Canada banks are the backbone of the country’s financial system, with 21 domestic banks, 23 full-service foreign bank branches, 25 foreign bank subsidiaries and seven foreign bank lending branches. All these banks manage more than $2.9 trillion worth assets. Canadian banks serve millions of customers, including small- and medium-sized businesses, individuals, governments, non-profit organizations, large corporations, and institutional investors. Canada possesses the highest number of ABM (Automated Banking Machines) in the world, driven by the highest penetration of electronic banking channels, such as internet banking and telephone banking.
Classification of Canada Banks
Following The Bank Act of 1991, banks operating in Canada got classified into three schedules. Schedule I banks are banks that are not subsidiaries of foreign banks and allowed to accept deposits. RBC, CIBC and Scotiabank are some of them. Schedule II banks are those that are subsidiaries of foreign banks and allowed to accept deposits. Citibank Canada, ING Bank of Canada and AMEX Bank of Canada are some. Schedule III banks are foreign banks that have branches in Canada. Examples include Deutsche Bank AG, Bank of America and Credit Suisse.
Most domestic Canada banks offer a range of investment, banking and financial services through their extensive distribution networks across the country. These domestic Canadian banks are also active in the US, Asia, Latin America, the Caribbean and other parts of the world. Many large international banks also operate in Canada through subsidiaries, branches or representative offices. Most foreign banks, except HSBC Canada, specialize in investment and corporate banking. HSBC Canada has strong retail presence, with branches across Canada.
Canada Banks – Safety
Canada banks are considered to be the safest and the most efficient banks in the world. According to the World Economic Forum (WEF) 2008, the Canadian banking system is the world’s soundest. While the banking systems of many countries, such as Germany and Britain, are adversely affected by the US subprime mortgage crisis, Canada banks continue to be healthy. This is because of the country’s high capital reserves and strict regulatory environment. The average capital reserves, also called Tier 1 capital, of the top five Canadian banks are much higher than the US and European commercial banks. Royal Bank of Canada (RBC), Scotiabank, TD Bank Financial Group, CIBC and Bank of Montreal are referred to as the Big Five Banks.