CDIC Member Institution Mergers | General comparisons | Discussion forum

pebbles said:

If I have $65,000 in a High Interest Saving Account with one CDIC Member and $65,000 with a different CDIC member and they merge, how does this effect my CDIC coverage? I would now have $130,000 at one institution. ($30,000 over the $100,000 coverage limit). Would I have to take out the $30,000 and deposit it somewhere else in order to be covered?

From my point of view it appears that any activity at the new merged institutions would
cause a mess of tracking what was what. I would do a 90,0000/40,000 split in two different
institutions. Allow room for interest. Not sure if CDIC covers interest? Keep in mind, from
what I have seen, when credit unions merge usually one or both of them are in financial
trouble but they only tell you about the positive spin off of the merger.

Here is your answer from the CDIC web site.

How does CDIC calculate insurance in the event of the amalgamation of 2 member institutions?

CDIC insures eligible deposits at each CDIC member institution up to a maximum of $100,000 (principal and interest combined) per depositor (or, in the case of joint deposits, per set of joint owners), for each of the following:

savings held in one name,
joint deposits (savings held in more than one name),
savings held in trust for another person,
savings held in Registered Retirement Savings Plans (RRSPs),
savings held in Registered Retirement Income Funds (RRIFs),
savings held in Tax-Free Savings Accounts (TFSAs), and
money held for paying realty taxes on mortgaged property.

To be eligible for deposit insurance, deposits must be payable in Canada, and in Canadian currency. As a general rule, a deposit is considered to be payable in Canada if it is held at a branch or office of a CDIC member institution in Canada.

Eligible deposits include savings accounts, chequing accounts, GICs or other term deposits with an original term to maturity of 5 years or less, money orders, certified cheques, and bank drafts issued by CDIC members, and debentures issued by loan companies that are CDIC members.

Your existing deposit insurance coverage does not change when one CDIC member buys another, or when two or more members join together to become one. Any money that you had deposited would still be insured at the new member institution.

In the event of a merger of CDIC member institutions, the total of your insured deposits made at each institution before the merger continues to be insured separately up to $100,000. For term deposits, this separate protection applies until they mature. For demand deposits, separate protection remains in effect until the money is withdrawn; that is, it is reduced by the amount of any withdrawals as they occur.