Investments (OSBI). As of 2018, Royal Bank of Canada, Toronto-Dominion Bank and Scotiabank direct dispute resolution to the for-profit Chambers Banking Ombuds Office (ADRBO).[33] 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".[33] In 2018, John Lawford, executive director of consumer rights group the Public Interest Advocacy Centre, criticized ADRBO for not "[adhering] to the same openness principles" that OBSI brought to the table,[32] adding that customer's are likely to experience "less success with their banking complaints" at ADRBO as a result.[32] As of 2021, National Bank of Canada and Digital Commerce Bank are also reported to use ADRBO.[34] 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."[34]

See also[edit]


  1. ^ 1 Place Ville Marie in Montreal is listed as the head office for RBC. However, Royal Bank Plaza in Toronto is listed as its corporate headquarters.
  2. ^ Since 2011, only serves Canadian tourists and expatriates. Retail banking for U.S. customers sold to PNC Financial Services.
  3. ^ Formerly Royal Bank of Trinidad and Tobago (RBTT).


  1. ^ William O’Connell, "[1]"
  2. ^ Ali, Zarmina (April 7, 2020). "The world's 100 largest banks". Standard & Poor. Retrieved June 23, 2020.
  3. ^ World Economic Forum - Global Competitiveness Report Archived 2010-12-06 at the Wayback Machine.
  4. ^ "Canada's Banks" Archived 2010-01-25 at the Wayback Machine Canadian Ministry of Finance, 2002
  5. ^ Automated teller machines (ATMs) (per 100,000 adults), The World Bank
  6. ^ Ligaya, Armina (July 20, 2017), "How Bill Downe turned 200-year-old BMO from laggard to leader", Financial Post
  7. ^ a b "Archived copy" (PDF). Archived (PDF) from the original on 2014-07-08. Retrieved 2014-09-23.{{cite web}}: CS1 maint: archived copy as title (link)
  8. ^ The Bank's History, Bank of Canada
  9. ^ "Canadian banks are the soundest in the world: report". 9 October 2008. Archived from the original on 2008-10-11. Retrieved 2008-10-09.
  10. ^ Canada rated world's soundest bank system: survey, Reuters, 9 October 2008
  11. ^ These are the 14 countries with the safest banks in the world, Independent, 10 April 2017
  12. ^ "Canadian banks the safest in the world, Moody's says", The Star, 11 April 2012
  13. ^ a b Blackwell, Richard (11 February 2002), "List of dividend-paying firms shrinking", The Globe and Mail
  14. ^ Toronto-Dominion Bank (TSX:TD): Time to Buy This Top Canadian Dividend Stock?, Yahoo! Finance
  15. ^ CIBC Stock Is a Top Pick for Retirees, Yahoo! Finance
  16. ^ 2 Best Canadian Dividend Stocks to Buy After the Market Correction, Yahoo! Finance
  17. ^ The bank failures of 1985 (PDF), The Bank of Canada
  18. ^ Bank failures in Canada: A history, 20 March 2022
  19. ^ "Constitution Act 1867-1982". Government of Canada. 7 August 2020.
  20. ^ a b c d e "Bank Act S.C. 1991, c. 46". Government of Canada.
  21. ^ "Office of the Superintendent of Financial Institutions". Government of Canada. 31 July 2012.
  22. ^ Pelletier, Martin (30 July 2018). "Our nation of oligopolies not good for consumers, but great for investors". Financial Post. Retrieved 2020-12-12.
  23. ^ "The Big Five Banks in Canada". Investopedia. Retrieved 4 January 2020.
  24. ^ "Archived copy" (PDF). Archived (PDF) from the original on 2008-02-27. Retrieved 2007-12-01.{{cite web}}: CS1 maint: archived copy as title (link)
  25. ^ "Royal Bank of Canada: Annual Report 2015" (PDF). Royal Bank of Canada. 31 October 2008. Retrieved August 5, 2014.
  26. ^ "RBC Announces Intention to Acquire HSBC Canada".
  27. ^ "New banks in Canada look to target niche markets". Archived from the original on 2016-09-26. Retrieved 2016-09-27.
  28. ^ Banks got $114B from governments during recession Archived 2013-05-31 at the Wayback Machine, CBC News, 30 April 2012. Retrieved 31 May 2013
  29. ^ Did Canadian banks receive a secret bailout? Financial post, 30 April 2012. Retrieved 31 May 2013
  30. ^ "Canadian banks remain soundest according to World Economic Forum, six years in a row". 2013-09-04. Archived from the original on 2014-07-26. Retrieved 2014-07-18.
  31. ^ The world's 20 safest bank "The world's 20 safest banks". Archived from the original on 2010-10-06. Retrieved 2010-12-19.
  32. ^ a b c d Evans, Pete (7 September 2018). "Scotiabank walks away from consumer dispute watchdog OBSI". CBC News. Retrieved 19 May 2021. Even though it is funded by industry ... the watchdog is considered to be an independent agency, and it's a free service for upset consumers.
  33. ^ a b Carrick, Rob (13 September 2018). "Ontario's Ford government is shamefully backing the investment industry over investors". The Globe and Mail. Retrieved 19 May 2021.
  34. ^ a b Lancaster, John (19 May 2021). "TD Bank accused of losing customers' RSPs — again". CBC News. Retrieved 19 May 2021. For the bank to say 'We know we transferred it, but we don't have a record of where it is' raises the question of how they know they transferred it.

Further reading[edit]

  • Bordo, Michael D.; Redish, Angela; Rockoff, Hugh (2014). "Why didn't Canada have a banking crisis in 2008 (or in 1930, or 1907, or …)?". The Economic History Review. 68 (1): 218–243. doi:10.1111/1468-0289.665. S2CID 154482588.

External links[edit]